Analysis and modeling of innovation factors to replace fossil fuels with renewable energy sources - Evidence from European Union enterprises

Abstract

In previous years, much research has been carried out to specify eco-innovations determinants. In most studies, eco-innovation was analyzed at a general level. From the perspective of climate change and the aim of achieving the Sustainable Development Goals and the European Green Deal objectives, the issue of innovations that replace the share of fossil fuel energy with renewable energy sources in the European Union appears to be particularly important. Therefore, this paper has two purposes. First, using a systematic literature review, it examines the key factors driving decisions taken by European Union enterprises to create innovations with environmental benefits. Second, it estimates the impact of these factors on introducing innovations that replace the share of fossil fuel energy with renewable energy sources. Specifically, using the logistic regression model, it analyses microdata from thirteen European Union Member States collected during the 2014 Community Innovation Survey. The effects show that six out of seven drivers under assessment positively affect the introduction of innovations that replace fossil fuel energy with renewable energy sources. These are (1) the high cost of energy, water, or materials, (2) environmental regulations or taxes expected in the future, (3) existing environmental taxes, charges, or fees, (4) government grants, subsidies, or other financial incentives for environmental innovations, (5) current or expected market demand for environmental innovations, and (6) voluntary actions or initiatives for good environmental practice within a sector.