Speaker: Gabriel Gonzalez Sutil

Title: Technology Adoption and Environmental Compliance in Electricity Generation: The Role of Organizational Experience

Abstract: This study investigates how organizational experience within multi-plant electricity firms influences compliance with environmental regulations, particularly in the realm of technology adoption. The paper presents a theoretical framework that conceptualizes technology adoption as a strategic choice shaped by operational uncertainty and learning dynamics. This framework posits that the impact of cross-plant experience —defined as the number of peer units within the same organization that have adopted a specific technology— on adoption rates varies according to the level of baseline uncertainty on how to manage the technology. The empirical analysis utilizes data from 1,475 generating units spanning 1998 to 2020 to test this hypothesis by examining the diffusion of multiple technologies characterized by heterogeneous levels of operational uncertainty. The analysis specifically focuses on compliance with the U.S. Ozone Transport Rules, which aim to curb regional ozone transport by limiting NOx emissions. Employing a difference-in-differences approach, the study leverages the staggered roll-out of these rules to estimate the heterogeneous responses across both technology types and levels of cross-plant experience, while controlling for persistent factors that might bias the results. The findings indicate that firms with extensive cross-plant experience are more likely to adopt new and uncertain technologies, whereas the adoption of established technologies shows less dependence on cross-plant experience. These results bolster the theoretical framework, underscoring the significant role of learning spillovers in shaping compliance strategies and driving technological innovation amid uncertainty. Furthermore, these findings highlight potential challenges in environmental policy design due to path-dependent behavior. The concluding discussion emphasizes the need for future research to explore organizational competency traps and inertia that may hinder the effectiveness of such policies.