Energy efficiency policies for different firm sizes: challenging current policies with empirical data

Panel: 3. Matching policies and drivers: Policies and Directives to drive industrial efficiency

This is a peer-reviewed paper.

Authors:
Patrick Plötz, Fraunhofer Institute for Systems and Innovation Research ISI, Germany
Tobias Fleiter, Fraunhofer Institute for Systems and Innovation Research ISI, Germany

Abstract

Energy efficiency is a simple and often cost-effective way to reduce energy consumption and green house gas emissions. Different policies have been designed to promote the implementation of energy-efficiency measures in industry. It is generally assumed that firms of different size have different means and face different barriers when adopting energy-efficiency measures. Several studies have tried to identify a net effect of firm size and other firm characteristics. However, a detailed understanding beyond linear regression of the general effect of firm size on energy consumption and the adoption of energy efficiency measures is still missing. Also in many policy evaluations (ex-ante as well as ex-post), only average values are used, ignoring differences in firm size of several orders of magnitude. Such a simplistic approach only allows for constrained policy recommendations as it neglects the large diversity that prevails among firms and that dominates firms’ adoption decision. Here, we study empirical distributions of firm size and adoption rates and how these interact. We identify general empirical trends by using data from different countries and industry branches. Thus, a more detailed picture of the adoption behaviour of firms of different size is obtained. This is a first step towards a more realistic consideration of diversity among firms in policy design and evaluation methods. The broad empirical trends have consequences for the future design of more effective energy-efficiency policies.