The aim of this paper is the econometric analysis of embodied and induced technological change that reduces energy input and
CO2 emissions in production. For this purpose, a model of unit costs and factor demand for 35 industries in 23 EU countries
has been set up, based on the World Input-Output Database (WIOD). The deterministic trend usually applied for describing the
factor bias for energy is replaced by a mixed term of energy efficiency of physical production capacity and a trend in three
energy intensive industries. This new variable for energy saving technological change is linked to the vintage structure of
installed capital. By this link technological change becomes induced, if capital and energy are substitutes. If energy and
capital are complements, this technological change can only be enforced by measures that accelerate the path of renovating
the capital stock. Within the three energy intensive industries we identify one, where induced technological change is energy
saving, but energy and capital are complements (pulp and paper), one where energy and capital are very weak substitutes, but
technological change is energy using (non-metallic minerals) and one, where energy and capital are substitutes and technological
change is energy saving (basic metals). Only in this latter case, price induced technological change can contribute significantly
to fossil energy and emission reduction.
Forschungsbereich:Klima-, Umwelt- und Ressourcenökonomie – Makroökonomie und öffentliche Finanzen