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We conduct a systematic and interdisciplinary review of empirical literature assessing evidence on induced innovation in energy and related technologies. We explore links between demand-drivers (both market-wide and targeted); indicators of innovation (principally, patents); and outcomes (cost reduction, efficiency, and multi-sector/macro consequences). We build on existing reviews in different fields and assess over 200 papers containing original data analysis. Papers linking drivers to patents, and indicators of cumulative capacity to cost reductions (experience curves), dominate the literature. The former does not directly link patents to outcomes; the latter does not directly test for the causal impact of on cost reductions. Diverse other literatures provide additional evidence concerning the links between deployment, innovation activities, and outcomes. We derive three main conclusions. (a) Demand-pull forces enhance patenting; econometric studies find positive impacts in industry, electricity and transport sectors in all but a few specific cases. This applies to all drivers—general energy prices, carbon prices, and targeted interventions that build markets. (b) Technology costs decline with cumulative investment for almost every technology studied across all time periods, when controlled for other factors. Numerous lines of evidence point to dominant causality from at-scale deployment (prior to self-sustaining diffusion) to cost reduction in this relationship. (c) Overall innovation is cumulative, multi-faceted, and self-reinforcing in its direction (path-dependent). We conclude with brief observations on implications for modelling and policy. In interpreting these results, we suggest distinguishing the economics of active deployment, from more passive diffusion processes, and draw the following implications. There is a role for policy diversity and experimentation, with evaluation of potential gains from innovation in the broadest sense. Consequently, endogenising innovation in large-scale models is important for deriving policy-relevant conclusions. Finally, seeking to relate quantitative economic evaluation to the qualitative socio-technical transitions literatures could be a fruitful area for future research.

Annual greenhouse gas (GHG) emissions from residential energy use in the United States peaked in 2005 at 1.26 Gt CO 2-eq yr −1 , and have since decreased at an average annual rate of 2% yr −1 to 0.96 Gt CO 2-eq yr −1 in 2019. In this article we decompose changes in US residential energy supply and GHG emissions over the period 1990–2015 into relevant drivers for four end-use categories. The chosen drivers encompass changing demographics, housing characteristics, energy end-use intensities, and generation efficiency and GHG intensity of electricity. Reductions in household size, growth in heated floor area per house, and increased access to space cooling are the main drivers of increases in energy and GHG emissions after population growth. Growing shares of newer homes, and reductions in intensity of energy use per capita, household, or floor area have produced moderate primary energy and GHG emission reductions, but improved generation efficiency and decarbonization of electricity supply have brought about far bigger primary energy and GHG emission reductions. Continued decline of residential emissions from electrification of residential energy and decarbonization of electricity supply can be expected, but not fast enough to limit climate change to 1.5 °C warming. US residential final energy demand will therefore need to decline in absolute terms to meet such a target. However, without changes in the age distribution, type mix, or average size of housing, improvements in energy efficiency are unlikely to outweigh growth in the number of households from population growth and further household size reductions.

Car owners underestimate total vehicle costs. Giving consumers this information could encourage the switch to cleaner transport and reduce emissions. Running a car costs much more than you think Car owners underestimate total vehicle costs. Giving consumers this information could encourage the switch to cleaner transport and reduce emissions.

This study examines how messaging approaches in a prosocial intervention can influence not only the effectiveness of the intervention but also, contagion afterward. Our investigation focuses on leveraging two motivations for solar adoption: self-interest and prosocial. Using data from a natural field experiment in 29 municipalities containing 684,000 people, we find that selfinterest messaging is twice as effective in inducing solar adoption both during and after the intervention. Adoptions under self-interest messaging have 10% higher net present value, but prosocial messaging increases the likelihood that adopters recommend solar to their friends and neighbors. Income moderates the effectiveness of self-interest messaging, performing much better in high-income communities than low- and moderate-income communities. There was no significant difference across income groups for prosocial messaging. These results provide guidance to policy makers aiming to encourage prosocial behavior across all income groups.

Studies across multiple disciplines demonstrate the importance of peers in shaping energy-related behaviours. Research on this process is wide ranging, from documenting spatial peer effects in the adoption of rooftop solar—when an individual’s behaviour is influenced by the behaviours of neighbours—to showing how neighbour comparisons can be used to reduce household electricity consumption. However, gaps exist in our understanding of how and why these peer effects occur. In this Review, we examine recent findings on social influence in energy behaviour and discuss pathways through which social influence can result in peer effects. We propose a conceptual framework for predicting which social influence processes will most often result in peer effects, depending on the targeted energy behaviour. We also review the limitations of social influence as well as evidence for when it is expected to be the strongest. Household energy behaviours are influenced by the behaviour of others. In this Review, the authors review recent findings on social influence in energy consumption and technology adoption and discuss pathways through which social influence can result in peer effects.

Social interactions are widely understood to influence consumer decisions in many choice settings. This paper identifies causal peer effects in residential water conservation during the summer using variation from movers. We classify high-resolution remote sensing images to provide evidence that conversions of green landscaping to dry landscaping are a primary determinant of the reductions in water consumption. We also find suggestive evidence that without a price signal, peer effects are muted, indicating a possible complementarity between information and prices. These results inform water use policy in many areas of the world threatened by recurring drought conditions.

Advice to the Biden administration as it seeks to account for mounting losses from storms, wildfires and other climate impacts. Advice to the Biden administration as it seeks to account for mounting losses from storms, wildfires and other climate impacts.

A central question in the analysis of fuel economy policy is whether consumers are myopic with regards to future fuel costs. We provide the first evidence on the consumer valuation of fuel economy from a natural experiment that provides exogenous variation in fuel economy ratings. We examine the short-run equilibrium effects of a restatement of fuel economy ratings that affected 1.6 million vehicles. Using the implied changes in willingness to pay, we find that consumers act myopically: consumers are indifferent between $1.00 in discounted fuel costs and $0.16–0.39 in the purchase price when discounting at 4 percent. This undervaluation persists under a wide range of assumptions.

Roughly three quarters of vehicles are purchased into multi-car households. We study whether households are willing to substitute attributes, such as fuel economy, across vehicles within their portfolio. We develop a novel strategy to separately identify idiosyncratic preferences for an attribute from these within-portfolio effects. Using the universe of household vehicle registration records in California over a 6-year period, we find that two-car households exhibit strong substitution across vehicles when faced with an exogenous change to fuel intensity of a kept vehicle. This effect can erode a substantial portion of the benefit from major policies, such as Cash-for-Clunkers.

Letter to the Editor