The impact of innovation and technology investments on carbon emissions in selected organisation for economic Co-operation and development countries

Abstract

Countries belonging to the Organisation for Economic Co-operation and Development (OECD) are among those with the highest level of carbon emissions in the world. Following negotiations, OECD members resolved to heighten and support innovation and technology investments in the public and private sectors aimed at reducing carbon emissions. This study conducted a system-Generalized Method of Moments (GMM) analysis to investigate how innovation and technology investments influence carbon emissions in selected OECD economies from 2000 to 2014. Using data from the OECD database and the World Development Indicators (World Bank database), it employed four proxies of innovation and technology investments, namely, renewable energy consumption, the number of researchers, spending on research and development and the number of triadic patent families. The results indicated that, after applying the dynamic model and controlling for endogeneity, renewable energy consumption and spending on research and development have a statistically significant negative relationship with carbon emissions. The number of triadic patent families illustrates a positive and significant relationship with carbon emissions, but in the case of the number of researchers, the relationship was positive but not significant. Overall, this suggests that innovation and technology investments in these countries affect emissions differently and still have the potential to reduce environmental quality. It is concluded that ensuring that patents include natural environmental standard specifications and that researchers are better equipped with green skills and knowledge would enhance the achievement of zero-emission targets.