Decoupling of industrial energy consumption and CO2-emissions in energy-intensive industries in Scandinavia

As methodology the ex-post analysis deserves more attention as a device to calibrate energy sector models. This paper studies the impact of energy prices and taxes on energy efficiency and carbon emissions of ten industrial sectors in the three Scandinavian countries. A database with sector-specific energy prices and taxes has been established, which allows the analysis to take various price reductions and tax exemptions better into account. A translog factor demand system estimation for a cross industry pooled model is explored and fixed effects across industries and time is estimated. The findings here confirm recent analyses which indicate higher long-term elasticities for industries than normally assumed in Scandinavian energy-sector models. With the observations on differences in energy-intensities among sectors and countries the findings allow for some optimism as to the opportunities for further decoupling between trends in gross value added, carbon emissions and energy consumption. (C) 2007 Elsevier B.V All rights reserved.