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Industrial electricity demand and energy efficiency policy: The role of price changes and private R&D in the Swedish pulp and paper industry

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  • Henriksson, Eva
  • Söderholm, Patrik
  • Wårell, Linda

Abstract

The objective of this paper is to analyze electricity demand behaviour in the Swedish pulp and paper industry in the context of the increased interest in so-called voluntary energy efficiency programs. In these programs tax exemptions are granted if the participating firms carry out energy efficiency measures following an energy audit. We employ a panel data set of 19 pulp and paper firms, and estimate both the own- and cross-price elasticities of electricity demand as well as the impact of knowledge accumulation following private R&D on electricity use. The empirical results show that electricity use in the Swedish pulp and paper industry is relatively own-price insensitive, and the self-reported electricity savings following the voluntary so-called PFE program support the notion of important information asymmetries at the company level. However, the results display that already in a baseline setting pulp and paper firms tend to invest in private R&D that have electricity saving impacts, and our model simulations suggest that up to about one-third of the industry sector's self-reported electricity savings in PFE could be attributable to pure baseline effects. Future evaluations of voluntary energy efficiency programs must increasingly recognize the already existing incentives to reduce energy use in energy-intensive industries.

Suggested Citation

  • Henriksson, Eva & Söderholm, Patrik & Wårell, Linda, 2012. "Industrial electricity demand and energy efficiency policy: The role of price changes and private R&D in the Swedish pulp and paper industry," Energy Policy, Elsevier, vol. 47(C), pages 437-446.
    • Handle: RePEc:eee:enepol:v:47:y:2012:i:c:p:437-446
    DOI: 10.1016/j.enpol.2012.05.016
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    4. Gert Bijnens & John Hutchinson & Jozef Konings & Arthur Saint Guilhem, 2021. "The interplay between green policy, electricity prices, financial constraints and jobs. Firm-level evidence," Working Paper Research 399, National Bank of Belgium.
    5. Cox, Michael & Peichl, Andreas & Pestel, Nico & Siegloch, Sebastian, 2014. "Labor demand effects of rising electricity prices: Evidence for Germany," Energy Policy, Elsevier, vol. 75(C), pages 266-277.
    6. Safarzadeh, Soroush & Rasti-Barzoki, Morteza & Hejazi, Seyed Reza, 2020. "A review of optimal energy policy instruments on industrial energy efficiency programs, rebound effects, and government policies," Energy Policy, Elsevier, vol. 139(C).
    7. Paterakis, Nikolaos G. & Erdinç, Ozan & Catalão, João P.S., 2017. "An overview of Demand Response: Key-elements and international experience," Renewable and Sustainable Energy Reviews, Elsevier, vol. 69(C), pages 871-891.
    8. Florian Jaehn & Raisa Juopperi, 2019. "A Description of Supply Chain Planning Problems in the Paper Industry with Literature Review," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 36(01), pages 1-39, February.
    9. Bergquist, Ann-Kristin & Keskitalo, E. Carina H., 2016. "Regulation versus deregulation. Policy divergence between Swedish forestry and the Swedish pulp and paper industry after the 1990s," Forest Policy and Economics, Elsevier, vol. 73(C), pages 10-17.

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