The impact of energy technology innovations on cleaner energy supply and carbon footprints in Europe: A linear versus nonlinear approach

Abstract

Providing more affordable and cleaner energy for all raises complex and significant financial, political, technical, and institutional issues, which must all be addressed to ensure sustainable development. Energy technology innovation has a critical role to play as one of the best pathways to achieve the transition to a global clean energy system. This paper is an endeavor to study the impact of government energy technology research, development, and demonstration (RD&D) budget, which is the primary input of energy technology innovations on cleaner energy supply and carbon footprints (CFP). In this study, a cleaner energy supply is measured as the contribution of renewable energy to total primary energy supply (RE). We assumed that the effect of energy innovation is not uniform but varies according to the descending and ascending movements in a government’s energy technology RD&D budget. To this end, we distinguished the impact of the descending and ascending movements in government energy technology RD&D budgets on cleaner energy supply, and CFP in Europe over the period 1985 to 2016. Additionally, we carried out a comparative examination of the effects of energy technology RD&D expenditures on RE and CFP under both linear and nonlinear panel techniques. To increase room for policy implications, we also controlled for the role of economic growth and trade openness and performed several robustness check analyses. We found that the reduction of carbon footprints associated with an increase in public support to energy technology RD&D is more pronounced than the contribution of energy technology innovation to the deployment of renewable energy in Europe. This study provided little evidence in favor of the effectiveness of a government energy technology RD&D budget to substantially boost renewable energy in Europe. Following these results, we suggest that the knowledge of the asymmetric linkage between public energy technology innovation, RE, and CFP is a starting point to achieve win-win solutions that favor clean energy and environmental sustainability.