Trade with emission allowances : the impact on the Swedish paper and pulp industry´s competitiveness

In January 2005 a trading scheme with emission allowances, including carbon dioxide (CO2), was introduced in Europe. This has influenced the electricity price as well as the price of CO2 emitting production. The paper and pulp industry uses a high share of electricity and emits CO2 and is therefore chosen. This industry is investigated to see if the competitiveness for the industry has been influenced by the emission trading scheme. Since the trial period is too short to give any clear results, USA has been investigated to make comparisons with Sweden. Different theories about the subject together with electricity price and production price data from Statistiska Centralbyrån. A competitiveness model is calculated with help from production prices and show that Sweden has become relatively more competitive compared to the USA since 1995. A reason for this can be the introduction of an emission trading scheme in the USA in 1995. If this is the case, the Swedish paper and pulp industry can face a decrease in competitiveness in the near future