The Effect of Within-Sector, Upstream and Downstream Energy Taxes on Innovation and Productivity

Energy efficiency technologies represent a key driver for the reduction of the energy demand, leading to environmental and economic benefits. This aspect appears to be particularly relevant in the residential sector, where the demand for energy has not showed a decreasing trend over the last two decades. Our study provides a wide-ranging empirical analysis of the drivers of innovation in energy efficiency technologies by looking at the residential sector for a comprehensive panel of 23 OECD countries over the 1990-2010 period. It confirms the importance of adopting a systemic perspective when eco-innovation is under scrutiny. In particular, the innovation system, both national and sectoral, together with the environmental and the energy systems, spurred the propensity to innovate and significantly shaped the rate and direction of technical change in the residential sector. A general policy inducement effect is found to be relevant, but the size of its contribution for new EE technologies changes if disaggregated policy instruments are investigated. We note a positive and significant impact not only driven by standard regulations, but also by policies aimed at improving the level of consumers' information and awareness. These evidences lead to noteworthy policy implications and suggest the way to further develop research in this field.