Effective environmental policies hand-in-hand with innovation

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Tighter energy performance standards for new-build houses have stimulated the Netherlands’ building sector to use more innovative products and to co-operate more innovatively. That is what researchers Dr Henk de Vries of Rotterdam School of Management, Erasmus University (RSM) and RSM alumnus Pieter Verhagen found in a new study. Their results show effective environmental policies can go hand-in-hand with innovation.

Energy performance standards were introduced in 1995 by the Dutch government to reduce CO2 emissions and encourage energy saving. Henk de Vries notes that along with these energy performance requirements, the Netherlands Standardisation Institute NEN together with partners from the construction industry developed a new standard for measuring energy performance.

The energy performance requirements are mandatory for all new houses and have been gradually tightened since their introduction. The compulsory nature of the standards has forced the sector to look for more energy efficient technical installations and better co-operation to meet the criteria, says de Vries.

Building permits

To find out how the building sector coped with tightening energy performance standards, the researchers analysed the energy efficiency of around 2,000 houses built between 1996 and 2003. They also studied the houses’ building permits to find out what techniques were used to comply with standards for heaters and ventilation systems. Comparing these results to the introduction dates of the performance standards and talking to experts allowed them to find out what types of innovation are inspired by the introduction of new standards.

Innovation of house designs

The results of the study show the introduction of stricter performance standards encouraged builders to incrementally ‘upgrade’ their house designs for more energy efficiency, using for example thicker insulation or a better central heating boiler. This can be seen as diffusion of existing innovations, the researchers say. In other instances, they found that building firms applied more systemic innovations in their buildings, for example switching to solar energy generation and energy storage.

Complexity generates standard solutions

Meeting the new energy standards made the building process more complex, researcher de Vries says, because every stage of the building and installation process became more integrated. To reduce this complexity, suppliers started designing ‘standard solutions’, combinations of new technology and fabrication techniques guaranteed to meet the new standards. Suppliers of heating and ventilation systems teamed up to design and make components with heating and ventilation component built-in, and some builders even designed and produced completely standardised houses that met all the new energy requirements.

Organisational innovations

The development of such components that meet the standard can be seen as an innovation in organisation and management, de Vries says. Other organisational innovations he found in the study included the appointments of ‘system integrators’ to oversee large parts of the building process, or the use of new and innovative software to calculate energy performance early in the design stage of a building project.

New standards bring tighter co-ordination

Some builders even resorted to abandoning the principle of installing energy equipment in each dwelling in a housing block; instead, one energy-efficient installation is shared by the community of neighbours, combining it with subterranean heat storage for even more energy efficiency. Researchers conclude that this is another example of stages in the building process that were traditionally only loosely coupled but became more tightly co-ordinated after the introduction of new standards led to innovative co-operation between firms.

The paper: de Vries Henk J., Verhagen W. Pieter Impact of changes in regulatory performance standards on innovation: A case of energy performance standards for newly-built houses, Technovation, Volumes 48–49, February–March 2016, Pages 56–68.

Rotterdam School of Management, Erasmus University (RSM) is one of Europe’s leading business schools, and ranked among the top three for research. RSM provides ground-breaking research and education furthering excellence in all aspects of management and is based in the international port city of Rotterdam – a vital nexus of business, logistics and trade. RSM’s primary focus is on developing business leaders with international careers who carry their innovative mindset into a sustainable future thanks to a first-class range of bachelor, master, MBA, PhD and executive programmes. RSM also has offices in Chengdu, China, and Taipei, Taiwan. www.rsm.nl

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