End‐of‐pipe or cleaner production? An empirical comparison of environmental innovation decisions across OECD countries

Abstract

Die Discussion Papers dienen einer möglichst schnellen Verbreitung von neueren Forschungsarbeiten des ZEW. Die Beiträge liegen in alleiniger Verantwortung der Autoren und stellen nicht notwendigerweise die Meinung des ZEW dar.Discussion Papers are intended to make results of ZEW research promptly available to other economists in order to encourage discussion and suggestions for revisions. The authors are solely responsible for the contents which do not necessarily represent the opinion of the ZEW.Download this ZEW Discussion Paper from our ftp server:ftp://ftp.zew.de/pub/zew-docs/dp/dp0482.pdf I Non-technical SummaryTypically, we distinguish between two different types of environmental innovations that mitigate the environmental burden of production: cleaner production and end-of-pipe technologies. Cleaner production reduces resource use and/or pollution at the source by using cleaner products and production methods, whereas end-of-pipe technologies curb pollution emissions by implementing add-on measures. Thus, cleaner products and production technologies are frequently seen as being superior to end-of-pipe technologies for both environmental and economic reasons.The establishment of cleaner production technologies, however, is often hampered by barriers such as additional co-ordination input and a lack of organizational support within firms. In addition to substantial investment costs in new technologies, additional obstacles arise due to the nature of the environmental problem and the type of regulations involved.Command and Control (CaC) regulations, for instance, frequently impose technology standards that can only be met through end-of-pipe abatement measures. With particular respect to the diffusion of cleaner production and products, the question arises which one of several alternative policy approaches is to be preferred: performance standards, voluntary measures, or economic instruments which leave decisions about the appropriate abatement technology up to the firm?This paper analyzes factors that may enhance a firm's propensity to implement cleaner products and production technologies rather than end-of-pipe technologies. It is a widespread assumption that end-of-pipe technologies still dominate investment decisions in firms. This is because there has been exceptionally little empirical analysis directed to the determinants of the use of specific types of abatement measures -principally because of the paucity of available data. On the basis of a unique facility-level data set based on a recent survey covering seven OECD countries (Canada, France, Germany, Hungary, Japan, Norway, and the U.S.)we find a clear dominance of cleaner production in these countries: Surprisingly, 76.8% of our sample facilities report that they predominantly invest in cleaner production technologies.There are, however, significant differences: Most notably, Germany displays the lowest percentage of cleaner production technologies among these OECD countries (57.5 %), while Japan exhibits the highest respective share (86.5 %). T...

Environmental management systems and technological environmental innovations: Exploring the causal relationship

“…Our econometric analysis with uni-and multivariate probit models supports this hypothesis because environmental process innovations have a significantly positive effect on certified EMS. We conclude from these results that the causal relationship between EMS and technological environmental innovations is ambiguous, also considering the estimation results of studies which reversely analyze the effect of implemented EMS (or EMP) on technological environmental innovations (e.g., Ziegler and Rennings, 2004;Rehfeld et al, 2007;Frondel et al, 2007Frondel et al, , 2008Wagner, 2007Wagner, , 2008Horbach, 2008). Instead of a clear causal relation, a complex dynamic interrelationship between these measures seems to be more likely.…”

“…Former micro-econometric studies analyze the effect of EMS certification (and single EMP) on technological environmental innovations (e.g., Ziegler and Rennings, 2004;Rehfeld et al, 2007;Wagner, 2007Wagner, , 2008Frondel et al, 2007Frondel et al, , 2008Horbach, 2008).…”

Energy, the Environment, and Technological Change

“…Regulation not only encourages adoption but also leads to the shutdown of plants using older technologies Popp (2006d) Combustion modification and postcombustion controls for NO X emissions from coal-fired power plants US coal-fired power plants, [1990][1991][1992][1993][1994][1995][1996][1997][1998][1999][2000][2001][2002][2003] Regulation is the dominant factor. Technology improvements lead to more adoption for combustion modification, but not for more expensive postcombustion controls, which are only adopted when needed because of regulatory pressures Frondel et al (2007) End-of-pipe versus process abatement Survey of OECD firms Regulations are more likely to lead to end-ofpipe solutions. Market forces influence cleaner production processes Wolfram and Bushnell (2008) Modifications at coal-fired electric power plants US power plants, [1998][1999][2000][2001][2002][2003][2004] Effect of new source review on capital investment is small Fowlie (2007) NO Popp (2006d) links the role of innovation and adoption in a study of NO X pollution-control technologies.…”

The adoption of green energy technologies: The role of policies in Austria, Germany, and Switzerland

“…The term soft-factors refers to voluntary agreements and informational instruments. Frondel, Horbach, and Rennings (2007) also investigated environmentally friendly innovation decisions based on survey data for Germany. Their results suggest that the adoption of cleaner production technologies tends to be market driven and not so much by regulatory measures.…”

“…We included the certified management systems to the simultaneous estimation procedure, since previous literature shows that they are immediately related to technology adoption. For instance, Frondel, Horbach, and Rennings (2007) found that organizational measures are very important for the adoption of environmentally friendly process innovations. Also Khanna, Deltas, and Harrington (2009) present evidence for a strong and significant relationship between totally quality management and the adoption of pollution prevention technologies.…”