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280 P. Ekins Source: Harmon, 2000 Fig. 9 Learning curve of PV-modules, 1968–1998 this phenomenon. Several other studies address this issue (e.g. Anderson (1999), Touche Ross (1995)). Both RIVM and TME conclude that the reduction of unit costs of environmental technologies goes faster than the—comparable—technological progress factor that is incorporated in macro-economic models used by the Netherlands Central Planning Bureau. In these models the average factor is about 2% annually. The results of both the RIVM and TME study for the annual cost decrease of environmental technologies are presented in Table 1. Both studies show comparable results: the annual cost decrease is mostly between 4% and 10%. Therefore, when modelling environmental costs for the longer term, some form of technological progress needs to be taken on board in addition to what is assumed in the macro-economic model. In the TME and the RIVM study no attempt was made to differentiate between two types of technological progress (see Krozer 2002): Table 1 Annual decrease in costs of applying environmental technologies Technology/Cluster Annual cost decrease Min Average Max Dephosphating sewage 3.8% 6.7% Desulphurisation of flue gas at power stations 4% 10% Regulated catalytic converter 9% 10.5% Industrial low NOx technologies 17% 31% 1. High efficiency central heating 1.4% 2. Energy related technologies 4.9% 3. End-of-pipe, large installations 7.6% 4. End-of-pipe, small installations (catalysts) 9.8% 5. Agriculture low emission application of manure 9.2% TME 1995, p. vi; RIVM 2000, p. 13, cited in Oosterhuis (2006, p.26)
Eco-innovation for environmental sustainability 281 & gradual improvements of already existing technologies (for which Krozer assumes that these will mainly lead to cost-savings and not so much to increased reduction potential); & innovations (or “leap technologies”) for technologies which are new and can compete with existing technologies in both efficiency (lower costs) and effectiveness (larger reduction potential). This distinction is important, especially concerning the development of the reduction potential, because this will enable in the future a greater reduction in pollution than currently thought. The anecdotal evidence on waste water treatment and low NOx technologies in industry actually shows both developments: & increasing reduction potential (to almost 100% theoretical) in a period of about 30 years; & decreasing unit costs. So from the empirical point of view both developments are important enough to be separately considered when estimating future costs of environmental technologies. Because most environmental impacts are external to markets, for eco-innovation to occur it will need to be largely driven by public policy rather than by (free) markets. Aghion et al. (2009a) find that such policy is not yet anything like strong enough to generate the level of eco-innovation that is required to address major environmental problems such as climate change. It is to the nature and effectiveness of the required policies that this paper now turns. 5 Policies for environmental innovation and eco-innovation While some resources have prices that are considered in market transactions, the great majority of environmental considerations do not enter into the cost calculations of markets, unless government policy causes this to happen through the various kinds of policy instrument. Jordan et al. (2003) categorised them as follows: & Market/incentive-based (also called economic) instruments (see EEA 2006, for a recent review of European experience). & Regulatory instruments, which seek to define legal standards in relation to technologies, environmental performance, pressures or outcomes (Kemp 1997 has documented how such standards may bring about innovation). & Voluntary/self-regulation (also called negotiated) agreements between governments and producing organisations (see ten Brink 2002, for a comprehensive discussion). & Information/education-based instruments (the main example of which given by Jordan et al. (2003) is eco-labels, but there are others), which may be mandatory or voluntary. Broadly, the market-based and regulatory instruments may be thought of as ‘hard’ instruments, because they impose explicit obligations, whereas voluntary and information-based instruments may be thought of as ‘soft’ instruments, because
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154 P.J.J. Welfens et al. Keywords
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344 C. Lutz 1 Introduction This cha
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352 C. Lutz Table 2 EU27 productivi
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356 C. Lutz Giljum S, Behrens A, Hi
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358 T. Machiba While industries are
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360 T. Machiba Field Target Technol
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362 T. Machiba 3 Understanding sust
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364 T. Machiba The automotive and t
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366 T. Machiba Air conditioners fun
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368 T. Machiba Table 2 Application
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370 T. Machiba Charter M, Clark T (
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