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Dissecting environmental efficiency: The role of technology adoption and usage

Year: 2024

Type: article

Abstract: How could firms best reduce their environmental impact? Should they change technology? Or could they do better with what they already have? This paper shows that one size does not fit all. We analyse a sample of polluting production plants (i.e. installations) regulated under the EU Emission Trading System. We employ a mixture model estimation to dissect environmental efficiency into a technology adoption component ( w h a t type of technology is used) and a technology usage component ( h o w a technology is used). Our installation-level analysis shows that the share of installations adopting frontier technologies is about 21%. We also find that the average environmental efficiency gains that installations could reach by improving technology adoption and technology usage are 75% and 80% respectively. The analysis of balance-sheet data on parent companies reveals that better environmental technologies are adopted by larger, listed, multi-installation and international companies, while older firms and firms with higher intangible assets intensity more commonly show improved technology usage.

Source: Journal of Economic Behavior & Organization

DOI: 10.1016/j.jebo.2024.106776

Authors: Filippo Belloc, Edilio Valentini

Institutions: University of Siena, University of Chieti-Pescara

Language: English

Topic: Efficiency Analysis Using DEA

Subfield: Management Science and Operations Research

Field: Decision Sciences

Domain: Social Sciences

SDGs: Responsible consumption and production, Climate action, Industry, innovation and infrastructure, Affordable and clean energy

Open Access status: hybrid

Estimated APC paid: $2,770