Drivers of environmental innovation - Vinnova

More documents

Recommendations

Info

e controlled that the emission from a source equals the total permits held by the polluter. In the cap and trade model questions about the size of the cap, the distribution of the permits, control and sanctions etc are decided at the start of the process. After these questions are settled, actors can trade with only a minimal degree of intervention from the authorities, thereby reducing the overall transaction costs incurred. The baseline and credit model is based on projects intent on reducing pollution. A hypothetical baseline scenario must be made up for every project, and describes how much pollution would be emitted without the project. This scenario is then compared with the emissions within the project. To be valid all emission reductions created must be approved. The transaction cost could end up being high (SOU 2000:45). Tradable permits have the advantage of offering a permanent innovation incentive. The setting of permit levels presupposes information on the desired goals in terms of environmental quality and permissible emission volumes, which is not always available. Another problem may be that it is possible for incumbent firms to create entry barriers by hoarding emission entitlements, thereby making new production facilities illegal or more likely artificially expensive. Time limited permits offer authorities the possibility to respond more flexibly to changed political objectives or to changed ecological parameters. Time limits incur a cost on firms, as they impose a large uncertainty on firms, which may result in incremental and end-of-pipe solutions being favoured. Unlimited permits, however devalued by authorities, create better conditions to innovate (Hemmelskamp, 1997). Subsidies Subsidies include various forms of financial assistance such as grants, soft loans, tax allowances or charge relief. Subsidies change the incentive structure. They intend to encourage reductions in pollution or environmentally sound management of resources. Subsidies and taxes theoretically have the same impact on the rates of return faced by consumers of energy, but subsidies have been found to be three times more effective than taxes in promoting investment in energy-efficient technologies (Azar and Dowlatabdi, 1999). However, several studies in the Netherlands have shown that subsidies have most often had a limited impact on decisions concerning investment in environmentally beneficial technologies. Three different subsidy schemes were investigated and it was observed that subsidies were the primary reason for investment in only 0 - 2 per cent of the investigated firms. Factors like fuel economy, road performance and comfort (silent trucks), health and safety considerations (PCB) and environmental regulation (manure storage) were more important (Kemp Forthcoming). 38
The Dutch studies looked for the primary reason of investment decisions. This may underplay the smaller, but non-negligible, contribution that subsidies make to investment decisions. Investment in technology may refer to purchases of existing technology, as well as to efforts to develop new technology. R&D subsidies R&D subsidies may take the form of a general instrument when implemented as a tax relief or as a targeted instrument when implemented as payments to selected R&D projects. Uncertainty about the demand for cleaner technologies may call for the use of R&D subsidies or loans. The use of subsidies should be restricted to environmentally beneficial technologies for which a market does yet not exist, due to, for example, long development times or problems of appropriating innovation benefits. Uncertainty about the solutions to problems is another rationale for using R&D subsidies. The subsidies may in this case be used to increase the number of potential solutions to the problem (Kemp, Forthcoming). Results, though scarce, on the effectiveness on R&D subsidies suggest that they have a limited impact on investments in environmental technologies research. A Danish example indicates that the active match making of firms, institutes etc for co-operative projects increases the effectiveness of R&D subsidies (Kemp Forthcoming). 39
Page 1 and 2: Drivers of environmental innovation
Page 3 and 4: Drivers of environmental innovation
Page 5 and 6: Preface Innovations such as new pro
Page 7 and 8: Sammanfattning Denna rapport är en
Page 9 and 10: Övergången mot ett mer marknadsdr
Page 11 and 12: Summary This study aims to provide
Page 13 and 14: 1 Introduction ”7KH# RQO\# SDWK#
Page 15 and 16: But there are also problems with a
Page 17 and 18: 2 Environmental innovations in firm
Page 19 and 20: ”sustainable development is a key
Page 21 and 22: was in general no larger change in
Page 23 and 24: positive environmental effects alth
Page 25 and 26: That location also plays an importa
Page 27 and 28: adapted, with the latter indicating
Page 29 and 30: 4 Environmental policy instruments
Page 31 and 32: oth in the regulated industry and o
Page 33 and 34: Table 1 Summary of innovation effec
Page 35 and 36: marginal cost of abatement is lower
Page 37: according to Hemmelskamp (Forthcomi
Page 41 and 42: Kemp claims that the effectiveness
Page 43 and 44: Table 5 Summary of innovation effec
Page 45 and 46: There is clearly a need for more em
Page 47 and 48: conditions. These perspectives are
Page 49 and 50: This study shows that the way envir
Page 51 and 52: Hemmelskamp, J. (Forthcoming) “En
Page 54 and 55: Appendix 1 Theoretical approaches t
Page 56: and their interaction. It opens up
Page 59 and 60: efficiency nor on optimising within
Page 61 and 62: on the theory of terms of trade. A
Page 63 and 64: egulation may lead to increases in
Page 65 and 66: average productivity increases. Thi
Page 68: VINNOVA, SE-101 58 Stockholm, Swede

Drivers of environmental innovation - Vinnova

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?