Sweden minority coalition has cut the amount of biofuel that must be added to diesel and petroleum.
A government agency spokesman admitted that the country will struggle to hit its 2030 emissions targets, Reuters reported.
The Sweden Democrats-backed coalition government has already cut fuel taxes, raised tax breaks for people driving to work and ended new electric vehicles subsidies.
Mixing in biofuels from renewable sources is a way to reduce emissions from cars, but the government said at the weekend it will cut the required amount of biofuel to 6% in 2024 and for it to remain at that level until the end of 2026.
Under current rules diesel has to contain 30.5% biofuel and petrol 7.8%. The percentage was meant to increase each year.
The decision was motivated by the cost-of-living crisis amid soaring inflation.
Sweden has some of the highest diesel and petrol prices in the world, mainly due to heavy taxes.
The move was criticised by the Swedish Environmental Protection Agency.
