A Framework for Analysing the Adoption of Energy-Efficient Technologies

Associated with economic development are increases in energy use and harmful emissions. Changes in total emissions can basically be decomposed into three components. The first component is associated with macroeconomic growth that, ceteris paribus, results in increased emissions. The second component is associated with structural change. As economies develop, their sector composition changes. Sectors are characterised by their own intensity and development of emissions over time. Changes in sector composition therefore, ceteris paribus, imply changes in macroeconomic emissions. The final component is technological change. Technological improvements tend to result in reduced emission-output ratios and thus, ceteris paribus, decrease macroeconomic emissions. Over the last decades, world-wide emissions have increased tremendously. These developments have, among others, resulted in concrete policy goals set out in the Kyoto protocol. These goals have prompted countries to develop policies oriented towards sustainable development, sustainable energy use and a reduction of emissions, such as CO₂, CH₄ and N₂O. Adoption of energy-efficient technologies by firms is one of the most important and promising means to reach these environmental goals (see, for example, de Groot, 1999a).2 A key question in the development of policies is therefore how firms respond to policy measures aimed at stimulating adoption of energy-efficient technologies.