Swedish Industry and Kyoto – An Assessment of the Effects of the European CO2 Emission Permit Trading System
AbstractWe assess the effects on Swedish industry input and output demands of different climate policy scenarios connected to energy policy induced by the Kyoto protocol. A unique data set containing firm level data on outputs and inputs during the years 1991 – 2001 is used to estimate a factor demand model, which is then simulated for different policy scenarios. Sector specific estimation suggests that the proposed quadratic profit function specification exhibit properties and robustness that are consistent with economic theory; that is, all own-price elasticities are negative and all output elasticities are positive. Furthermore, the elasticities show that the input demands are, in most cases, relatively inelastic. Simulation of the model for 6 different policy scenarios reveal that the effects on Swedish base industry of a EU level permit trade system is dependent on (i) removal or no removal of current CO2 tax, (ii) the established price of permits, and (iii) what will happen to the electricity price. Our analysis show that changes in electricity price may be more important than the price of permits for some sectors.
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Bibliographic InfoPaper provided by Umeå University, Department of Economics in its series Umeå Economic Studies with number 668.
Length: 32 pages
Date of creation: 05 Dec 2005
Date of revision:
Contact details of provider:
Postal: Department of Economics, Umeå University, S-901 87 Umeå, Sweden
Phone: 090 - 786 61 42
Fax: 090 - 77 23 02
Web page: http://www.econ.umu.se/
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CO2- emissions; factor demand; fossil fuels; tradable permit market;
Other versions of this item:
- Brännlund, Runar & Lundgren, Tommy, 2006. "Swedish Industry and Kyoto An Assessment of the Effects of the European CO2 Emission Permit Trading System," Working Paper Series 06/01, Swedish University of Agricultural Sciences, Department of Forest Economics.
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- L70 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - General
- Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Costs; Distributional Effects; Employment Effects
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-04-22 (All new papers)
- NEP-ENE-2006-04-22 (Energy Economics)
- NEP-ENV-2006-04-22 (Environmental Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Martin Hill & Bengt Kristöm, 2002. "Sectoral EU-trading and other Climate Policy Options: Impacts on the Swedish Economy," Working Paper Series 02/328, Swedish University of Agricultural Sciences, Department of Forest Economics.
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- Brännlund, Runar & Lundgren, Tommy, 2001. "A Dynamic Analysis of Interfuel Substitution for Swedish Heating Plants," UmeÃ¥ Economic Studies 550, Umeå University, Department of Economics.
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- Hammar, Henrik & Lundgren, Tommy & Sjöström, Magnus, 2006. "The significance of transport costs in the Swedish forest industry," Working Paper 97, National Institute of Economic Research.
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