Relative Importance of different Climate Policy Elements for Corporate Climate Innovation Activities

This research paper analyzes the relative importance of various climate policy elements—specifically the EU Emission Trading System (EU ETS) and long-term climate policy targets—on the investment decisions of European power sector companies. Based on a 2009 survey of 65 power generators and 136 technology providers, the study examines two dimensions of innovation: the adoption of new plants and research, development, and demonstration (RD&D) activities. The findings indicate that climate policies are generally less influential than market factors and technology-specific regulations, though long-term targets are particularly critical for the RD&D activities of technology providers.

• Climate policy elements are generally rated as less relevant than other business environment factors for corporate investment decisions. For power generators, market prices for fuels and electricity, as well as technology-specific regulations like feed-in tariffs, are the most relevant factors. Technology providers also identify technology-specific regulation as the decision factor with the highest relevance for both sales and RD&D.
• There is a distinct difference in how power generators and technology providers perceive the relevance of the EU ETS versus long-term climate policy targets. Technology providers view long-term targets as significantly more relevant than the EU ETS for both RD&D and product demand. In contrast, power generators see the EU ETS as slightly more relevant for the adoption of new plants, while long-term targets are slightly more relevant for RD&D, though these differences are not statistically significant.
• The relevance of long-term climate policy targets is highly correlated with other policy elements, but the nature of this relationship differs by actor. For power generators, long-term targets correlate strongly with the EU ETS but not with technology-specific support policies. For technology providers, long-term targets are highly correlated with both the EU ETS and technology-specific support policies regarding sales and RD&D.
• A company's technology portfolio has a limited impact on the perceived relevance of climate policies for power generators, suggesting lower path dependency than typically assumed. However, for technology providers, the product portfolio significantly affects the relevance of technology-specific policies: firms with a higher share of sales in fossil-fuel based power generation assign lower relevance to these policies.
• Power generators' expectations for CO2 prices are higher for 2020 than for 2012, though certainty regarding the 2020 price is lower. There is a correlation between the relevance assigned to the EU ETS for new plant investments and the combination of higher long-term CO2 price expectations and higher certainty about those expectations.
• The Clean Development Mechanism (CDM) is consistently rated as the least important factor across all actor groups and investment dimensions.

APA

Rogge, K. S., Schmidt, T. S., & Schneider, M. (2011). Relative Importance of different Climate Policy Elements for Corporate Climate Innovation Activities. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2011/12/Relative-Importance-of-Policy-Elements.pdf

Chicago

Rogge, Karoline S., Tobias S. Schmidt, and Malte Schneider. Relative Importance of different Climate Policy Elements for Corporate Climate Innovation Activities. Climate Policy Initiative, 2011. https://www.climatepolicyinitiative.org/wp-content/uploads/2011/12/Relative-Importance-of-Policy-Elements.pdf.

Wikipedia

{{cite report |last1=Rogge |first1=Karoline S. |last2=Schmidt |first2=Tobias S. |last3=Schneider |first3=Malte |title=Relative Importance of different Climate Policy Elements for Corporate Climate Innovation Activities |publisher=Climate Policy Initiative |date=January 2011 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2011/12/Relative-Importance-of-Policy-Elements.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rogge2011relative, author = {Rogge, Karoline S. and Schmidt, Tobias S. and Schneider, Malte}, title = {{Relative Importance of different Climate Policy Elements for Corporate Climate Innovation Activities}}, institution = {Climate Policy Initiative}, year = {2011}, month = jan, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2011/12/Relative-Importance-of-Policy-Elements.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }