CERE Working Papers,
CERE - the Center for Environmental and Resource Economics

Abstract: This paper examines the transition towards renewable energy in the Swedish pulp and paper industry (PPI) during the 1970s and -80s. In the wake of the first Oil Crisis until the late 1980s, the use of fossil fuels was reduced by 70 percent in this sector. The lion’s share of the reduction was achieved by substituting oil by biofuels in terms of rest products from the pulp manufacturing process. The reduction was made possible also by efficiency improvements and increased internal production of electricity through back-pressure turbine power generation. Sweden was highly dependent on oil when the first Oil Crisis broke, and the run up in oil prices put pressure on the Swedish government and the energy intensive PPI to reduce dependency. Of central importance for the transition to be implemented was a highly collaborative strategy of the sector as well as between the sector and the corporatist Swedish state administration. The Swedish government chose a proactive strategy by emphasizing knowledge management and collaboration with industry along with the substitution of oil with biofuels. The transition was further fueled by the fact that focus was directed towards unutilized potentials in the sector, where a previous waste problem now could be transformed into energy savings, i.e., the strong version of the Porter hypothesis. Also energy taxes and fees played a major role as control agents in the Swedish energy policy of the 1970s and 80s. Thus, the study illustrates the central role of governments and their ability to push industries into new technological paths through a wide palette of interplaying policy instruments. The study further points at the importance of a more holistic understanding of the interplay between different policies and impacts in the longer run.

Keywords: Energy transition; oil crisis; bio fuels; pulp and paper; Sweden

JEL-codes: N00

26 pages, March 27, 2015

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