Are government energy technology research, development, and demonstration budgets converging or diverging? Insights from OECD countries

Abstract

ABSTRACT Accelerating the pace of energy technological innovation is essential to curb global climate change and build a clean energy system. Based on this idea, from the perspective of renewable energy technology gaps across countries, this study presents a thorough empirical analysis of the convergence of energy technology research, development, and demonstration (RD&D) budgets across OECD countries over 1985–2017. In doing so, we apply two-regimes threshold autoregressive approach to account for heterogeneity, nonlinearity, and transition path in energy technology RD&D convergence. One observation is that only a small number of advanced countries namely Canada, Japan, and the U.S. follow a nonlinear process and exhibit partial convergence in energy technology RD&D budgets with Japan as a transition country. Interestingly, our results also provide clear support for the global convergence of energy technology RD&D budgets once accounting for the two regimes jointly. These trends in national energy innovation policies could arguably help Canada, Japan, and the U.S. to drive up their energy RD&D trajectory into the future, suggesting that these countries would be able to achieve a more sustainable energy innovation supply system.