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Abstract

This chapter conceptualizes the distributional impacts of energy innovation adoption. Following the existing literature on energy innovation, we provide a conceptual framework to map costs and benefits from energy innovation adoption at various levels, including households, firms, and governments. We first conceptualize the relevant decision-making dimensions at the micro and the macro levels for determining the distributional effects of energy innovation adoption. We then illustrate how the conceptualization can be applied to Indian household consumption data. Our results are twofold. First, the conceptual findings resonate well with empirical findings showing that early adopters of energy innovation tend to be richer households. Second, as long as energy innovation policy-induced costs are proportional to income, they do not create additional vertical distributional impacts. Finally, we discuss how the costs and benefits of energy innovation on avoided climate impacts and stranded assets would be distributed.