How do policies for efficient energy use in the household sector induce energy-efficiency innovation? An evaluation of European countries

Research on innovation induced by climate-mitigation policy has been focused predominantly on the supply side of the energy system. Despite considerable climate-mitigation potential on the demand side, less attention is given to the innovation effect of policies addressing the household sector. Based on a comprehensive data set, including 550 policy measures over 30 years (1980-2009) and covering 21 European countries, we find based on econometric estimations that policies targeting efficient energy use in the household sector significantly increase the number of patented energy-efficiency inventions. A comparison of the different policy types reveals a particularly strong influence from financial subsidies and energy labels. The results indicate that policies supporting early market adoption of energy-efficient technologies are effective in fostering innovation.