Technology transfer into capital-intensive industry II. Effect of legislative action

Government policy supports the customary industrial goal of putting new technology to work in industry as quickly as possible, so as to enhance productivity and save energy. There is continuing debate over how to achieve this goal, specifically as to the impact of legislation on efforts to improve industrial energy conservation. The Office of Technology Assessment has studied the effects of four types of legislation on four large energy-using industries: Chemicals, paper, petroleum refining and steel. The legislative options include fuel taxes, changes in depreciation rules, energy tax credits, and lower interest rates. The analysis indicates that reasonable levels of the first three of these will not be persuasive in motivating new investments, and will not speed up the rate of new technology penetration. The limits of new technology introduction are set by capital availability and cash flow. Accordingly, lower interest rates which promote capital availability would indeed increase the levels of capital spending and hence accelerate energy conservation.