IDEAS home Printed from https://ideas.repec.org/a/eee/energy/v252y2022ics0360544222007812.html
   My bibliography  Save this article

Labour productivity improvements from energy efficiency investments: The experience of European firms

Author

Listed:
  • Kalantzis, Fotios
  • Niczyporuk, Hanna

Abstract

Energy efficiency investments are essential to transition to a carbon-neutral economy. Nevertheless, despite being financially viable, many energy efficiency investment opportunities do not materialise. The existing literature attributes this situation to financial and non-financial factors. Research suggests that many firms focus only on direct energy savings and neglect non-energy benefits that include increased labour productivity. Up to date, due to the lack of high-quality data, few studies attempted to quantify how the energy efficiency investments affect firm-level outcomes other than the reductions in energy consumption. This paper overcomes this barrier by using novel data from a firm-level survey conducted by the European Investment Bank. The survey covers more than 15,000 firms in 27 European Union member states and the United Kingdom during 2018–2019. This study investigates the relationship between the energy efficiency investments and the labour productivity of the European firms and uses instrumental variables methodology to account for potential endogeneity. The results show a positive and causal relationship between energy efficiency investments and labour productivity. The findings of the paper suggest that firms can benefit much more from the energy efficiency investment than what is often assumed, and highlight a need for government policies that would increase firms’ awareness of the non-energy benefits.

Suggested Citation

  • Kalantzis, Fotios & Niczyporuk, Hanna, 2022. "Labour productivity improvements from energy efficiency investments: The experience of European firms," Energy, Elsevier, vol. 252(C).
    • Handle: RePEc:eee:energy:v:252:y:2022:i:c:s0360544222007812
    DOI: 10.1016/j.energy.2022.123878
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0360544222007812
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.energy.2022.123878?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Elhanan Helpman & Marc J. Melitz & Stephen R. Yeaple, 2004. "Export Versus FDI with Heterogeneous Firms," American Economic Review, American Economic Association, vol. 94(1), pages 300-316, March.
    2. Fleiter, Tobias & Hirzel, Simon & Worrell, Ernst, 2012. "The characteristics of energy-efficiency measures – a neglected dimension," Energy Policy, Elsevier, vol. 51(C), pages 502-513.
    3. Ürge-Vorsatz, Diana & Kelemen, Agnes & Tirado-Herrero, Sergio & Thomas, Stefan & Thema, Johannes & Mzavanadze, Nora & Hauptstock, Dorothea & Suerkemper, Felix & Teubler, Jens & Gupta, Mukesh & Chatter, 2016. "Measuring multiple impacts of low-carbon energy options in a green economy context," Applied Energy, Elsevier, vol. 179(C), pages 1409-1426.
    4. Worrell, Ernst & Laitner, John A & Ruth, Michael & Finman, Hodayah, 2003. "Productivity benefits of industrial energy efficiency measures," Energy, Elsevier, vol. 28(11), pages 1081-1098.
    5. Hallward-Driemeier, Mary & Wallsten, Scott & Lixin Colin Xu, 2003. "The investment climate and the firm : firm-level evidence from China," Policy Research Working Paper Series 3003, The World Bank.
    6. Kalantzis, F. & Revoltella, D., 2019. "Do energy audits help SMEs to realize energy-efficiency opportunities?," Energy Economics, Elsevier, vol. 83(C), pages 229-239.
    7. Trianni, Andrea & Cagno, Enrico & Worrell, Ernst, 2013. "Innovation and adoption of energy efficient technologies: An exploratory analysis of Italian primary metal manufacturing SMEs," Energy Policy, Elsevier, vol. 61(C), pages 430-440.
    8. Accordini, D. & Cagno, E. & Trianni, A., 2021. "Identification and characterization of decision-making factors over industrial energy efficiency measures in electric motor systems," Renewable and Sustainable Energy Reviews, Elsevier, vol. 149(C).
    9. Christopoulos, Dimitris K. & Tsionas, Efthymios G., 2004. "Financial development and economic growth: evidence from panel unit root and cointegration tests," Journal of Development Economics, Elsevier, vol. 73(1), pages 55-74, February.
    10. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
    11. Nehler, Therese, 2018. "Linking energy efficiency measures in industrial compressed air systems with non-energy benefits – A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 89(C), pages 72-87.
    12. Hao, Yu & Zhang, Zong-Yong & Yang, Chuxiao & Wu, Haitao, 2021. "Does structural labor change affect CO2 emissions? Theoretical and empirical evidence from China," Technological Forecasting and Social Change, Elsevier, vol. 171(C).
    13. Giovanni Cerulli, 2014. "ivtreatreg: A command for fitting binary treatment models with heterogeneous response to treatment and unobservable selection," Stata Journal, StataCorp LP, vol. 14(3), pages 453-480, September.
    14. Wu, Haitao & Hao, Yu & Ren, Siyu & Yang, Xiaodong & Xie, Guo, 2021. "Does internet development improve green total factor energy efficiency? Evidence from China," Energy Policy, Elsevier, vol. 153(C).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kalantzis, Fotios & Dominguez, Sofia, 2022. "Are EU firms climate-ready? Micro evidence from EIBIS," EIB Working Papers 2022/08, European Investment Bank (EIB).
    2. Heru Wahyudi & Widia Anggi Palupi, 2023. "Relationship between Energy Consumption, Foreign Direct Investment, and Labor Force Participation Using the VECM Model: Empirical Study in OECD Countries," International Journal of Energy Economics and Policy, Econjournals, vol. 13(2), pages 157-165, March.
    3. Armenia Androniceanu & Ioana-Catalina Enache & Elena-Narcisa Valter & Florin-Felix Raduica, 2023. "Increasing Energy Efficiency Based on the Kaizen Approach," Energies, MDPI, vol. 16(4), pages 1-24, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kalantzis, Fotios & Niczyporuk, Hanna, 2021. "Can European businesses achieve productivity gains from investments in energy efficiency?," EIB Working Papers 2021/07, European Investment Bank (EIB).
    2. Fábio de Oliveira Neves & Henrique Ewbank & José Arnaldo Frutuoso Roveda & Andrea Trianni & Fernando Pinhabel Marafão & Sandra Regina Monteiro Masalskiene Roveda, 2022. "Economic and Production-Related Implications for Industrial Energy Efficiency: A Logistic Regression Analysis on Cross-Cutting Technologies," Energies, MDPI, vol. 15(4), pages 1-19, February.
    3. Cagno, Enrico & Accordini, Davide & Trianni, Andrea & Katic, Mile & Ferrari, Nicolò & Gambaro, Federico, 2022. "Understanding the impacts of energy efficiency measures on a Company’s operational performance: A new framework," Applied Energy, Elsevier, vol. 328(C).
    4. Monjurul Hasan, A S M & Trianni, Andrea & Shukla, Nagesh & Katic, Mile, 2022. "A novel characterization based framework to incorporate industrial energy management services," Applied Energy, Elsevier, vol. 313(C).
    5. Daniela Artemisa Calu & Adriana Ana Maria Davidescu & Alina Mihaela Irimescu & Corina-Graziella Batca Dumitru & Viorel Avram, 2023. "Implementation of Energy Efficiency Improvement Measures in Romania and the Role of Professional Accountants," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 25(63), pages 479-479, April.
    6. Olsthoorn, Mark & Schleich, Joachim & Klobasa, Marian, 2015. "Barriers to electricity load shift in companies: A survey-based exploration of the end-user perspective," Energy Policy, Elsevier, vol. 76(C), pages 32-42.
    7. Nel, A.J.H. & Vosloo, J.C. & Mathews, M.J., 2018. "Financial model for energy efficiency projects in the mining industry," Energy, Elsevier, vol. 163(C), pages 546-554.
    8. Andrea Trianni & Davide Accordini & Enrico Cagno, 2020. "Identification and Categorization of Factors Affecting the Adoption of Energy Efficiency Measures within Compressed Air Systems," Energies, MDPI, vol. 13(19), pages 1-51, October.
    9. Therese Nehler, 2018. "A Systematic Literature Review of Methods for Improved Utilisation of the Non-Energy Benefits of Industrial Energy Efficiency," Energies, MDPI, vol. 11(12), pages 1-27, November.
    10. Accordini, D. & Cagno, E. & Trianni, A., 2021. "Identification and characterization of decision-making factors over industrial energy efficiency measures in electric motor systems," Renewable and Sustainable Energy Reviews, Elsevier, vol. 149(C).
    11. De Masi, G. & Giovannetti, G. & Ricchiuti, G., 2013. "Network analysis to detect common strategies in Italian foreign direct investment," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 392(5), pages 1202-1214.
    12. Elhanan Helpman, 2010. "Labor Market Frictions as a Source of Comparative Advantage, with Implications for Unemployment and Inequality," NBER Working Papers 15764, National Bureau of Economic Research, Inc.
    13. Alexandre Janiak & Paulo Santos Monteiro, 2011. "Inflation and Welfare in Long‐Run Equilibrium with Firm Dynamics," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 43(5), pages 795-834, August.
    14. Dennis, Allen & Shepherd, Ben, 2007. "Trade costs, barriers to entry, and export diversification in developing countries," Policy Research Working Paper Series 4368, The World Bank.
    15. Alexander Hijzen & Sébastien Jean & Thierry Mayer, 2011. "The effects at home of initiating production abroad: evidence from matched French firms," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 147(3), pages 457-483, September.
    16. Antoine Gervais, 2015. "Product quality, firm heterogeneity and trade liberalization," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 24(4), pages 523-541, June.
    17. Yuko Imura, 2023. "Reassessing Trade Barriers with Global Production Networks," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 51, pages 77-116, December.
    18. Andrew B. Bernard & J. Bradford Jensen & Stephen J. Redding & Peter K. Schott, 2018. "Global Firms," Journal of Economic Literature, American Economic Association, vol. 56(2), pages 565-619, June.
    19. Bettina Peters & Rebecca Riley & Iulia Siedschlag & Priit Vahter & John McQuinn, 2014. "Innovation and Productivity in Services: Evidence from Germany, Ireland and the United Kingdom," JRC Working Papers on Corporate R&D and Innovation 2014-04, Joint Research Centre.
    20. Qun Bao & Jiuli Huang & Yanling Wang, 2015. "Productivity and Firms’ Sales Destination: Chinese Characteristics," Review of International Economics, Wiley Blackwell, vol. 23(3), pages 620-637, August.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:energy:v:252:y:2022:i:c:s0360544222007812. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/energy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.