Sweden is pulling its guarantees for “green” credits in 2026, only limiting itself to already signed agreements.
The moves comes amid a wider shrink in green energy projects across Europe as market conditions in the sector deteriorate and subsidies falter.
It also seems inspired by the high-profile bankruptcies of former green champions, such as the battery manufacturer Northvolt.
Swedish business magazine Affärs Världen reported that in the budget bill presented by finance minister Elisabeth Svantesson, the green guarantees fall away.
In the bill, it was written: “The Government is therefore not requesting any authorisation to issue new guarantees in 2026, which means that the credit guarantee programme is limited to agreements already entered into.”
According to the magazine, the lack of attention for this was strange because in recent years, State guarantees had ballooned from 10 billion Swedish krona (€910 million) in 2021 to 80 billion krona (€7 billion) in 2024 and 2025.
The State credit guarantee programme for large-scale green industrial investments was created to support long-term financing for the development of sustainable industrial technologies, particularly in sectors such as energy.
By providing guarantees on market-based terms, Sweden wanted to reduce risk for investors, something that did not work as hoped for.
“To date, several guarantees have been issued under the programme, amounting to approximately 27 billion krona [€2.45 billion] as of 11 August 2025. This figure does not include the planned guarantee for Northvolt, as the underlying loan agreements were terminated and the company has since filed for bankruptcy,” the budget reads.
The guarantee model is structured to be self-financing, ensuring that it does not place a burden on the State budget over time.
But, given the long-term nature of these investments, the goverment said “careful balancing of state risk against expected societal benefit is essential”.
“Because this type of investment involves particular uncertainty — both in terms of risk and economic efficiency — the government has decided not to seek authorisation for new guarantees in 2026. As a result, the programme will be restricted to agreements already in force,” it said.
Minister for Financial Markets Niklas Wykman wrote in a post on Facebook: “All government activities should be evaluated at regular intervals. This also applies to the green credit guarantee programme. As the example of Northvolt shows, it is associated with significant challenges to assess the risks that exist in this type of large investment.”
Affärs Världen found that at the turn of the year 2024/25, 83 per cent of the Swedish Government credit guarantees granted had ended up in just two companies, both troubled: Northvolt and Stegra, a “green” steel production company.
Due to Northvolt’s troubled financial state, though, the government did not pay out or activate those credit guarantees for it, citing caution.
The company did use the guarantees as “granted funds” in order to convey financial stability. This might have misled investors, some observers say.
Stegra used to be named H2Green Steel and aims to revolutionise steel production by eliminating carbon emissions.
With €6.5 billion in private investment from major backers including Microsoft and Mercedes-Benz, Stegra is positioning itself as a leader in the green industrial transition.
Despite its ambitious goals, it faces several challenges. The Swedish Environmental Protection Agency recently denied the company €152 million in government funding, citing concerns over interim natural gas use and the project’s emissions during the transition period.
Additionally, the company has encountered difficulties sourcing iron ore.
It reported an operating loss of just over 2 billion krona (€180 million) for 2024, up from 657 million krona (€60 million) the year before.
Both Northvolt and Stegras are owned by the Vargas Holding, a green investment holding founded by Harald Mix and Carl-Erik Lagercrantz, venture capitalists relying heavily on State subsidies.
The European Union also gave many millions to both companies.
The bankruptcy of Swedish battery developer and manufacturer Northvolt is set to cost the European taxpayer a hefty sum. https://t.co/4PRhvG5ExG
— Brussels Signal (@brusselssignal) November 26, 2024
