Sweden and Finland residential energy efficiency initiatives

In Sweden, discussions have emerged regarding the reform of the ROT tax deduction to better prioritize energy-efficient home improvements. Proponents, including Swedisol CEO Carolina Larsson, suggest restructuring the deduction to focus on measures like insulation and energy-efficient technology to help meet EU requirements and reduce electricity grid costs. This follows observations from the Swedish National Audit Office that the current deduction, which cost 22 billion SEK, often serves as an expensive subsidy for aesthetic upgrades that primarily benefits high-income households.

Political momentum for this reform has grown, with six out of eight Swedish parliamentary parties now supporting changes to the ROT deduction. The proposed shift aims to prioritize insulation, climate shells, and energy-efficient technology to meet EU energy efficiency requirements and lower household energy costs. Supporters argue that redirecting funds could reduce peak electricity demand during cold months and decrease the need for grid investments. While the reform seeks to address the socio-economic criticisms of the current subsidy, the Moderate Party and the Sweden Democrats have expressed opposition, citing the popularity of the existing deduction.

Concurrently, government support for energy renovations remains active in Sweden and Finland. In Sweden, the ‘Villaeffekten’ state subsidy provides up to 60,000 SEK to cover up to 30 percent of material costs for improvements such as heat pumps and insulation. In Finland, housing companies can access grants of up to 4,000 euros per dwelling for energy repairs, covering up to 50 percent of approved costs, alongside tax deductions for labor related to energy-efficient maintenance.