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Lena Neij

Lena Neij

Professor

Lena Neij

Transaction costs analysis of low-carbon technologies

Author

  • Luis Mundaca
  • Mathilde Mansoz
  • Lena Neij
  • Govinda R. Timilsina

Summary, in English

Transaction costs (TCs) must be taken into account when assessing the performance of policy instruments that create markets for the diffusion and commercialization of low-carbon technologies (LCTs). However, there are no comprehensive studies on the development and application of transaction cost analysis to LCTs. In this meta-analysis, a wide-ranging evaluation of TCs associated with energy efficiency, renewable energy, and carbon market technologies is provided. There is a plethora of different definitions of, and measurement techniques to estimate, TCs. There is wide variation in the quantitative estimates, which can be attributed to factors such as the definition used, data collection, quantification methods, the type and size of technologies, the regulatory frameworks, the complexity of transactions, and the maturity of policy instruments. It is concluded that TCs are highly specific to both LCTs and policy instruments and that a common methodological approach is needed to avoid misleading policy analysis of the extant and future assessments. Policy relevance Transaction costs (TCs) accrued by, for instance, the search for information, due diligence, monitoring and verification (M&V) activities, must be considered in the design, implementation, and assessment of policy instruments. Such costs can have a negative effect on the performance of policy instruments aimed at the diffusion and commercialization of low-carbon technologies. It is shown here that TC analysis is mostly technology and policy context-specific and hence that it is not advisable to make generalizations about sources and estimates. The nature and scale of TCs are likely to differ due to a variety of endogenous determinants (e.g. size and performance of technologies), exogenous drivers (e.g. regulatory policy frameworks), and methodological aspects (e.g. quantification techniques). Several measures and strategies have the potential to reduce TCs, including standardized full cost accounting systems, an ex ante M&V approach, project bundling, and streamlining of procedures.

Department/s

  • The International Institute for Industrial Environmental Economics

Publishing year

2013

Language

English

Pages

490-513

Publication/Series

Climate Policy

Volume

13

Issue

4

Document type

Journal article

Publisher

Taylor & Francis

Topic

  • Social Sciences Interdisciplinary

Keywords

  • carbon markets
  • energy efficiency
  • GHG emissions
  • low-carbon
  • technologies
  • renewable energy
  • transaction costs

Status

Published

Project

  • Policy Intervention for a Competitive Green Energy Economy

ISBN/ISSN/Other

  • ISSN: 1469-3062