Technological change plays a crucial role in realizing energy efficiency improvements and, therefore, in ameliorating the conflict between economic growth and environmental quality. However, the diffusion of new technologies can prove a costly and lengthy process, meaning that many firms do not invest in best-practice technologies. The author offers important new explanations for this energy-efficiency paradox. This volume contributes to a better understanding of the interplay between economic growth, energy use and technological change, with particular emphasis on the adoption and diffusion of energy-saving technologies. In the theoretical section, the author examines how several characteristics of technological change and environmental policy affect the dynamics of technology choice. He demonstrates how technological complementarity, learning processes and uncertainty can help explain why the innovation and diffusion of new technologies is such a protracted and complex procedure. The empirical section explores long-run trends in energy and labour productivity performance, as well as patterns of substitutability and technological change across a range of OECD countries. The book concludes by integrating the results in an applied policy model of economy-energy interaction.

This book is unique in applying insights from different perspectives to the field of energy economics, and by focusing on the diffusion of energy-saving technologies rather than their innovation. It will be of immense value to academics and policymakers with an interest in energy economics, environmental economics and the interaction between economic growth and natural resources.