Dr. Stephan Wimmers, June 1st, 2007 The Contribution of Innovation to Environmental Protection Presentation of Dr. Stephan Wimmers Director Research and.

Dr. Stephan Wimmers, June 1st, 2007

The Contribution of Innovation to Environmental Protection

Presentation of

Dr. Stephan Wimmers

Director Research and Technology Policy, Science Policy, Innovation Policy

European Clusters and Regions for Eco-innovation and Eco-

investments Network – Assembly of the Regions

June 1st 2007, Stuttgart



Content

1. Introduction - what is meant by Eco-Innovation?

2. Investment Data for the Regions

3. Success in Reduction Environmental Burdens

4. Remarks on Regional State Aid and Eco-Innovation

5. Policy Recommendations


The Contribution of Innovation to Environmental Protection - what is meant by Eco-Innovation?

Bundesland Total Investment – millions of Euro in 2005

Investment into Environmental Protection – millions of Euro in

2005

Baden-Württemberg 7.992,5 167,1

Bayern 9.095,0 224,8

Berlin 836,1 11,0

Brandenburg 872,4 29,8

Bremen 514,2 3,9

Hamburg 1.040,8 45,0

Hessen 2.442,9 56,8

Mecklenburg-Vorpommern 403,6 7,1

Niedersachsen 4.154,6 100,5

Nordrhein-Westfalen 9.020,7 294,8

Rheinland-Pfalz 2.036,7 86,0

Saarland 813,4 23,5

Sachsen 3.062,4 38,7

Sachsen-Anhalt 1.458,2 57,3

Schleswig-Holstein 807,7 38,0

Thüringen 1.061,9 20,3

Deutschland 45.613,1 1.204,4

Source: http://www.statistik-portal.de



• Do these numbers really reflect the effort of enterprises in environmental protection and sustainable development?

Assumptions for the presentation

• It is a basic intention of Enterprises to produce with low costs in order to maximise profits or to be competitive.

• Enterprises fell a strong incentive to minimise the use of input factors in production.

• This incentive is stronger the higher input prices are.

• Enterprises Innovation effort often aims to minimise the use of input factors.

• Enterprises have an in-built environmental protection incentive.


What does Innovation mean?

• According to the definition of Joseph Schumpeter innovation is

– introduction of a new good or of a new quality of a good.

– introduction of a new method of production.

– opening of a new market.

– conquest of a new source of supply of raw materials or half-manufactured goods.

– carrying out of a new organization of any industry.



Which innovations contribute to Environmental Protection?

• Environmental Technology Goods

– Impact: User firms reduce environmental burdens

• Environmental Protection in Production Processes

– Impact: Reduction of environmental damages/use of resources within companies

• Product-integrated Environmental Protection

– Impact: Products with less environmental burdens

• Environmental Protection Service Companies

– Impact: Higher Efficiency and Quality in Customer Firms processes concerning environmental Protection

• Supporting Environmental Protection Industries

– Impact: Environmental Technology firms get access to Environmental Technology and Products



Which innovations contribute to Environmental Protection?

• Environmental Technology Goods

– Impact: User firms reduce environmental burdens

• Environmental Protection in Production Processes

– Impact: Reduction of environmental damages/use of resources within companies

• Product-integrated Environmental Protection

– Impact: Products with less environmental burdens

• Environmental Protection Service Companies

– Impact: Higher Efficiency and Quality in Customer Firms processes concerning environmental Protection

• Supporting Environmental Protection Industries

– Impact: Environmental Technology firms get access to Environmental Technology and Products



The Contribution of Innovation to Environmental Protection - Investment Data for the Regions

Data sources used:

• Annual Data from the Business Cycle Analyses of the 81 Chambers of Industry and Commerce among 25.000 Enterprises.

2. Data from the National Statistical Office

3. Data from Hamburg Institute for Economic Research (HWWA)

4. Data from the Deutsche Bundesbank



Business Investment into Environmental Protection - Share of enterprises in Germany's Bundesländer 1

0

5

10

15

2001

2002

2003

2004

2005

2006

Baden-Württemberg Bayern Berlin Brandenburg

Bremen Hamburg Hessen Mecklenburg-Vorpommern

Source: DIHK



Investment into Environmental Protection - Share of enterprise in Germany's Bundesländer 2

0

5

10

15

20

01

20

02

20

03

20

04

20

05

20

06

Niedersachsen Nordrhein-Westfalen Rheinland-Pfalz Saarland

Sachsen Sachsenanhalt Schleswig-Holstein Thüringen

Source: DIHK



Investment into Innovation - share of enterprise in Germany's Bundesländer - 1

15,0

20,0

25,0

30,0

35,0

40,0

45,0

50,0

55,0

2001 2002 2003 2004 2005 2006

Baden-Württemberg Bayern BerlinBrandenburg Bremen HamburgHessen Mecklenburg-Vorpommern

Source: DIHK



Investment into Innovation - share of enterprise in Germany's Bundesländer 2

15,0

20,0

25,0

30,0

35,0

40,0

45,0

2001 2002 2003 2004 2005 2006

Niedersachsen Nordrhein-Westfalen Rheinland-Pfalz

Saarland Sachsen Sachsenanhalt

Schleswig-Holstein Thüringen

Source: DIHK



Investment into rationalisation - share of enterprise in Germany's Bundesländer - 1

20253035404550556065

2001 2002 2003 2004 2005 2006Baden-Württemberg BayernBerlin BrandenburgBremen HamburgHessen Mecklenburg-Vorpommern

Source: DIHK



Investment into rationalisation- share of enterprise in Germany's Bundesländer - 2

20

25

30

35

40

45

50

55

60

65

2001 2002 2003 2004 2005 2006

Niedersachsen Nordrhein-Westfalen Rheinland-PfalzSaarland Sachsen SachsenanhaltSchleswig-Holstein Thüringen

Source: DIHK



Bundesland Correlation Coefficient Coefficient of determination

Baden-Württemberg 0,36799374 0,02124958

Bayern 0,73544311 0,48485059

Berlin 0,48391291 0,54725466

Brandenburg 0,94451917 0,71538209

Bremen 0,56704179 0,51022701

Hamburg 0,88165819 0,63513605

Hessen 0,5396931 0,65970028

Mecklenburg-Vorpommern -0,13713348 0,39417252

Niedersachsen 0,44477102 0,55831217

Nordrhein-Westfalen 0,41262456 0,47108447

Rheiland-Pfalz 0,84914205 0,68075553

Saarland -0,45034171 0,25762453

Sachsen 0,30288738 0,24560947

Sachsenanhalt -0,37900813 0,0070559


Thüringen 0,73466193 0,78168143

The correlation of the price index for Energy-related raw materials and investment into environmental protection between 2001 and 2006

Source: DIHK/Deutsche Bundesbank, calculation by DIHK



The correlation of the price index for non Energy-related raw materials and investment into environmental protection between 2001 and 2006 -


Baden-Württemberg 0,36799374 0,13541939

Bayern 0,73544311 0,54087656

Berlin 0,48391291 0,2341717

Brandenburg 0,94451917 0,89211646

Bremen 0,56704179 0,32153639

Hamburg 0,88165819 0,77732116

Hessen 0,5396931 0,29126864

Mecklenburg-Vorpommern -0,13713348 0,01880559

Niedersachsen 0,44477102 0,19782126


Rheiland-Pfalz 0,84914205 0,72104222

Saarland -0,45034171 0,20280766

Sachsen 0,30288738 0,09174077

Sachsenanhalt -0,37900813 0,14364716


Thüringen 0,73466193 0,53972816




The Correlation of the price index for Energy-related raw materials and investment into innovation between 2001 and 2006


Baden-Württemberg -0,14577235 0,34906696

Bayern 0,69631213 0,87067722

Berlin 0,73976663 0,88715758

Brandenburg 0,84580263 0,86590644

Bremen 0,71430176 0,36285804

Hamburg 0,79695423 0,90097166

Hessen 0,81221936 0,8407489


Niedersachsen 0,7472029 0,89838998


Rheiland-Pfalz 0,82507911 0,95700782

Saarland -0,50756727 0,94334366

Sachsen 0,49559002 0,25255082

Sachsenanhalt -0,08399938 0,00487107


Thüringen 0,88412749 0,76188285




The Correlation between the price index for non Energy-related raw materials and investment into innovation 2001 to 2006 -



Bayern 0,69631213 0,48485059

Berlin 0,73976663 0,54725466

Brandenburg 0,84580263 0,71538209

Bremen 0,71430176 0,51022701

Hamburg 0,79695423 0,63513605

Hessen 0,81221936 0,65970028


Niedersachsen 0,7472029 0,55831217


Rheinland-Pfalz 0,82507911 0,68075553

Saarland -0,50756727 0,25762453

Sachsen 0,49559002 0,24560947

Sachsen-Anhalt -0,08399938 0,0070559


Thüringen 0,88412749 0,78168143




The Correlation between the price index for non Energy-related raw materials and rationalisation investment 2001 to 2006 -



Bayern 0,0234291 0,00054892

Berlin 0,6106284 0,37286704

Brandenburg 0,9022908 0,81412869

Bremen 0,27014402 0,07297779

Hamburg 0,5942713 0,35315838

Hessen 0,47597393 0,22655118


Niedersachsen 0,64363812 0,41427003


Rheiland-Pfalz 0,65849483 0,43361544

Saarland -0,516254 0,2665182

Sachsen -0,89521674 0,80141301

Sachsenanhalt -0,11942924 0,01426334


Thüringen 0,6642601 0,44124147




The Correlation between the price index for non Energy-related raw materials and rationalisation investment 2001 to 2006 -



Bayern 0,0234291 0,00054892

Berlin 0,6106284 0,37286704

Brandenburg 0,9022908 0,81412869

Bremen 0,27014402 0,07297779

Hamburg 0,5942713 0,35315838

Hessen 0,47597393 0,22655118


Niedersachsen 0,64363812 0,41427003


Rheiland-Pfalz 0,65849483 0,43361544

Saarland -0,516254 0,2665182

Sachsen -0,89521674 0,80141301

Sachsenanhalt -0,11942924 0,01426334


Thüringen 0,6642601 0,44124147




Bundesland Number of Enterprises listed in UMFIS - 2007

Baden-Württemberg 1168

Bayern 1960

Berlin 453

Brandenburg 317

Bremen 105

Hamburg 159

Hessen 747

Mecklenburg-Vorpommern 239

Niedersachsen 556

Nordrhein-Westfalen 1617

Rheinland-Pfalz 334

Saarland 102

Sachsen 833

Sachsen-Anhalt 622

Schleswig-Holstein 385

Thüringen 430

Deutschland 10027

Database of German companies involved in environmental technologies and services

– Information System of the German Chambers of Industry and Commerce -


The Contribution of Innovation to Environmental Protection - Success in Reduction of Environmental Burdens

Source: Statistisches Bundesamt, Umweltökonomische Gesamtrechnungen 2006

Economic-Based Use of Environmental Resources between 1995 and 2004 (2005) in % in Germany

-0,2

-10,2

-17,7

8,5

-7,3

-5,9

-17,3

-37,1

-66,4

-26,7

-41

0

-17,7

-3,2

29

14

-80 -60 -40 -20 0 20 40

1

GDP (2005)

Depreciation (2005)

Working Hours (2005)

Waste Water

NH3

NMVOC

NOx

SO2

CH4

N2O

CO2 (2005)

Greenhouse Gases

Area for Location and Traffic

Water

Raw Materials (2005)

Primary Energy (2005)


The Contribution of Innovation to Environmental Protection - Success in Reduction of Environmental Burdens

World Market Shares in Environmental Protection Products and Technology 2003

Others; 31,30%

Germany; 18,80%

France; 6,50%

Italy; 8,40%

England; 6,50%

Japan ; 10,10%

USA; 18,40%

Source: Legler, H., Gehrke, B. u.a. (2005): Zur technologischen Leistungsfähigkeit Deutschlands, Hg.: Bundesministerium für Bildung und Forschung, Berlin


The Contribution of Innovation to Environmental Protection - Remarks on Regional State Aid and Eco-Innovation

Can regional state aid improve the willingness of firms to invest

into eco-innovation?

• Compared to total investment into environmental protection regional state aid funds seem to be at very low level in West German Bundesländer.

• The share of state aid funds that is dedicated for eco-innovation in business firms seems to be very low.

Some Chambers of Commerce confirm that there are some state aid funded projects which lead to higher eco-innovation.

The impact of regional state aid on eco-innovation is limited.


The Contribution of Innovation to Environmental Protection - Remarks on Regional State Aid and Eco-Innovation

Will the new state aid regulations of the EU increase the

willingness of firms to invest into eco-innovations?

• Market introduction costs for SMEs are usually high.

• The Risk of Failure in introducing eco-innovations is high for SMEs.

It is much to early to assess the impact of the changes of the new state aid regulations.


The Contribution of Innovation to Environmental Protection – Policy Recommendations

Policy Recommendations 1

• Increase Knowledge about Risks of Economic Activities for People and Environment before regulation is adopted.

• Promote Self-Regulation of Firms and Market-Based Policy Instruments.

• Existing Policy Instruments (Eco-Tax, Regulations, Subsidies for Re-newables etc.) should be coordinated.

• Check all Environmental Protection Regulations concerning the Impact on the International Competitiveness of Enterprises.

• Support SMEs in increasing Energy Efficiency.

• Extend Energy Research


The Contribution of Innovation to Environmental - Protection Policy Recommendations

Policy Recommendations 2

• The strongest Impact on Eco-Innovation is the Demand of the Consumers.

• If Consumers demand for Eco-Efficient Products the Firms will produce them.

• Due to higher costs Eco-Efficient Products are usually expensive compared to other Products.

• A Price Increase has always to effects: a substitution and an income effect.

• Will Consumers buy Eco-Efficient Products when they can buy cheaper alternatives?

In a world of globalization with open access to markets German enterprises that produce eco-efficient products have to compensate higher costs for eco-innovation by other competitive advantages.

Competitive advantages can be for example: advanced production technologies, advanced R&D, high skilled employees, perfect infrastructures, perfect business locations, low tax burdens, low red tape burdens.


The Contribution of Innovation to Environmental

Thank you very much!

Dr. Stephan Wimmers, June 1st, 2007 The Contribution of Innovation to Environmental Protection Presentation of Dr. Stephan Wimmers Director Research and.

Documents

contribution of innovation

environmental technology

innovation mean

enterprises innovation

technology policy

new quality

effort of enterprises

new organization