Research on influencing factors of renewable energy, energy efficiency, on technological innovation. Does trade, investment and human capital development matter?

Abstract

Studies on renewable energy, energy efficiency, and sustainability appear to have accelerated worldwide in response to the need for alternate energy sources against conventional fossil-based sources. This work contributes to the current body of information by estimating the effects of renewable energy and energy efficiency on technological innovation using panel data from 1995 to 2017 and employing the instrumental variable fixed effect technique. The results indicate that renewable energy and energy efficiency promote innovation performance at the aggregate and disaggregate levels. A one percent increase in renewable energy will lead to about 0.437% increases in trademark and 0.114% increase in the patent application, respectively. Increasing energy efficiency promotes trademark by 0.029% and patent by 0.054%, respectively. Another important finding illustrates the moderating impact of investment, trade and human development on the aforementioned relationship. A series of robustness checks support our essential findings. The research supports Porter's hypothesis and directs key policy suggestions regarding environmental policies and promotes policy measures for the use of cleaner energies; Décentralisation of the energy industry to give more room for private sector participation; financial incentives to energy consumers for using renewable energy; issuance of green certificates and intensification of feed-in-tariffs; introduction of the polluter-pay principles for accountable.