Economic growth, energy consumption and CO2 emissions in Sweden 1800-2000

Abstract: Large transformations of technologies have occurred in the Swedish economy during the last two centuries, resulting in higher income, better quality of products and changing composition of GDP. An agrarian society has given way to an industrial society and lately to a post-industrial phase. The energy supply systems have changed, from traditional energy carriers, such as firewood and muscle energy to modern carriers like coal, oil and electricity, with effects on CO2 emissions. Not only the energy supply has gone through fundamental changes, but also forest management, which affects the net emissions of CO2. The interrelations of growth, energy and CO2 are analyzed in this thesis, which uses standard calculations, relative price analyses and energy quality factors, to determine the relative effects of structural and technical changes, including changes in energy carrier composition to explain the long term delinking of energy consumption, CO2 emissions and economic growth that takes place. Technical change is the main reason of energy intensity decline. Total factor productivity gains, including improvements in technical energy efficiency, saves energy in relation to output. The most spectacular energy savings took place in the sectors transportation & communications and industry. Structural changes at the sector level tended to increase energy intensity between 1870 and 1970. No correlation was found between increasing energy quality and decreasing energy intensity, but energy quality may have had an impact on economic growth rates. The consumers’ surplus was exceptionally high during the interwar period and the three decades after the Second World War, and the total energy quality was outstanding during the latter period. The most rapid relative decline in energy intensity took place between 1970 and 2000. In this period structural changes at the sector level no longer worked to increase energy intensity and the new growth direction of the third industrial revolution saved energy in relation to output. The decrease in energy intensity after 1970 was not caused by changed patterns of foreign trade for Sweden, but by changed patterns of demand in Sweden as well as abroad. CO2 intensity, when only emissions from fossil fuels are counted, shows a pattern of either one long Environmental Kuznets’ Curve, interrupted by the Wars, or of three separate EKCs. The main determinants of this CO2 intensity are energy intensity and energy carrier composition, where the latter turned out to be most influential. The three costs involved in energy consumption, purchasing cost, handling costs and environmental costs are intended to play different roles at different income levels, with effects on energy carrier composition. The estimate of CO2 emissions and sequestration by Swedish forests showed a magnitude well in parity with emissions from fossil fuels. The aggregate CO2 emissions over the period 1800-2000 were not much altered, but the pattern of CO2 intensity was profoundly altered when forest emissions were included. Furthermore the analysis of forest management questioned the idea that firewood caused net CO2 emissions in a dynamic perspective, because the demand for thin timber dimensions stimulated a rational forestry.