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Innovation and Diffusion of Environmental Technology: Industrial NOx Abatement in Sweden under Refunded Emission Payments

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  • Last Name, First Name

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Abstract

In this paper we study the process of technical change in the case of pollution abatement from large stationary sources that have been regulated by a very forceful refunded emission payment policy. Thanks to the high costs of emitting nitrogen oxides (NOx), considerable progress has been made in lowering aggregate emissions. This paper seeks to disaggregate average industry improvements to study how much of it is due to innovation (improvement of best practice through investments as well as learning by doing) and how much is due to the spread and adoption of technology. We find both factors very important. Innovation has been rapid: the best firms have cut emissions on the order of 70 percent. Nevertheless, reductions have been even more rapid for the majority of firms, such that the disparity in emission coefficients has also been reduced significantly as the median firms have caught up with best practice.

Suggested Citation

  • Last Name, First Name, 2008. "Innovation and Diffusion of Environmental Technology: Industrial NOx Abatement in Sweden under Refunded Emission Payments," Discussion Papers dp-08-02, Resources For the Future.
  • Handle: RePEc:rff:dpaper:dp-08-02
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    References listed on IDEAS

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    1. Jaffe Adam B. & Stavins Robert N., 1995. "Dynamic Incentives of Environmental Regulations: The Effects of Alternative Policy Instruments on Technology Diffusion," Journal of Environmental Economics and Management, Elsevier, vol. 29(3), pages 43-63, November.
    2. Gersbach, Hans & Requate, Till, 2004. "Emission taxes and optimal refunding schemes," Journal of Public Economics, Elsevier, vol. 88(3-4), pages 713-725, March.
    3. Parry, Ian W. H., 1995. "Optimal pollution taxes and endogenous technological progress," Resource and Energy Economics, Elsevier, vol. 17(1), pages 69-85, May.
    4. Fischer, Carolyn & Parry, Ian W. H. & Pizer, William A., 2003. "Instrument choice for environmental protection when technological innovation is endogenous," Journal of Environmental Economics and Management, Elsevier, vol. 45(3), pages 523-545, May.
    5. Isaksson, Lena Hoglund, 2005. "Abatement costs in response to the Swedish charge on nitrogen oxide emissions," Journal of Environmental Economics and Management, Elsevier, vol. 50(1), pages 102-120, July.
    6. Downing, Paul B. & White, Lawrence J., 1986. "Innovation in pollution control," Journal of Environmental Economics and Management, Elsevier, vol. 13(1), pages 18-29, March.
    7. Sterner, Thomas & Hoglund Isaksson, Lena, 2006. "Refunded emission payments theory, distribution of costs, and Swedish experience of NOx abatement," Ecological Economics, Elsevier, vol. 57(1), pages 93-106, April.
    8. Fredriksson, Per G. & Sterner, Thomas, 2005. "The political economy of refunded emissions payment programs," Economics Letters, Elsevier, vol. 87(1), pages 113-119, April.
    9. Jung, Chulho & Krutilla, Kerry & Boyd, Roy, 1996. "Incentives for Advanced Pollution Abatement Technology at the Industry Level: An Evaluation of Policy Alternatives," Journal of Environmental Economics and Management, Elsevier, vol. 30(1), pages 95-111, January.
    10. Milliman, Scott R. & Prince, Raymond, 1989. "Firm incentives to promote technological change in pollution control," Journal of Environmental Economics and Management, Elsevier, vol. 17(3), pages 247-265, November.
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    More about this item

    Keywords

    nitrogen oxides; NOx; R&D; innovation; technology diffusion; environmental policy instrument; technical change;

    JEL classification:

    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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