Energy efficient and low-carbon technology in process industries: Innovation, diffusion and the role of public policy

This paper addresses the role of public policy in influencing technological innovation and diffusion in the energy-intensive process industries (e.g., pulp and paper, iron and steel etc.). We highlight in particular technologies that either reduce the industry's energy use or imply lower process emissions of carbon dioxide. This research scope is motivated due both to its societal relevance and the fact that it raises a number of important scientific challenges and controversies. Specifically, the paper discusses the role of two different theoretical perspectives for orienting the analysis of issues in technology policy: the neoclassical and the evolutionary approaches. The overall objectives of the paper are to: (a) provide a conceptual comparison of these theoretical approaches and their implications for the role and the design of policy intervention; and (b) discuss some relevant implications for spurring innovation processes by examining the experiences of two existing policies and one future technological challenge (CCS) in the Swedish process industries.