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Factors of Energy Transition of Manufacturing Companies Regarding their Inclusion in Global Value Chains

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  • Mikhail G. Kuzyk
  • Liudmila S. Ruzhanskaya

Abstract

Environmental problems, the results of structural changes in the world economy and technological progress set forth the task of finding factors that stimulate the transition from the continuous growth of energy consumption to decarbonization and energy transition. The aim of the article is to empirically analyze the factors of companies' energy transition policies in different countries of the world, considering the functioning of global value chains (GVCs). The database is sourced from a survey of representatives of more than 15,000 manufacturing companies conducted by the World Bank Group in 2018-20 in 40 countries. The novelty of the analytical research framework proposed in the paper lies in the integrated presentation of factors which are external and internal to firms that influence decisions on energy transition policies and strategies. Descriptive statistics and econometric modeling revealed the presence of energy efficiency and energy transition policy elements in more than 2/3 of the sampled companies with a focus on energy efficiency, reflecting a desire to reduce related costs. Firms' use of fossil fuels is a driver of energy transition. Two alternative energy transition strategies of firms are found: the first emphasizes energy efficiency plans and actions, while the second involves a shift to carbon neutrality. High country income levels deter firms from energy efficiency decisions but incentivize the implementation of carbon emission reduction strategies. The level of environmental efficiency of countries has a positive impact on the "immersion" of their companies in the energy transition agenda. Companies' participation in the GVCs is generally positively associated with the presence of energy efficiency and energy transition policy elements. Government tax regulation and consumer demand are important factors in companies' commitment to energy efficiency and energy transition policies. Signs of the diffusion of incentives to implement energy transition policies along production chains are also identified. The results can be used in the development of industrial policy.

Suggested Citation

  • Mikhail G. Kuzyk & Liudmila S. Ruzhanskaya, 2024. "Factors of Energy Transition of Manufacturing Companies Regarding their Inclusion in Global Value Chains," Journal of Applied Economic Research, Graduate School of Economics and Management, Ural Federal University, vol. 23(3), pages 642-673.
    • Handle: RePEc:aiy:jnjaer:v:23:y:2024:i:3:p:642-673
    DOI: https://doi.org/10.15826/vestnik.2024.23.3.026
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    More about this item

    Keywords

    energy transition; energy efficiency; energy consumption; carbon neutrality; fossil fuels; renewable energy; global value chains;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • F61 - International Economics - - Economic Impacts of Globalization - - - Microeconomic Impacts

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