Adjustment and competitiveness in energyintensive industries: An analysis of policy instruments

1
Adjustment and competitiveness in
energy-intensive industries An analysis of
policy instruments

• Lars J. Nilsson and Patrik Söderholm
• Lund University and Luleå University of Technology

2
Overall objective, focus and contributions of the
project

• Objective Generate new knowledge about the
  prospects for the
• Swedish energy-intensive industries to adapt to
  climate and energy
• policy instruments.
• Two PhD students Eva Henriksson (LTU) and
  Christian Stenqvist (LU)
• Scope (a) pulp- and paper industry (b)
  policy-induced structural
• changes (c) energy efficiency and (c)
  multi-disciplinary synthesis.
• Contributions knowledge for (a) assessing the
  effectiveness of policy
• measures (e.g., PFE) on industry (b) selecting
  policy instruments and
• improving methods to evaulate these and (c)
  assessing the role of
• policy in inducing structural change.

3
Growth and the environment in Swedish
manufacturing industry, 1913-1999
Source Brännlund (2008). Umeå
Economic Studies No. 728.
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Publications Electricity Demand Behvaiour and PFE

• Henriksson, E., and P. Söderholm (2008). The
  Cost-effectiveness of Voluntary Energy Efficiency
  Programs, Proceedings of the 31st IAEE
  International Energy Conference, Istanbul 18-20
  June, 2008.
• Henriksson, E., and L. Wårell (2008).
  Electricity Demand Impacts of Knowledge-generatin
  g Investments Experiences from the Swedish Pulp
  and Paper Industry, Proceedings of the 31st IAEE
  International Energy Conference, Istanbul 18-20
  June, 2008.
• Nilsson, L. J., C. Lopes, P. Fonseca and M.
  Araujo (2008). Evaluation and Monitoring for the
  EU Directive on Energy End-Use Efficiency and
  Energy Services Assessment of Existing
  Evaluation Practice and Experience, EMEEES
  Report, Wuppertal Institute, Germany.
• Stenqvist, C., and L. J. Nilsson (2009).
  Process and impact evaluation of PFE A Swedish
  Tax Rebate Program for Industrial Energy
  Efficiency, Paper to be presented at the ECEEE
  Conference, June 2009.
• Henriksson, E., and L. Wårell (2009).
  Electricity Demand and Factor Substitution in
  the Swedish Mining Industry An Econometric
  Approach, Paper to be presented at Securing the
  Future and 8th ICARD, June 23-26, Skellefteå,
  Sweden.

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PFE a selection of results/lessons

• Strengths addresses the problem of asymmetric
  information, clear monitoring guidelines, focus
  on organization and working practices. Reasonably
  cost-effective.
• Weaknesses Business-as-usual scenario not
  clearly defined, implying also that policy target
  is not clear. Distinction between short- and
  long-run not addressed.
• We assess methods to distinguish between short-
  and long-run price responses, and we..
• analyse free-riders and spillover effects.

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Forthcoming conference paper (IAEE conference,
Vienna, 2009).
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Publications Structural changes and policy
impacts on the base industries

• Söderholm, P., and R. Lundmark (2009). The
  Development of Forest-based Biorefineries
  Implications for Market Behavior and Policy,
  Forest Products Journal, Vol. 59, Nos. 1-2, pp.
  6-16.
• Blomberg, J., and P. Söderholm (2009). Factor
  Demand Flexibility in the Primary Aluminium
  Industry Evidence from Stagnating and Expanding
  Regions, re-submitted to International Journal
  of Production Economics.
• Ericsson, K., C. Stenqvist, L. J. Nilsson, and M.
  Nilsson (2009). Stuck in the Greenhouse
  Opportunity or Threat for the Pulp and Paper
  Industry?, forthcoming report.
• Johansson, B., G. Modig, and L. J. Nilsson
  (2007). Policy Instruments and Industrial
  Responses Experiences from Sweden, Proceedings
  of the ECEE Summer Study on Energy Efficiency,
  The European Council for an Energy Efficient
  Economy, La Colle sur Loup, France, 4-9 June.
• Söderholm, P., and L. Lundberg (2009).
  Structural Breaks in Swedish Industrial Demand
  for Electricity An Econometric Analysis, Paper
  to be revised and submitted to an international
  journal.

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A selection of results/lessons

• Market and policy implications of the development
  of forest-based biorefineries (a) future
  competition for the raw material and (b) the
  role of public policy is to target environmental
  externalities and RD spillovers.
• Evidence of structural changes in Swedish
  industrial electricity demand since the early
  1990s. Methods assessed to analyze structural
  shifts (e.g., endogenous vs. exogenous).
• The direct (short-run) impact of stringent
  climate policies on the industry are significant
  (e.g., primary aluminium production). Long-term
  targets and engineering flexbility should be
  encouraged.

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A forest-based biorefinery
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Ongoing work 2009-2010

• Climate and energy policy and structural breaks
  (methods and empirical analysis).
• Structural change in the pulp and paper industry
  (cooperation with Smurfit and Billerud within the
  realms of Solander Science Park).
• The overall impact of energy and climate policy
  on the paper and pulp industry (including
  organizational changes)
• Continued work on PFE, and lessons for future
  programs (t.ex. spillovers, rebound,
  double-counting etc.).
• Methods/approaches for evaluating energy
  efficiency in the base industries.