Serena Pontoglio’s research while affiliated with European Research Council and other places

In this article, the effects of environmental policy instruments on technological innovation are examined as investigated in four literatures: theoretical models, econometric studies, technology case studies, and surveys of firms. Results from these literatures are compared and discussed in an attempt to reach synthesized conclusions. One important conclusion is that the effects of the instruments depend on the way in which they are used and the context of application. Another important finding is that the influence on innovation of market-based instruments (such as emission trading and taxes) is far weaker than assumed.

This paper discusses the innovative potential and outcomes of a specific policy instrument, the European Union Emission trading Scheme (EU ETS). EU ETS is the cornerstone of the European climate policy and it was introduced in 2005 with Directive 2003/87. It can be considered the biggest example of an emissions permit scheme compared to previous experiences. The focus is set on the design of the scheme and on cap-stringency. EU ETS design aspects have been scrutinized with respect to their influence on the development and introduction of low-carbon technologies following the indications of the theory on tradable permits and the lessons learnt from past experiences. A micro-level analysis of the innovative and non-innovati ve response to the EU ETS is realized through a case study concerning the Italian paper industry, which is one of the energy-intensive sectors included in EU ETS. The Italian paper industry has been chosen as sample to analyse the effects of the application of EU ETS and to identify the patterns of the compliance strategies adopted by operators. The analysis of the general performance of the scheme and of the response strategies adopted in the paper industry provides a comprehensive picture of EU ETS potentials for the development and diffusion of environmental innovations in the field of low- carbon technologies and on the factors influencing this process during Phase I.