The adoption of energy-efficient technologies by firms

Abstract

The transformation to a global low-carbon industrial production system is a precondition of mitigating the impacts of climate change. Accelerating energy efficiency improvement can significantly contribute to this transition. Among others, the IEA estimates that the diffusion of already available innovations still embodies a huge potential for energy efficiency improvement. The diffusion of energy efficiency measures (EEMs) is a complex process and, lying at the intersection between society, economy and technology, it is influenced by a huge variety of factors such as EEM characteristics, adopter characteristics and behavior, the information channels, the regulatory framework and various other contextual aspects. Most innovations (including EEMs) typically follow an s-shaped curve when they diffuse among the users. For EEMs, the (surprisingly) slow diffusion of apparently cost-effective measures has attracted much attention from researchers who have put forward numerous explanations for this. These comprise barriers related to risk and uncertainty, hidden costs, transaction costs and imperfect information, bounded rationality, split incentives and access to capital for financing. Empirical evidence for the existence of barriers for firms to adopt EEMs has accumulated and increasingly many and various policies have been developed and designed to overcome such barriers. In a world of constrained resources, it is essential to design effective and efficient policies that reach their objective at the lowest cost. Understanding of the underlying barriers pattern and the energy-saving potentials available, as well as their costs, form the basis for designing effective policies. While these aspects have been researched in the past, little attention has been put so far on the interactions between these dimensions and how they affect the impact of policies. This knowledge gap is the starting point for this thesis which aims to extend the basis for designing policies to accelerate the diffusion of EEMs in industry. It takes a comprehensive view by exploring the EEM potentials and costs as well as the adoption behavior of firms. A particular focus lies in the interaction between these two research fields. Thus, the main research question can be stated as follows. How are EEMs and the adoption behavior of firms interrelated and what does this imply for the design and impacts of policies in this field? As such, the research question has a wide scope drawing on the dimensions technology, firm behavior and policy. The first part focuses on the dimensions technology and firm behavior and their interrelation. First, the techno-economic characteristics of EEMs in the form of energy saving potentials and costs are analyzed (Chapter 2), before the adoption behavior of firms is assessed (Chapter 3). The following chapter explores the linkages of both fields (Chapter 4). The second part of the thesis then shifts the focus towards the policy dimension. This includes an ex-post policy impact evaluation (Chapter 5) and a review of models for ex-ante assessment of policy impact on industrial energy demand (Chapter 6). The policy-related analyses particularly focus on the role of barriers and EEMs.