Environmental innovation, climate change and knowledge diffusion process: How can spillovers play a role in the goal of sustainable economic performance?

Abstract

Technological innovation could affect climate change in multiple ways. On the one hand, technological innovation promotes economic growth and energy consumption, increasing carbon emissions. On the other hand, environmental innovations are devoted to reducing the impact of economic activity on climate change. This paper explores the impact of climate change in three economic areas (Europe, Japan and the USA) from 2002 to 2017 of two different innovation variables: the total firms' R&D investments and the knowledge innovation spillovers in the energy field. The findings indicate that the overall R&D process is detrimental to climate change variables, but the knowledge diffusion process of energy innovations positively impacts climate change mitigation. Policy implications are also related to institutional variables connected to environmental regulations.