Environmental Policy Instruments and Technological Change in the Energy Sector: Findings from Comparative Empirical Research

This article explores the extent to which and in what ways environmental policy instruments may affect patterns of environmental friendly technological change in the energy sector. Our argument is based on the assumption, however, that technological change is also affected by the political context in which the instruments are applied and by the nature of the problem itself. Comparative empirical research involving different European countries, sectors and policy fields were examined, including climate change, air pollution and wind power. The relationship between environmental policy instruments and technological change is extremely complex, not least due to the impact of other factors that may be more decisive than environmental ones. Against this backdrop, it was concluded that: 1) a portfolio of policy instruments works to the extent that different types of policy instruments affect the different drivers and stages behind technological change needed to solve specific problems. The need for a portfolio of policy instruments depends on the technological challenge being faced; 2) voluntary approaches facilitated constructive corporate strategies, but mandatory approaches tended to be more effective in stimulating short term major technological change; 3) voluntary approaches work well in the short term when the problem to be solved is characterized by lack of information and coordination.