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Dissecting environmental efficiency: The role of technology adoption and usage

Author

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  • Belloc, Filippo
  • Valentini, Edilio

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 (what type of technology is used) and a technology usage component (how 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.

Suggested Citation

  • Belloc, Filippo & Valentini, Edilio, 2024. "Dissecting environmental efficiency: The role of technology adoption and usage," Journal of Economic Behavior & Organization, Elsevier, vol. 228(C).
    • Handle: RePEc:eee:jeborg:v:228:y:2024:i:c:s0167268124003901
    DOI: 10.1016/j.jebo.2024.106776
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    More about this item

    Keywords

    Environmental efficiency; Technology adoption; Technology usage; Mixture models;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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