Determinants of Energy Efficiency and Renewable Energy in European SMEs

Abstract

This paper empirically investigates the factors driving the adoption of energy efficiency (EE) and renewable energy (RE) measures in a sample of 8,213 Small and Medium-Sized Enterprises (SMEs) in European countries. Using a bivariate probit model we examine their drivers, complementarities, and potential temporal persistence in three European country clusters (Core countries, Mediterranean countries and New EU members). Our results suggest that sustainable energies actions (EE and RE) are highly persistent both at the firm level and across countries and that there are relevant complementarities between EE and RE practices, as well as other resource efficient practices. In addition, strategies for EE seem to rely more on cost saving and regulations, while those for RE are more linked to public support and environmental awareness. This paper ends with some recommendations for policymakers suggesting that Europe needs to design an energy policy for the SMEs firms that jointly pursues both EE and the diffusion of RE according to the technological gap of each member country. Keywords: energy efficiency, renewable energy, European Union, SMEs firms