Contents lists available at ScienceDirect Ecological Economics journal homepage: www.elsevier.com/locate/ecolecon Analysis Real capital investments and sustainability - The case of Sweden Eva C. Alfredsson a, ⁎ , J. Mikael Malmaeus b a KTH, Royal Institute of Technology, Environmental Strategies Research (fms), Sweden b IVL Swedish Environmental Research Institute, Sweden ARTICLE INFO Keywords: Economic growth Real capital Physical capital Resource use CO 2 emissions ABSTRACT Real capital investments are important for a transition to a more sustainable economy and for the continuous process of creative destruction and economic development. At the same time investments have negative en- vironmental effects. In this paper we analyze to what extent the current investments in real capital (i.e., buildings, machinery and infrastructures) in Sweden are sustainable in regard of the most important resources used in investments and in terms of CO 2 emissions. This is evaluated based on Sweden's share of a sustainable use of these resources and our share of the remaining carbon budget for achieving the Paris agreement. In the analysis we have used best publicly available data and methods to indicatively establish sustainable levels of resource use and emissions. We find that 1 million invested SEK (US$ 110,000) generate 15–75 tonnes of CO 2 emissions and use 80–260 MWh of energy, and on average 4.8 tonnes of iron, 0.2 tonnes of aluminum, 260 tonnes of gravel and sand and 6 tonnes of timber. Our analysis shows that within 50 years current invest- ment would use up Sweden's CO 2 budget available for achieving the Paris agreement, leaving no room for emissions from consumption. The use of timber, gravel and sand is above Sweden's share of a global yearly sustainable production. The current use of iron and aluminum can be maintained for 20–50 years, but ap- proaches the sustainability criteria with a 200 year perspective. 1. Introduction Investments in real capital, i.e. buildings, tools, machinery and other fixed structures constitute a substantial part of the gross national product (GDP) – typically between 20 and 30% in developed economies – and typically contribute to a continually growing stock of capital (capital formation). This capital is used together with human labor, energy and natural resources to produce the remaining share of the GDP, i.e. private consumption, public spending and net exports. Recently there has been a strong focus on financing and scaling up sustainable investments. In order to achieve the Paris agreements there is for example a need to replace the current fossil based energy system with renewables. This endeavor will require an additional investment of USD 27 trillion between 2015 and 2050 (IRENA, 2018). And achieving the Agenda 2030 and its sustainable development goals (SDGs) is es- timated to require investments in developing countries on the order of US$3.3 to 4.5 trillion per year (OECD, 2016). From a resource perspective investment in real capital have an en- vironmental cost in terms of natural resource exploitation, energy use and CO 2 emissions, both in the investment phase and during main- tenance and use. If the exploitation of renewable natural resources exceeds its reproduction rate this exploitation is ecologically unsustainable long term. For non-renewable resources it is a matter of choice how to define a sustainable exploitation level. And concerning emissions of CO 2 any net increase in CO 2 in the atmosphere is un- sustainable from a climate change perspective. In this study we have chosen to define unsustainable CO 2 emissions as those exceeding Sweden's share of the remaining carbon budget for achieving the Paris agreement. The sustainability criteria used in this study are explained in more detail in Section 3. As investment in physical capital impacts future patterns of pro- duction and consumption due to the technology lock-in associated with the existing capital stock (Janssen and Scheffer, 2004) their degree of sustainability has long term effects in addition to the direct effects discussed above. For instance, existing infrastructures influence choices and locations of new investments as well as consumer behavior (Guivarch and Hallegatte, 2011). Acknowledging the importance of capital formation for economic growth and for a transition to a more sustainable economy, as well as its negative environmental effects we aim to analyze to what extent cur- rent capital investments are sustainable. Using Sweden as an example, the aim of this study is to: • Analyze the current resource use and CO 2 emissions resulting from https://doi.org/10.1016/j.ecolecon.2019.04.008 Received 7 September 2018; Received in revised form 15 February 2019; Accepted 2 April 2019 ⁎ Corresponding author. E-mail address: eva.alfredsson@tillvaxtanalys.se (E.C. Alfredsson). Ecological Economics 161 (2019) 216–224 0921-8009/ © 2019 Published by Elsevier B.V. T