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Determinants of renewable energy innovation: environmental policies vs. market regulation

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  • Francesco Vona

    (Observatoire français des conjonctures économiques)

  • Francesco Nicolli

    (Facoltà di Economia (Faculty of Economics))

  • Lionel Nesta

    (Observatoire français des conjonctures économiques)

Abstract

This paper carries out a comprehensive analysis of renewable energy innovations considering four mechanisms suggested by innovation models: 1. policy-inducement; 2. market structure; 3. demand and social cohesion- mainly proxied by income inequality; 4. characteristics of country knowledge base. For OECD countries and years 1970-2005, we build a unique dataset containing time-varying information on quality-adjusted patent production in renewable energy, the latter being a function of environmental policies, green R&D, entry barriers, knowledge stock, knowledge diversity and income inequality. We develop count data models using the Generalized Method of Moments (GMM) to account for endogeneity of policy support. Our synthetic policy index positively affects innovations especially in countries with deregulated energy markets and low entry barriers. The effect of entry barriers and inequality is negative and of similar magnitude as that of policy. Product market liberalization positively affects green patent generation, especially so when ambitious policies are adopted, when the initial level of public R&D expenditures and when the initial share of distributed energy generation is high. Our results are robust to alternative specifications, to the inclusion of technology-specific effects and to the use of quality-adjusted patents as dependent variables. In the latter case, the estimated effect of lowering entry barriers and of knowledge diversity almost double on citation count relatively to patent count.

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  • Francesco Vona & Francesco Nicolli & Lionel Nesta, 2012. "Determinants of renewable energy innovation: environmental policies vs. market regulation," Sciences Po publications 2012-05, Sciences Po.
  • Handle: RePEc:spo:wpmain:info:hdl:2441/eu4vqp9ompqllr09j0h0ji242
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    Cited by:

    1. Kahia, Montassar & Ben Aissa, Mohamed Safouane & kadria, Mohamed, 2014. "Do renewable energy policies promote economic growth? A nonparametric approach," MPRA Paper 80751, University Library of Munich, Germany.
    2. Francesco Nicolli & Francesco Vona, 2012. "The evolution of renewable energy policy in Oecd countries:aggregate indicators and determinants," Documents de Travail de l'OFCE 2012-13, Observatoire Francais des Conjonctures Economiques (OFCE).
    3. Horbach, Jens & Rammer, Christian, 2017. "Energy transition in Germany and regional spillovers: What triggers the diffusion of renewable energy in firms?," ZEW Discussion Papers 17-044, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    4. Zhao, Yong & Tang, Kam Ki & Wang, Li-li, 2013. "Do renewable electricity policies promote renewable electricity generation? Evidence from panel data," Energy Policy, Elsevier, vol. 62(C), pages 887-897.

    More about this item

    Keywords

    Renewable energy technology; patent; environmental policies; product market regulation; inequality;

    JEL classification:

    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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