Sweden is a sparsely populated country with significant hydro, bioenergy, and wind resources. Renewable energy sources currently account for more than 50% of total Swedish use and both electricity production and residential heating are virtually fossil-free. Swedish energy policy can be characterized by the perceived conflict between an ambitious climate policy and the competitiveness of the energy-intensive industries. Related to this, the future of nuclear power has played a key role in the Swedish energy discourse over the last 40 years. Energy governance through market solutions is widely embraced in Sweden and includes the use of economic policy instruments such as carbon and energy taxes, the EU Emissions Trading System, and renewable electricity certificates. Fully decarbonized electricity and heating sectors would appear to be within reach in the coming decade, although technical and institutional adaptations will be necessary to manage the expected continued expansion of variable electricity production.However, major challenges remain for decarbonization of the transport and industrial sectors in Sweden. In both sectors, electrification, together with the continued role of bioenergy, are regarded as key options for the future.