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Historically, the basic materials industry has had relatively low R&D expenditure levels, raising concerns about meeting 2050 climate targets given the crucial need for innovation and technology advancement in this industry. Decisive government intervention and active support for key technological pathways are required to address significant market failures and catalyse industrial decarbonisation. This Essay lays out the economic justification for an active green industrial policy and proposes key policy design principles, with the aim of striking a balance between facilitating the green industrial transition and maintaining cost efficiency in meeting climate targets.

In this paper, we carry out a field experiment that contributes to the literature on how social comparisons affect residential energy and water use in two important ways. First, we study a social comparison treatment that is continuous and communicated via pre‐installed in‐home displays, which are salient and updated in real time. Second, we estimate the effects of provision of social comparisons on two distinguished resources – electricity and water – in the same experimental setting. We find that, on average, our social comparison reduces daily residential energy consumption by 6.7 percent but has no effect on overall residential water use.

We investigate the process of electricity price formation in the Swedish intraday market, given a large share of wind power in the Swedish electricity system. According to Karanfil and Li's (2017) approach, if the intraday market is efficient, with large shares of intermittent electricity in the entire electricity system, intraday prices should send signals based on scarcity pricing for balancing power. Based on this theory, we analyze Swedish electricity market data for the period 2015–2018 and find that the Swedish intraday market, despite its small trading volumes, is functioning properly. In particular, our results show that intraday price premia mostly respond to wind power forecast errors and other imbalances resulting from either supply or demand sides of the electricity market, as they should if the intraday market is efficient. The results of wind power forecast errors hold for central and southern Sweden, but not for northern Sweden where the share of wind power production is still very small. However, we find no effect of unplanned nuclear power plant outages on intraday price premia.

To the best of our knowledge, this is the first paper comparing empirically the transaction costs of the monitoring, reporting and verification (MRV) required by two environmental regulations aimed to cost-efficiently reduce greenhouse gas emissions: a carbon dioxide (CO₂) tax and an emissions trading system. We do this in the case of Sweden, where a set of firms are covered by both types of regulations—the Swedish CO₂ tax and the European Union’s Emissions Trading System (EU ETS). Our results indicate that there is a significant degree of heterogeneity in the transaction costs of the firms in our sample. Moreover, for some of the firms, the transaction costs are high when compared with the actual cost of the CO₂ tax and the price of the EU ETS. Furthermore, we find that the MRV costs are lower for CO₂ taxation than for the EU ETS, which confirms the general view that regulating emissions upstream via a CO₂ tax yields lower transaction costs vis-á-vis downstream regulation via emissions trading.

Given the intensifying debates on whether governments should promote particular renewable energy technologies, the main objective of this study is to investigate the long-and short-run effects of policy-induced expansion of renewable solar and wind technologies on economic growth and employment in 15 European Union (EU) member states during 1990-2013 by using panel-data time-series econometric techniques. Instead of relying on renewable energy consumption or generation as commonly done in the literature, we focus on the capacity for solar and wind power generation, which is largely a consequence of the EU's renewable energy policies. In summary, we find that, to date, renewable energy policy-induced wind and solar power capacity promotes growth and/or employment in the short run, but these capacity increases do not stimulate economic growth in the long run in the EU-15 region. In fact, our results tend to support the opposite relationship: increases in wind and solar power capacity are associated with negative economic growth, at least at the total economy level.

A large body of literature shows that the provision of social comparisons can cause households to reduce residential energy and water use. In this paper, we carry out a field experiment that contributes to this literature in two important ways. First, we study a social comparison treatment that is continuous and communicated via pre-installed in-home displays, which are salient and updated in real time. Second, we estimate the effects of provision of social comparisons on two distinguished resources – electricity and water – in the same experimental setting. We find that, on average, our social comparison reduces daily residential energy consumption by 6.7 percent but has no effect on overall residential water use. The electricity savings are impersistent and occur in the evening hours, which only slightly overlap with peak hours. We argue that electricity conservation due to social comparisons is driven by short-run changes in households’ electricity saving behavior

We use a panel dataset of about 5,000 Lithuanian firms between 2003 and 2010, to assess the impact of the EU ETS on the environmental and economic perfor­mance of participating firms. Using a matching methodology, we are able to estimate the causal impact of EU ETS participation on C02 emissions, C02 in­tensity, investment behaviour and profitability of participating firms. Our results show that ETS participation did not lead to a reduction in C02 emissions, while we identify a slight improvement in C02 intensity. ETS participants are shown to have retired part of their less efficient capital stock, and to have made modest additional investments from 2010. We also show that the EU ETS did not rep­resent a drag on the profitability of participating firms.

In this paper we empirically compare the transaction costs from monitoring, reporting and verification (MRV) of two environmental regulations directed to cost-efficiently reduce greenhouse gas emissions: a carbon dioxide (CO₂) tax and a tradable emissions system. We do this in the case of Sweden, where a set of firms are covered by both types of regulations, i.e., the Swedish CO₂ tax and the European Union’s Emissions Trading System (EU ETS). This provides us with an excellent case study as it allows us to disentangle the costs of each regulation from other firm-specific variables that might affect the overall cost of MRV procedures. Our results indicate that the MRV costs of CO₂ taxation do not depend on firms’ emissions, while they do in the case of the EU ETS. For firms of equivalent emissions’ size, the MRV costs are lower for CO₂ taxation than for the EU ETS, which confirms the general view that regulating emissions upstream by means of a CO₂ tax yields lower transaction costs vis-á-vis downstream regulation by means of emission trading.

This study is one of the first to empirically investigate firm trading behaviour and the importance of permit trading transaction costs, such as information costs and search costs, in the first phase of the European Union’s Emissions Trading System (EU ETS). The signs and significance of our constructed transaction costs proxy variables indicate for a presence of these costs in the initial years of the EU ETS. In particular, this paper shows that ETS firms with the smaller number of installations and with less trading experience were less likely to participate in the European emissions trading market and traded the lower quantities of permits. Furthermore, these firms chose to trade permits indirectly via third parties. This study also supports the concerns that transaction costs could be excessive for smaller participants and firms operating in the new EU member states.

Given the intensifying debates whether governments should use industrial policies to promote particular renewable energy technologies, the main objective of this study is to investigate the long-run effects of renewable energy support policies on economic growth and employment in 15 European Union (EU) member states for the 1990-2012 time period by using panel-data time-series econometric techniques. The first hypothesis is that the EU’s renewable energy support policies lead to technological advancement, followed by economy growth, in the long-run. The second hypothesis states that these policies at least generate an increase in output and employment in the short-run. In summary, our results provide some evidence in support of the second hypothesis, but, in contrary to the similar studies, our findings do not support the first hypothesis that these policies promote growth in the long-run.