The Energy Market, Ownership and the Climate

Björn Carlén Tommy Lundgren Jesper Stage Thomas Tangerås

Should state-owned energy companies take extra measures to decrease their climate emissions? Are the efficiency and investments of energy producers affected by the ownership form? These are some of the questions that have been investigated by economists Tommy Lundgren, Jesper Stage, Thomas Tangerås and Björn Carlén at the request of SNS. In the report The Energy Market, Ownership and the Climate (SNS Förlag), these researchers issue a warning that it can become expensive and inefficient to let municipal energy companies take special responsibility for the climate.

energimarknaden_agandet_och_klimatet.pdf 1.2 MB PDF

Björn Carlén has a PhD and works as a researcher at SNS and The Swedish National Road and Transport Research Institute:

— The view that energy companies owned by the municipalities should take special responsibility for the climate does not take the climate policy that is carried out in the EU into consideration. The climate policy of the union means that major units that produce electricity and heating have been allocated emission rights. If the thermal power station in a Swedish municipality chooses to reduce its emissions, this means that some other unit in the union can increase its emissions to the same extent. There is no positive effect on the climate, but it might become expensive for the inhabitants in that municipality.

The researchers have made a case study of the sector for district heating in order to study whether it is possible to empirically determine the differences between the use of resources of municipal and private energy companies and how they have adjusted to climate policy. One of the conclusions is that private district heating power plants react to Swedish and European climate policy to a larger extent.

Tommy Lundgren is professor and works at the Centre for Environmental and Resource Economics at Umeå University:

— An explanation as to why private companies adjust more quickly to environmental policy control is due to the fact that they have tougher requirements for profits that their municipal competitors. Private producers of district heating care more about their profitability and are therefore more attentive when the price for emissions changes on the EU emission market. Another possible explanation is that municipal companies have already adjusted by taking extra measures.

The report was presented at an SNS seminar on August 29.

Participants at the meeting:

CARL CEDERSCHIÖLD, Director of the Board, KFS
MARIA ERIKSSON, freelance writer and author of the book Dubbelspelet – Så höjde politikerna elpriset, skyllde på marknaden och lät dig betala.
GÖRAN KARRESKOG, Head of Department, Swedish Competition Authority.
TOMMY LUNDGREN, Visiting Professor at Umeå School of Business and Economics and Swedish University of Agricultural Sciences (SLU).
JESPER STAGE, Professor at Mid Sweden University.
THOMAS TANGERÅS, Associate Professor (Docent) at the Research Institute of Industrial Economics (IFN).