Umeå University's logo

We analyse the impact of high electricity prices on individual preferences and attitudes toward climate and energy policy in Sweden. Our identification strategy leverages key features of the data and study design. First, consumers are distributed across four electricity price areas, each characterized by varying and often divergent electricity prices. Second, surveys were conducted in four distinct waves. Notably, between the second and third waves, electricity prices were nearly identical across price areas, whereas after the third wave, significant price differences emerged. Using multiple estimators that exploit these features, we find that higher electricity prices: (1) reduce acceptance of a carbon tax, (2) increase support for nuclear power,(3) diminish concerns about climate change, and (4) have no significant impact on other political attitudes or food consumption preferences.

We study the macroeconomic effects of four fiscal policy responses to an energy supply shock: energy vouchers to all households, energy vouchers only to low-income households, energy vouchers to non-energy goods producers, and subsidies for investments in the energy sector. The analysis is carried out in a DSGE model that explicitly includes the energy sector. Calibrating the model to Swedish data, our results show that subsidies for investment in the energy sector are the most effective instrument to reduce energy prices in the short to medium term. However, this policy is welfare-dominated by energy vouchers given to households, as it immediately compensates low-income, non-saving households in the event of a shock. Providing energy vouchers to non-energy firms prevents energy prices from falling as quickly as they would without policy intervention and is also the least desirable from a welfare perspective.

This paper examines the Swedish electricity distribution sector to highlight three key findings. First, we identify significant economies of scale among electricity distribution firms, indicating that larger firms operate more efficiently. Second, we explore alternative market structures and demonstrate that these can substantially reduce the aggregated costs of electricity distribution. Third, we use novel survey data to show that firms perceive the economic incentives for mergers to be insufficient. These findings suggest that policymakers should consider creating a regulatory environment that encourages consolidation and enhance efficiency in the sector.

In this paper, we empirically investigate how environmental protection expenditures affect sector-level employment within manufacturing industries, using detailed firm-level data for Sweden for the years 2002–2021. We use a structural model that allows for a decomposition of the total employment effect of environmental protection expenditures within a sector into a cost effect, a factor shift effect, and a demand effect. We add to previous literature by using instrumental variables in our empirical framework, to account for endogenous environmental spending stemming from, e.g., corporate social responsibility and self-regulation. Our results reveal that increased environmental protection expenditures generally have no statistically significant effect on employment among the sectors studied, with the paper and pulp sector being the exception, showing non-negligible negative effects on employment.

We measure the cost of technical inefficiency for local electricity distribution firms in Sweden using Stochastic Frontier Analysis, and explore how small-scale generation, the number of electric vehicles and the introduction of dynamic pricing schemes affects the transient inefficiency and efficiency scores. Our results show little to no effect of these environmental variables on the cost of technical inefficiency of electricity distribution grids in Sweden.

I samband med att EU antog en ny klimatlag 2021 höjdes målet att minska växthusgasutsläppen från 40 procent till minst 55 procent senast 2030. Lagen omvandlar tidigare politiska åtaganden om att EU ska uppnå klimatneutralitet senast 2050 till en bindande skyldighet. I juli 2021 lade EU-kommissionen fram sitt förslag om ett uppdaterat ramverk Fit for 55, för att nå målet som slås fast i klimatlagen. Klimatpolitiken får effekter på Sveriges näringslivsstruktur. Strukturomvandling innebär att resurser flyttar från en del av ekonomin till en annan. Hur väl ekonomin kan anpassa sig till sådana förändringar är viktigt för hur tillväxten påverkas. Förmågan att ställa om kan också ge fördelar på den globala marknaden när det gäller att exportera hållbara varor och tjänster som efterfrågas globalt. Förändringarna kan vara både tillfälliga och permanenta. De kan också påverka olika delar av ekonomin olika. Den här rapporten belyser hur klimatpolitiken kan komma att påverka den svenska industrin, och innehåller en litteraturgenomgång, en empiriskanalys på mer aktuella data samt en konceptuell analys med ett räkneexempel.

We study the potential effects on the real economy and welfare of four fiscal policy responses to an energy supply shock: energy vouchers to all households, only to low-income households, or to non-energy goods producers, and subsidies for investments in the energy sector. The analysis relies on a DSGE model that explicitly models the energy sector. Calibrating the model to Swedish data, our results show that the subsidy for the investment in energy sector is the most effective instrument to reduce the energy price in the short- to medium term. This policy is, however, welfare dominated by energy vouchers given to households as it immediately compensates low-income, non-saving households in the event of the shock. Giving the energy voucher to the non-energy firms prevents energy prices from falling as fast as they would without policy intervention. It is also the least desirable from a welfare perspective.

The amount of electricity end-users demand from the distribution grid is going to be more uncertain in the future. In this paper, we empirically investigate how variation in demand (which we refer to as demand uncertainty) influence the pricing behavior of distribution system operators (DSOs) that are subject to an ex-ante revenue cap and a penalty scheme that is activated when the cap is violated. Using data from 162 Swedish electricity DSOs observed over 13 years, our econometric investigations shows that demand uncertainty leads to lower electricity distribution prices under the current ex-ante revenue cap regime, but not under the previous ex-post rate-ofreturn regime. We also find that DSOs react more strongly to uncertainty when they have a relatively higher debt ratio. While lower network prices may sound like a good outcome for customers, it also leads to reduced revenue and a slowdown in investments. Thus, when society benefits from distribution network expansions and the DSOs are regulated by ex-ante revenue caps, the regulator should consider regulating the debt ratio. 

In this study, using hourly data from a representative sample of Swedish households on standard tariffs, we investigate the welfare and emission implications of moving to a mandatory dynamic pricing scheme. We allow demand during different hours of a day to affect utility differently, and account for the derived nature of electricity demand by explicitly accounting for the services (end-use demands) that drive hourly electricity demand. We use the flexible Exact Affine Stone Index (EASI) demand system, which accommodates both observed and unobserved heterogeneity in preferences, to understand changes in load consequent to hourly retail pricing. Our findings suggest that, following hourly retail pricing, changes in load patterns across hours are relatively small: total load changes by less than one percent. There are correspondingly small reductions in welfare and carbon emissions, of less than 0.2 percent and 0.47 percent, respectively. Overall, in the context of a decentralized, competitive retail electricity market-setting, our results suggest that the benefits to ensuring that the retail price of electricity reflects the hourly marginal cost is small, at least in the short run.

In this paper, we explore whether there is a potential for shifting load between different times of the days, i.e., between peak and off-peak hours. In particular, we explore whether the fact that electricity is a necessity to modern life puts restrictions on the possibilities for load shifting. To do that we provide a structural framework for peak and off-peak electricity demand, where households are assumed to have Stone-Geary utility functions with subsistence levels for electricity demand that varies within the day, and that depends on household characteristics and temperature. As an empirical illustration, we fit our model to Swedish data on residential electricity usage at the sub-daily level. Our results indicate that the potential to shift load from peak to off peak is limited. One reason for this is that the subsistence levels are larger during peak than off-peak, implying that households assign a high value on electricity during peak time, relative to off-peak time. Overall, the results have important policy implications, not the least with respect to effects of real time pricing, as it suggests that there are limits to households' price responsiveness.