We conduct a systematic and interdisciplinary review of empirical literature assessing evidence on induced innovation in energy and related technologies. We explore links between demand-drivers (both market-wide and targeted); indicators of innovation (principally, patents); and outcomes (cost reduction, efficiency, and multi-sector/macro consequences). We build on existing reviews in different fields and assess over 200 papers containing original data analysis. Papers linking drivers to patents, and indicators of cumulative capacity to cost reductions (experience curves), dominate the literature. The former does not directly link patents to outcomes; the latter does not directly test for the causal impact of on cost reductions. Diverse other literatures provide additional evidence concerning the links between deployment, innovation activities, and outcomes. We derive three main conclusions. (a) Demand-pull forces enhance patenting; econometric studies find positive impacts in industry, electricity and transport sectors in all but a few specific cases. This applies to all drivers—general energy prices, carbon prices, and targeted interventions that build markets. (b) Technology costs decline with cumulative investment for almost every technology studied across all time periods, when controlled for other factors. Numerous lines of evidence point to dominant causality from at-scale deployment (prior to self-sustaining diffusion) to cost reduction in this relationship. (c) Overall innovation is cumulative, multi-faceted, and self-reinforcing in its direction (path-dependent). We conclude with brief observations on implications for modelling and policy. In interpreting these results, we suggest distinguishing the economics of active deployment, from more passive diffusion processes, and draw the following implications. There is a role for policy diversity and experimentation, with evaluation of potential gains from innovation in the broadest sense. Consequently, endogenising innovation in large-scale models is important for deriving policy-relevant conclusions. Finally, seeking to relate quantitative economic evaluation to the qualitative socio-technical transitions literatures could be a fruitful area for future research.
Most policy instruments to reduce greenhouse gas (GHG) emissions have focused on producers, and on the energy efficiency of buildings, vehicles and other products. Behavioural changes related to climate change also impact 'in-use' emissions, and potentially, emissions both 'upstream' (including from imported goods) and 'downstream' (eg disposal). Consumption-oriented policies may provide avenues to additional and cost-effective emission reductions, but are less prevalent, in part because of political sensitivities around government efforts to shape individual-level mitigation behaviour. In this paper, we explore policy instruments for encouraging low carbon behaviour in the EU context. Drawing on a literature survey and interviews, as part of the EU Carbon-CAP project, we develop a list of 33 potential instruments, present a systematic methodology for assessing their potential impact and feasibility, and apply this to rank instruments of most interest. Most instruments involve a clear trade-off between their potential impact and feasibility; about half feature in the top three scoring categories, many being voluntary approaches, which may be easier to implement, but with limited or highly uncertain impact. However, we identify a handful of top-scoring instruments that deserve far more policy attention. The complexity of consumer and corporate motivations and behaviours suggests that instruments should be trialled and monitored (e.g. in regions / individual States) before widespread introduction. Most would also be most effective when nested within wider policy packages, to address the varied behavioural motivations and stages of supply chains. Key policy insights. Influencing consumer behaviour has been little used in climate policy and is politically sensitive and complex, but can address emissions that have largely escaped influence to date. . A few instruments stand out as particularly promising, including: technology lists; supply chain procurement by leading retail companies; a carbon-intensive materials consumption charge; and key infrastructure improvements. . A common trade-off between potential impact and likely feasibility points to the importance of government-business collaboration to secure support and impact. . More ambitious transformation would require a mix of production and consumption-oriented policy instruments.
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