What drives the preferences for cleaner energy? Parametrizing the elasticities of environmental quality demand for greenhouse gases

Abstract

Research background: The heterogeneity in the factors that affect demand for environmental quality implicates a diverse set of policies and actions aimed at achieving cleaner production to address the challenges posed by pollution and damage to the natural environment. Even though this topic has been widely addressed, mainly from the traditional perspective of the Environmental Kuznets Curves hypothesis (EKC), it has been assumed that the environment is a luxury good with an income elasticity greater than unity. However, it has recently been recognized that the relationship between income and demand for cleaner energy may be more complex and that further inquiry may be needed for a better understanding. Purpose of the article: This research work, employing a panel of European countries, offers direct explicit parameters for the elasticity of income-environmental quality demand for Greenhouse Gases (GHG), as well as its relationship with other important factors. It provides quantitative novel insights into the complex relationship between income and the preferences for cleaner energy. Methods: A hierarchical regression equations approach is used to analyze the evolution of the elasticity of income-environmental quality demand with the inclusion of further co-variates that are relevant for the preferences side of the EKC, such as consumption, R+D investment and BERD (Business Enterprise Research and Development). The data for the empirical study comes from a panel of 16 European countries for the period from 2010 to 2020. Findings & value added: The results show robust evidence that the elasticity of environmental quality demand, which although positive and significant, does not exceed one. To obtain an elasticity above unity, two more variables are needed, namely the R+D expenditure of business enterprises and the exposure of citizens to air pollution. These two factors have a similar or even higher effect on the preferences of agents for cleaner energy, which also means that the preferences of the citizens are endogenous to technological development. At the theoretical level, this work shows that the technological and preferences arguments are not substitute explanations of the EKC, but that technological development exerts a positive effect on the preferences of inhabitants, whose demand for environmental quality is heavily conditioned by their capabilities to see pollution, even more than by their income level. This also means that public policies directed to improve environmental awareness should be directed first towards those regions where the exposure of the citizens to pollution is lower.

Reviewing the Situation and Prospects for Developing Small Renewable Energy Systems in Poland

“…All over the world, the development of the energy sector is strongly associated with supporting renewable energy sources (RES) [129][130][131][132][133]. Their biggest advantage in the struggle for an adequate condition of the global climate is that they contribute to decarbonization by emitting less carbon dioxide (CO 2 ) than fossil fuels when converted into energy [134,135].…”

“…It has also been determined that electric power prices have an impact on a household's willingness to adapt to power generation, which was even suggested by some older investigations [147][148][149][150]. The idea to make a transition of the power industry to renewable and small-scale energy is gaining popularity, not only because of environmental protection issues and preservation of natural resources for future generations, but also to solve systemic problems arising from the wear-out of equipment and the lack of innovative technologies that could contribute to the modernization of the existing power capacities to increase the efficiency of the power industry [132]. An example of communities keen on tapping into renewable energy sources is found among inhabitants of Greek islands.…”

Energy Transformation Development Strategies: Evaluation of Asset Conversion in the Regions

“…In addition, it is necessary to emphasize the aspect of promoting the improvement of energy efficiency, which is related to increasing the rationality of energy use in the places of its consumption, as well as limiting losses in the process of its transmission [12]. Public policies directed to improve environmental awareness should be directed first towards those regions where the exposure of the citizens to pollution is lower [13]. The European Union understood these risks-the European Green Deal sets out guidelines on how to make Europe the first climate-neutral continent by 2050 and provides the most comprehensive package of measures enabling Europe's inhabitants and businesses to benefit from a sustainable ecological transformation [14].…”

The Impact of Public Policies and Civil Society on the Sustainable Behavior of Romanian Consumers of Electrical and Electronic Products

“…The major policy instruments that can stimulate changes in consumer behavior are incentives, bans and mandates, communication, and nudges [11]. Government departments can thus play a guiding role in promoting e-waste recovery and recycling [12] in terms of environmental, social, and corporate performance, bringing about green innovation in enterprises [13], driving circular economy practices pivotal for the sustainable development of renewable energy practices [14], of environmental quality demand for cleaner energy [15], of green finance furthering renewable energy technologies [16], of sustainable organization management [17], and of sustainable development of innovative industrial infrastructures [18]. It is not only governments but also non-governmental organizations that can intervene in informing and educating consumers in this direction.…”