Exploring energy transition in European firms: the role of policy instruments, demand-pull factors and cost-saving needs in driving energy-efficient and renewable energy innovations

Abstract

The transition toward more efficient and sustainable energy systems relies on the introduction by firms of innovations aimed at reducing the energy-environmental impact. In this paper, controlling for firms’ technological capabilities and taking into account the role of specific policy instruments, demand-pull factors and firms’ cost-saving needs, we carry out an in-depth analysis of the drivers motivating firms’ decision to engage in two main types of energy innovations, energy-efficient and renewable energy innovations, as compared to other environmental technologies. The empirical evidence, provided by using firm-level data from the Community Innovation Survey for different European countries, highlights the key role of firms’ cost saving needs as a motivation driving the introduction of both types of energy innovations, as well as of governmental subsidies and public procurement though only for renewable energy innovations. The influence of demand-pull factors is instead transversal between energy innovations and other eco-innovations.