Less Demand or Less Supply? Winding Roads Away from Fossil Fuels and Inequality

Climate-related policies on fossil fuels have traditionally targeted consumption behaviour via market-based tools or demand-side policies, such as carbon pricing and carbon taxes. However, this has been criticised for reinforcing the carbon-centric political and economic system, lacking transparency, and only shifting emissions between jurisdictions, often with disproportionate distributional effects. Scholars have long argued for supply-side policies that target fossil fuel extraction and infrastructure directly to complement demand-side solutions. These include moratoria on new exploration, taxation of profits and investments, bans on export finance for overseas fossil fuel projects, and termination of oil and gas licensing rounds, among other things. This brief explores recent discussions on the need to advance supply-side policies. It recommends that Swedish and European policymakers become active participants in national and international efforts to strengthen reporting and disclosure requirements on fossil fuel investments and profits, work to develop progressive wealth-based carbon taxes linked to the carbon content of owned assets or investments, and complement carbon pricing with policy tools that directly target fossil fuel investment flows.