Trends, Investment Behaviour and Policy Design
Edited by Raymond J.G.M. Florax, Henri L.F. de Groot and Peter Mulder
Economic development and increasing prosperity around the globe go hand in hand with a continuous surge in the demand for energy. This increase in the demand for energy has profound implications for energy security and climate change, and it also raises questions regarding the sustainability of economic development itself. The need to maximize efficiency in usage of limited and often non-renewable resources has been at the centre of a substantive collection of applied research in energy economics, and has caught the attention of policy-makers. The mitigation of the adverse effects of increasing energy consumption through the promotion of efficient energy usage is associated with large investments in new energy-saving technologies, both in the energy sector as well as in the various end-use sectors. One would suspect that continuously rising energy prices cause firms to adopt such technologies instantaneously upon availability. However, this is often not the case. This phenomenon constitutes a rather fascinating paradox, which is generally known as the ‘energy-efficiency paradox’: even although energy-efficient technologies are available and cost-effective, producers are reluctant to adopt such technologies. The paradoxical phenomenon occurs in energyintensive sectors, such as aluminium, chemicals, paper and steel industries, but also in energy-extensive sectors of the economy such as the light industry and the service sector. The latter sectors are of vital importance when it comes to meeting ambitious energy usage and associated CO2 emission targets, for instance in relation to worldwide climate change concerns. The energy-extensive sectors are responsible for no less than 20 per cent...