F.H. Oosterhuis

Survival of the greenest: evolutionary economics and policies for energy innovation

Abstract This paper aims to explore the possible contribution of evolutionary economics to environmental policy-making, in particular with respect to innovations in energy technology. Evolutionary economics offers insights into the mechanisms that underlie innovations, structural changes and transitions, therefore making it of great value in framing policies aimed at stimulating environmental innovations and transitions to sustainable development. The paper identifies ‘bounded rationality’, ‘diversity’, ‘innovation’, ‘selection’, ‘path dependency and lock-in’, and ‘co-evolution’ as the main concepts in evolutionary economics. These concepts are subsequently used to formulate guidelines for designing energy innovation policies. We evaluate current Dutch policies related to energy technologies against this background and examine the development of three particular energy technologies within the adopted evolutionary economics framework, namely fuel cells, nuclear fusion, and photovoltaic cells. We conclude that in order to incorporate the core concepts of evolutionary economics, governmental technology policies should focus more on the diversity of technologies, strategies and businesses, rather than on economic efficiency as the key goal. It is further found that evolutionary concepts conflicting with traditional growth objectives are rarely incorporated in Dutch energy innovation policies.

Supply and demand factors of Cleaner technologies: Some empirical evidence

This article identifies and analyzes factors that affect the willingness of firms and consumers to develop and adopt cleaner technologies. “Cleaner technologies” is used as a general term for pollution abatement technologies, re-use systems, and environmentally sound consumer products and materials. The article also contains the findings of three case studies on cleaner technologies (CFC substitutes, low-solvent paints and coatings, and membrane technology), in which the importance of the identified factors is investigated. From the case studies some general conclusions are drawn about these factors, and the way in which policy instruments can be used to stimulate innovation in and diffusion of cleaner technologies. No single policy instrument is considered to be optimal. Instead a policy mix is needed, involving a much wider use of economic instruments.

Evolutionary Economics and Environmental Policy

This study offers a unique evolutionary economics perspective on energy and innovation policies in the wider context of the transition to sustainable development.

Determining the environmental effects of indirect subsidies: integrated method and application to the Netherlands

The term ‘environmentally damaging subsidies’ covers all sorts of direct and indirect subsidies with negative consequences for the environment. This article presents a method to determine the environmental impact of these subsidies. It combines a microeconomic framework with an environmental impact module. The method is particularly useful for analysing indirect subsidies. These are often hidden, and therefore, not recognized as subsidies. Use of the method will provide a basis for formulating corrective policy. The method is applied to several important subsidies in the Netherlands, in agriculture, energy and transport sectors. The results reveal large environmental effects, which deserve serious attention from policy makers. To illustrate the specific features of the method, its application to a particular subsidy, namely the exemption of excise taxes on aviation fuels, is presented in full detail.

Assessment of cost recovery through water pricing

ion charges are in place in some EU Member States. They target households and industry. The agriculture sector often benefits from lower rates (ECOTEC, in ACTeon, 2009), and abstraction charges are nearly ubiquitous in the countries assessed in this study. In most cases, volumetric charging is applied. In the absence of metering systems, fixed charges per hectare are imposed. Exemptions from abstraction charges and taxes are common. Examples of exemption are regions or water bodies with a positive water balance and small water • Slovenia: — Rules of tariff system for public service on the environmental field (Pravilnik o metodologiji za oblikovanje cen storitev obveznih občinskih gospodarskih javnih služb varstva okolja, Official Gazette no. 63/2009, 87/2012). — Filippini, M. et al. (2010): Productivity growth and price regulation of Slovenian water; Zbornik radova Ekonomski fakultet Rijeka, vol. 28, no. 1, pp. 89–112 (see http://amala.rero.ch/record/20112). — Filippini, M., Hrovatin, N., Zorić, J. (2006): Cost Efficiency and Regulation of Slovenian Water Distribution Utilities: an Application of Stochastic Frontier Methods (see http://miha.ef.uni-lj.si/_dokumenti/wp/wp_filippini-hrovatin-zoric_ zadnja%20verzija.pdf). — Statistical Office of the Republic of Slovenia (SORS) (see http://www.stat.si/eng/drz_stat.asp). — Websites of various public utilities (see, for instance http://www.vo-ka.si/, http://www.rvk-jp.si/, http://www. komunala-ptuj.si/). • Croatia: — Water companies. — Price list documents/Official decision provided by Water management utility of Zagreb (see http://www.vio.hr/default. aspx?id=49; http://www.vio.hr/default.aspx?id=50; http://www.vio.hr/default.aspx?id=45). — Price list documents/Official decision provided by Water management utility of Rijeka (see http://www.kdvik-rijeka.hr/ default.asp?ru=97). — Price list documents/Official decision provided by Water management utility of Split (see http://www.vodovod-st.hr/ Servisneinformacije/Cijenavode/tabid/57/Default.aspx). • Serbia: — Water companies. — Price list documents/Official decision provided by Water management utility of Belgrade (see http://212.200.75.2/ cenovnikk.htm; http://212.200.75.2/download/odluka_o_ceni_04.08.2010_voda.pdf). — Price list documents/Official decision provided by Water management utility of Novi Sad (see http://www.podaci.net/_ zakon/_RS_LOKAL/propis/Odluka_o_utvrdjivanju/O-ucivuv92v1103.html). — Price list documents/Official decision provided by Water management utility of Niš (see http://www.jkpnaissus.co.rs/ index.php/usluge). — Price list documents/Official decision provided by Water management utility of Sremska Mitrovica (see http:// vodovodsm.rs/vodovod/wp-content/uploads/2012/10/CENE-VODE-U-OKRUZENJU-2012.pdf). — Price list documents/Official decision provided by Water management utility of Čoka (see http://www.coka.rs/sr/ opstina/privreda/jkp/planiranje.php). — Price list documents/Official decision provided by Water management utility of Bački Petrovac (see http://www. backipetrovac.rs/vesti/nove-cene-komunalnih-usluga-u-doo-gloakvalis.php). • Spain: — Confederación Hidrográfica del Ebro (2011) Propuesta de Proyecto de Plan Hidrológico de la Cuenca del Ebro. Memoria. Versión 3.7, Zaragoza, junio de 2011 (domestic and industrial water tariffs). — Aigües de Barcelona. Factura (see http://www.aiguesdebarcelona.cat/facturaagua) (domestic and industrial sanitation tariffs). — Ministerio de Medio Ambiente (2007) Precios y costes de los servicios del agua en España. Informe integrado de recuperación de costes de los servicios de agua en Espana. Articulo 5 y anejo III de la Directiva Marco de Agua (irrigation water).

Economic impacts of the EU ETS: preliminary evidence

This chapter, from a monograph on climate change and European emissions trading, addresses the economic impact of the European Union (EU) Emissions Trading Scheme (ETS). The authors compare the expectations and predictions that accompanied the introduction of the system with the actual results after the first three years of emissions trading. Topics include the impact of the ETS on production costs and competitiveness, trading patterns (between sectors and countries), and the extent to which the EU ETS leads to actual investments in emission reduction and innovations. After reminding readers that any conclusions are preliminary at this point, the authors contend that the ETS is actually influencing operational and strategic decisions of energy intensive industries in the EU. There are also strong indications that the EU ETS actually contributes to emission reductions and to investment in the development and application of new, low-carbon technology.

Policy Instruments to Stimulate Cleaner Technologies

We know a great deal about innovations that help save costs or that render superior services. The economics of the innovation and diffusion processes of such innovations have been studied quite extensively. Our knowledge, however, of the economic stimuli for innovations that help save the natural environment is rather limited. We know that such innovations depend to a large extent on government interventions. But how and to what extent government policy and different policy instruments affect firms’ and consumers’ willingness to develop and use cleaner innovations is quite unclear.

Lessons from the Southern Enlargement of the EU for the Environmental Dimensions of Eastern Enlargement, in particular for Poland

This paper analyses the environmental dimensions the past accession of Greece, Portugal and Spain to the EU in order to draw lessons for the current accession of countries of Central and Eastern Europe. A distinction is made between scale, composition and technique effects. Two major conclusions are drawn. First, the impacts of accession differed significantly among accession countries, due to economic, social, political and geographical factors. Second, the composition effect was relatively unimportant and the technique effect was positive due to the modernisation of production and the implementation of the environmental acquis. A negative scale effect dominated in the areas of consumption and transport. Accession also led to growing disparities at the regional level. At the time of accession, Greece, Portugal and Spain showed similarities with present-day Eastern European countries. Lessons from the southern enlargement are drawn for the current accession, in particular for Poland.

The Economics of Recycling

Abstract Recycling is generally considered an important strategy for alleviating the pressures of society on the environment while creating employment and attracting investments. In recent years, many countries have experienced large increases in recycling. This chapter aims to identify the main economic drivers of recycling, address the economic effects of recycling-related activities, and demonstrate the effectiveness of economic policies promoting recycling. The chapter demonstrates how recycling takes place in a volatile, dynamic, and globalizing world, which complicates the projections of future developments in the recycling sector. Moreover, the chapter describes which private and external costs of recycling-related activities need to be taken into account and how these effects can be valued in economic terms. Finally, the most important economic instruments to promote recycling are identified and explained.

An evolutionary economics perspective on industrial transformation

Core concepts of evolutionary economics are applied to the notion of industrial transformation, resulting in an innovative perspective on how to stimulate such a transformation. Evolutionary economics is first discussed at a general level, followed by a review of applications to environmental economic themes. Subsequently, an application of evolutionary economics to the energy system is presented.