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The Determinants of Sulfur Emissions from Oil Consumption in Swedish Manufacturing Industry, 1976-1995

Using a structural decomposition analysis, we analyze the causes of a reduction in sulfur emissions originating from oil consumption in the manufacturing industry in Sweden during 1976-1995. The Swedish case is of interest since Sweden has pursued an ambitious policy to combat the precursors of acid rain. Between 1989 and 1995, about 59 percent of the reduction in sulfur emissions from manufacturing can be attributed to the announcement and implementation of a Swedish sulfur tax. Two thirds of the reduction during 1976-1995 is captured by substitution between oil and other energy sources. The price of electricity also has had a significant effect via substitution between oil and electricity. Furthermore, one third of the reduction during 1976-1995 is explained by decreased energy intensity.

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Energy Specializations: Petroleum – Markets and Prices for Crude Oil and Products; Energy and the Environment – Air Emissions (other than greenhouse gases)

JEL Codes:
L13 - Oligopoly and Other Imperfect Markets
Q52 - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects

Keywords: Sulfur tax, Sulfur emissions, oil use, manufacturing industry, decomposition analysis, acid rain, environmental policy

DOI: 10.5547/ISSN0195-6574-EJ-Vol22-No2-5

Published in Volume22, Number 2 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.