CERE WP#2016-08, Karimu, A., Brännlund, R., Lundgren, T. & Söderholm, P. Energy Intensity and Convergence in Swedish Industry: A Combined Econometric and Decomposition Analysis.

This paper analyzes the determinants of energy intensity and tests for convergence across 14 Swedish industrial sectors and relies on a detailed sectorial dataset covering the period 1990-2008. The empirical analysis builds on a non-parametric regression analysis of an intensity index constructed at the industry sector level as well as indexes constructed from a decomposition of this index. The findings indicate that input prices, including the price of energy, have been significant determinants of energy intensity in the Swedish industrial sectors. The results suggest that a well-designed tax system could be effective in delivering significant energy efficiency improvements in Swedish industry. The authors also find evidence of energy intensity convergence among the industrial sectors. The above implies that during the studied time period, Swedish industry shifted away from more to less energy-intensive production, in part perhaps driven by moving energy-intensive manufacturing abroad.

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