New CIES research by Joelle Noailly and Jules-Daniel Wurlod finds a positive impact of green innovation on the energy intensity of industrial sectors.
The research is part of the Energy-Economic-Society research programme financed by the Swiss Federal Office of Energy (SFOE).

This paper analyzes the impact of green patenting activities on the energy intensity of 14 industrial sectors in 18 OECD countries over the 1975-2005 period. The objective is to clarify empirically the role of green technologies on the decline in energy intensity at the sector level. Our results show that an increase in green patenting activities is associated with a reduction in energy intensity in most of the sectors in our sample: a 1% increase in green patenting activities in a given sector is associated with a 0.03% decline in energy intensity at the median. Interestingly, we find a statistically significant impact in all energy intensive industries, such as for instance “Manufacturing of coke, refined petroleum production”, “Chemicals”, “Rubber
and plastics”, “Non-metallic minerals” and “Metals”. By contrast, sectors with a relatively low cost share of energy (e.g. “Textiles”) do not seem to benefit much from green patenting activities.
While predicted energy intensity decreased by 16% at the median
between 1980 and 2005, we find that input substitution and technological change are found to contribute to a proportion of 50:50 to this decline. Within the estimated contribution of technology, 1/3 can be attributed to green patented innovation, 1/3 to nongreen innovation, and 1/3 to autonomous technical change.
In the context of Switzerland, our results underline that policy initiatives aiming to encourage green innovation such as the “Action plan for coordinated energy research” which sets innovative research and development as one of the main pillars of the new energy strategy will effectively contribute to improve the energy efficiency of production processes in Swiss industries.
Besides green innovation, our results also emphasize an equally important role for input substitution in explaining the observed decline in energy intensity per sector. This implies that rising energy prices lead firms to substitute energy for other inputs in their production processes. Hence, public policies putting a higher price on energy, such as current proposals in the Energy Strategy 2050, are also likely to yield important energy efficiency gains.

The report is now available on the SFOE website and as a CIES Research Paper No42.