Abstract:
Over the past decades, a growing body of research has examined the structural and behavioral barriers that hinder firms from adopting cost-effective technologies to improve energy efficiency. In this paper, we draw on firm-level data from the EIB Investment Survey combined with energy efficiency regulatory indicators from the World Bank's RISE database to analyse two key strategic decisions: firms' likelihood of investing in energy efficiency, and the share of total investment allocated to such measures. Accounting for self-selection into energy efficiency investments, we find that financial constraints, particularly among SMEs, can limit firms' ability toundertake these long-term investments. Moreover, the share of investment allocated to energy efficiency is positively associated with the strength of a country's incentive-based energy efficiency regulatory framework.
