Editor's note: Sweden is the world leader in bio-energy research and development and has some cooperation projects with China in the field. Ola Altera, Sweden's deputy minister for enterprise, energy and communication, talked with China Business Weekly reporter Zhang Qi about what China can learn from Sweden's example.

Q: China is making energy efficiency and emission reduction a priority. What's your comment on the policy?

A: I think it is a top challenge when the economy is speeding at 10 percent per year, but at the same time the government is trying to bring down emissions. The Chinese leaders have been very aware of these problems, and they are trying to find new strategies.

In Sweden, we are the world leader in renewable energy and sustainable energy systems, so this is an obvious area in which to keep cooperating with China.

Q: What kind of technologies can you share with China?

A: We have technologies and solutions that we can share with China in many fields including construction energy, sewage treatment and renewable energy. Our minister Fredrik Reinfeldt will visit China in April, and my priority is to prepare for his coming visit. I traveled to Wuhan recently. We might reach an agreement on cooperation projects including biofuel, waste water treatment and sludge in Wuhan when he arrives.

Q: UK and Singapore have signed agreements with Shanghai and Tianjin to build eco-cities. As you said Sweden wants to share its experiences in sustainable construction, do you have any similar plans to build a Sino-Swedish eco-city in China?

A: Yes. We also discussed the topic of a Sino-Swedish eco-city similar to Singapore's with Tianjin with Huang Wei, vice-minister of Ministry of Construction. Our government just set aside special funds this year to support sustainable cities, not only for Sweden, but also for other countries, so is a growing sector for cooperation between Sweden and China.

We also agreed on standards for Chinese buildings to be more adoptable for sustainable constructions. Now we are ready to go for some pilot projects in China to broaden this cooperation.

Q: What kind of Swedish clean technologies do you think are most competitive compared with other countries?

A: The greatest technologies that Sweden has are biofuel, combined heating power production (heat and electricity are produced in the same plant), and a district heating grid for heating purposes and for electricity.

If you have a condensing power station, maybe you put in coal and one-third is electricity and two-thirds is just waste heat - out in the air or in the sea. If you have a district heating system you can heat the city with that energy, two-thirds for heating, and one-third for electricity.

Q: Do you think Swedish technologies can satisfy China's energy demand?

A: Of course, yes. The whole Swedish energy balance is already 40 percent renewable energy from our total energy demand.

In the beginning of 1980s, we had 90 percent fossil fuels in the heating sector, and then we introduced a CO2 tax and technological solutions. Today, we have changed the proportion, only 10 percent is from fossil fuels.

We have done this practically, so we know how this solution works.

The Chinese State grid has also invested in a biofuel project in Sweden. As we are world leaders in biofuel energy, they want to learn about the Swedish market and then do the same thing in China.

Q: China has faced cost problems regarding renewable energy. As you said 40 percent of energy use in Sweden comes from renewable energy. Can you offer some suggestions about how to reduce the cost of renewable energy?

A: I think it's a learning process. When you start to invest in renewable energy, the demand will increase, and there will be more volume.

What is also very important from the political point of view is the real price is paid for fossil fuels. If you subsidize the price of fossil energy, it's very difficult for renewable energy to compete. And even more so, there should be environmental price in the market place.

That should be covered by a CO2 tax, and we have done it in Sweden. It works very well. And also there could be trading on emissions.

It would be a good price to pay for the environmental damage caused by fossil fuels.

I expect China to be competitive in wind power and other renewable energy industries.

(China Daily March 10, 2008)