The Effects of Resource Efficiency on Competitiveness and Climate Change Mitigation: The Role of Investments

Abstract

There is growing evidence that resource efficiency can be beneficial for boosting competitiveness and mitigating climate change. However, the majority of relevant studies either rely on case studies or suffer from methodological shortcomings. This chapter critically reviews the existing evidence base on the effects of resource efficiency on (firm and country level) competitiveness and climate change mitigation objectives. The concept of competitiveness is reviewed in detail followed by a discussion on the channels linking resource efficiency, competitiveness, and climate change. Furthermore, this chapter describes new empirical evidence on the effects of resource efficiency on competitiveness and greenhouse gas (GHG) emissions at the country and firm level in the European Union. The results provide a nuanced picture. On the one hand, there appears to be only limited evidence for a link at the country level. On the other hand, particular firms that have increased their resource efficiency as a result of investments in eco-innovations can realise positive competitiveness effects and simultaneously reduce their GHG emissions. This suggests that resource efficiency investments can reconcile competitiveness with climate change mitigation objectives for certain firms, in particular those that invested in eco-innovations. Important policy insights can be distilled from these results, including that not all firms are likely to benefit from resource efficiency improvements, and that investments in eco-innovations can play a crucial role in bringing about the resource transition.