Energy policies as used in the three analysed countries (Austria, Germany, Switzerland) have a positive impact on the adoption of green energy-related technologies. Energy taxes reduce innovation unless they are positively related to additional demand. Policies do not harm international competitiveness. Intensive adoption of energy-efficient technologies increases labour productivity.
Background (completed research project)
In line with the Energy Strategy 2050 the federal government wants to significantly reduce energy consumption by 2035. A policy framework that fosters the adoption and generation of energy-efficient technologies is an essential element to reach this goal. Based on a newly designed questionnaire sent to a representative sample of firms in Austria, Germany, and Switzerland, the effectiveness of the current policy framework was investigated and some important factors to improve the policy design were highlighted. While the response rates for Germany (36.4%; 2321 observations) and Switzerland (31.4%; 1815 observations) were satisfactory, the response rate for Austria (7.6%; 539 observations) was very low suggesting a careful interpretation of the descriptive results for Austria. It is also important to see that the survey-based analyses are ex-post referring to the time period 2012-2014.
Aim (completed research project)
The main goal of the research project was to investigate the effects of different types of energy policies (taxes, subsidies, regulation, etc.) on different aspects of energy-related product and process innovation, and whether energy-related innovation is linked to the economic and environmental performance of firms.
The current policy framework in all three countries is partly effective in stimulating a firm’s decision to adopt green energy-related technologies, and it has no major impact on the amount of investment into these technologies. Voluntary agreements/standards, public subsidies and taxes increase the propensity of adoption while only public subsidies increase investment intensity. There are significant differences across countries; taxes are more effective in Germany and demand related factors are more effective in Switzerland to increase the adoption propensity. Public subsidies are more effective in Austria. However, in order to identify the efficiency of policy instruments, we would have to include the economic costs of policies which is beyond the focus of this study and must be left for future investigations.
Concerning the development and commercialization of new green energy-related technologies positive effects of subsidies, no effects for voluntary agreements, and negative effects for taxes and regulations were observed. The latter is mainly driven by a reduction in the financial resources that can be used for product innovation. The size of the policy effects largely depends on firms’ primarily demand-driven green innovation potential. Negative policy effects were not observed for technological leaders.
Energy policy in the three countries had no negative influence on firms’ international market position. Firms that introduced new energy technologies or that developed such technologies for the market report higher export performance, indicating that investments in ‘greener’ energy technologies pay-off. The study also found a positive direct effect of the adoption of energy-related technologies on labour productivity. Further, a positive indirect effect of energy taxes, a market-based policy instrument, on labour productivity via the adoption of energy-related technologies was found. Here, no country differences were detected.
Relevance for research
The project contributes to the existing research in several ways: a) the measurement of energy-related policy environment by developing a new design for a questionnaire questioning the presumption of an a priori link between the policy exposure and the behaviour of the firm was improved, thus avoiding the “common method bias”; b) a comprehensive, harmonised data set was exploited - which allows for a rich control vector - covering three countries allowing to identify country differences by applying identical econometric models and (partly) using parametrical as well as non-parametrical methods.
Relevance for practice
Policies to enhance energy efficiency generally show no negative impact on international competitiveness. Likely negative impacts are either balanced by positive impacts of new technology adoption or the size of costs incurred by energy policy is too small to exert measurable effects. Policy makers should strengthen the demand effects of new policy designs as demand is an important driver for higher energy efficiency and the generation of energy-efficient technologies. Subsidies complement the set of policy tools, but are likely to be more expensive. Regulation is greatly ineffective for spurring innovation.
Firms with a high intensity of energy-efficient technologies show a greater labour productivity and are internationally more competitive. Hence, investments into the adoption of energy-efficient technologies are likely to pay-off.
Creation and Adoption of Energy-related Innovations