Do Policy Mix Characteristics Matter for Low-Carbon Innovation? A Survey-Based Exploration for Renewable Power Generation Technologies in Germany

Policy mixes may play a crucial role in redirecting and accelerating innovation towards low-carbon solutions, thus addressing a key societal challenge. Towards this end, the characteristics of such policy mixes have been argued to be of great relevance, yet with little empirical evidence backing up such claims. In this paper we explore this link between policy mix characteristics and low-carbon innovation, using the research case of the transition of the German electricity system towards renewable energy. Our empirical insights are based on an innovation survey among German manufacturers of renewable power generation technologies which builds on the Community Innovation Survey, but which we adjusted to better capture companies’ perceptions of the policy mix. Employing a bivariate Tobit model we find that companies’ perceptions regarding the consistency and credibility of the policy mix are positively associated with the level of their innovation expenditures for renewable energies, and this positive link intensifies when considering the mutual interdependence of these policy mix characteristics. In contrast, we find no support for such a direct link for the comprehensiveness of the instrument mix or the coherence of policy processes. These findings suggests that future research on low-carbon and eco-innovation more broadly should pay greater attention to the characteristics of policy mixes, rather than focusing on policy instruments only. It also implies a need to rethink the consideration of policy in innovation surveys to enable better informed policy advice regarding the greening of innovation.