Energy transition, carbon dioxide reduction and output growth in the Swedish pulp and paper industry: 1973‐2006

This study examines the historical relation between carbon dioxide emission and output growth in the Swedish pulp and paper industry from 1973 to 2006. We find that the industry achieved an 80 percent reduction in carbon dioxide emission, where most of the reduction took place before the implementation of active climate policy in 1991. Foremost energy substitution and also efficiency improvements contributed to the reduction. Growing prices of fossil fuel due to market price change and taxes and subsidies, explains most of the efficiency improvements and substitution. The study finds that energy transformation was coinciding with ongoing structural change in the industry during the 1970s and 1980s as well as a strong period of environmental adaption. We therefore suggest that the oil reduction was reinforced through the dynamics between the energy issue and an overall renewing process of the industry. This suggests a need to coordinate climate and environmental policy measures with the long‐term industrial dynamics of structural change.