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Information Programs for Technology Adoption: The Case of Energy-Efficiency Audits

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Author Info
Newell, Richard () (Resources for the Future)
Anderson, Soren

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Abstract

We analyze technology adoption decisions of manufacturers in response to energy audits provided by Department of Energy Industrial Assessment Centers. Using fixed effects logit estimation to control for unobserved plant characteristics, we find that plants respond as expected to financial costs and benefits, though there are unmeasured project-related factors that also influence investment decisions. Revealed behavior of plants suggests that most require a payback of 15 months or less as their investment threshold, corresponding to an 80% or greater hurdle rate. This is consistent with survey results for stated investment thresholds, suggesting that these programs do not lower hurdle rates, as some suggest. Plants reject about half of recommended projects; the primary rationale given is their economic undesirability, as opposed to remaining market or organizational barriers. This raises concerns regarding engineering-economic estimates of the degree to which there are feasible no-net-cost opportunities for reducing energy consumption and carbon emissions.

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Paper provided by Resources For the Future in its series Discussion Papers with number dp-02-58.

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Date of creation: 01 Sep 2002
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Handle: RePEc:rff:dpaper:dp-02-58

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Related research
Keywords: energy efficiency; information; technology adoption; energy audits; Municipal Solid Waste; Recycling; Inventory; Optimization;

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Find related papers by JEL classification:
Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply
Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes
O38 - Economic Development, Technological Change, and Growth - - Technological Change - - - Government Policy
Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation

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  1. Technology Assessment
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Stephen J. Decanio & William E. Watkins, 1998. "Investment In Energy Efficiency: Do The Characteristics Of Firms Matter?," The Review of Economics and Statistics, MIT Press, vol. 80(1), pages 95-107, February. [Downloadable!] (restricted)
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  2. Henry Ruderman & Mark D. Levine & James E. McMahon, 1987. "The Behavior of the Market for Energy Efficiency in Residential Appliances Including Heating and Cooling Equipment," The Energy Journal, International Association for Energy Economics, vol. 8(1), pages 101-124.
  3. Richard G. Newell & Adam B. Jaffe & Robert N. Stavins, 1999. "The Induced Innovation Hypothesis And Energy-Saving Technological Change," The Quarterly Journal of Economics, MIT Press, vol. 114(3), pages 941-975, August. [Downloadable!] (restricted)
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  4. Jerry A. Hausman, 1979. "Individual Discount Rates and the Purchase and Utilization of Energy-Using Durables," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 33-54, Spring. [Downloadable!] (restricted)
  5. Tonn, Bruce & Martin, Michaela, 2000. "Industrial energy efficiency decision making," Energy Policy, Elsevier, vol. 28(12), pages 831-843, October. [Downloadable!] (restricted)
  6. Jaffe, Adam B. & Stavins, Robert N., 1994. "The energy paradox and the diffusion of conservation technology," Resource and Energy Economics, Elsevier, vol. 16(2), pages 91-122, May. [Downloadable!] (restricted)
  7. Brown, Marilyn A. & Levine, Mark D. & Short, Walter & Koomey, Jonathan G., 2001. "Scenarios for a clean energy future," Energy Policy, Elsevier, vol. 29(14), pages 1179-1196, November. [Downloadable!] (restricted)
  8. Chamberlain, Gary, 1980. "Analysis of Covariance with Qualitative Data," Review of Economic Studies, Blackwell Publishing, vol. 47(1), pages 225-38, January. [Downloadable!] (restricted)
  9. Lefley, Frank, 1996. "The payback method of investment appraisal: A review and synthesis," International Journal of Production Economics, Elsevier, vol. 44(3), pages 207-224, July. [Downloadable!] (restricted)
  10. DeCanio, Stephen J., 1993. "Barriers within firms to energy-efficient investments," Energy Policy, Elsevier, vol. 21(9), pages 906-914, September. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Fuerst, Franz & McAllister, Patrick, 2008. "Green Noise or Green Value? Measuring the Price Effects of Environmental Certification in Commercial Buildings," MPRA Paper 11446, University Library of Munich, Germany, revised Sep 2008. [Downloadable!]
    Other versions:
  2. Stavins, Robert & Jaffe, Adam & Newell, Richard, 2004. "A Tale of Two Market Failures: Technology and Environmental Policy," Discussion Papers dp-04-38, Resources For the Future. [Downloadable!]
    Other versions:
  3. Hammar, Henrik & Löfgren, Åsa, 2007. "Explaining adoption of end of pipe solutions and clean technologies," Working Paper 102, National Institute of Economic Research. [Downloadable!]
  4. Joshua Linn, 2006. "Energy Prices and the Adoption of Energy-Saving Technology," Working Papers 0612, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research. [Downloadable!]
    Other versions:
  5. Stavins, Robert N. & Jaffe, Judson & Schatzki, Todd, 2007. "Too Good to Be True? Three Economic Assessments of California Climate Change Policy," Discussion Papers dp-07-12, Resources For the Future. [Downloadable!]
  6. Okay, Nesrin & Konukman, Alp Er S. & Akman, Ugur, 2009. "Analysis of Innovation and Energy Profiles in the Turkish Manufacturing Sector," MPRA Paper 16344, University Library of Munich, Germany, revised 13 Aug 2009. [Downloadable!]
  7. Isamu Matsukawa, 2005. "The Benefits of Information on the Efficient Usage of Consumer Durables," Others 0501005, EconWPA. [Downloadable!]
  8. Stavins, Robert & Jaffe, Judson & Schatski, Todd, 2007. "Too Good to Be True? An Examination of Three Economic Assessments of California Climate Change Policy," Working Paper Series rwp07-016, Harvard University, John F. Kennedy School of Government. [Downloadable!]
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  9. Théophile T. Azomahou & Raouf Boucekkine & Phu Nguyen-Vanc, . "Promoting Clean Technologies: The Energy Market Structure Crucially Matters," Working Papers 2008_13, Department of Economics, University of Glasgow. [Downloadable!]
    Other versions:
  10. Okay, Nesrin & Akman, Ugur, 2009. "Analysis of ESCO Activities Using Country Indicators," MPRA Paper 17012, University Library of Munich, Germany. [Downloadable!]
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