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Oil prices and energy technology innovation: An empirical analysis

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Abstract

To achieve environmental sustainability and reduce their vulnerability to oil shocks, countries can develop new energy technologies. Technological advances reduce the cost of structural changes in the energy economy, and thus also increase the political feasibility of such changes. But what explains international variation in the form and quality of energy technology innovation? We build on previous theories and offer an integrated account: increasing oil prices reinforce existing sectoral innovation systems, both politically and economically, thus allowing public policymakers and private entrepreneurs to profitably invest in new energy technologies. We test this theoretical argument against data on public R&D expenditures and patents in the domain of renewable energy technology for industrialized countries from 1989 to 2007. We find strong support for the interactive hypothesis. Thus, we contribute to literatures on (i) domestic responses to international shocks, (ii) environmental sustainability and energy security, and (iii) the political economy of technology innovation.

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... Many other studies indicate that high oil prices should help increase the demand and supply of alternative energy, and hence should inspire the investment and development of RE (e.g., Bleischwitz & Fuhrmann, 2006;McDowall & Eames, 2006;Rifkin, 2003). Put differently, an increase in the price of traditional energy or policies that restrict pollution or waste generation create an incentive for private companies or public institutions to develop new energy technology that either conserves energy or produce it at a lower cost (Cheon & Urpelainen, 2012;Newell et al., 2001). Rising oil price, therefore, is advantageous for the financial performance of alternative energy companies. ...
... The study makes three major contributions to the literature: (a) it uses a global panel, as opposed to a particular region, and shows that the patent-oil price relationship is primarily driven by the conventional energy importers; (b) it applies a fixed-effects hurdle Negative Binomial model that takes the aforementioned technological barriers of innovations into account; and (c) it addresses the endogeneity in oil prices with a control function. Previous studies either argue that the endogeneity is improbable in the short run, used an autoregressive structure, or ignore the endogeneity problem (e.g., Ayari et al., 2011;Bayer et al., 2013;Cheon & Urpelainen, 2012). Our control function finds evidence that the endogeneity exists in the patent-oil price relationship. ...
... Renewable electricity production involves geothermal, solar, tides, wind, biomass, and biofuels. We particularly use electricity production from renewable energy excluding hydroelectricity because the technology for hydroelectricity is already well developed and has fewer innovations over time (Cheon & Urpelainen, 2012 energy imports are estimated as energy use minus production. Negative values of energy imports indicate net exports. ...
Article
This article theoretically and empirically studies the association between research and development investments in renewable energy (RE) and oil prices at the country level. We find a positive and robust association between patent counts for RE and price of crude oil using a panel of 46 countries for 1991–2013 in a fixed‐effects hurdle Negative Binomial control function framework. Results suggest that net conventional energy importing countries are more likely to invest in RE when oil prices increase. Countries with more electricity production, less emissions, and greater energy utilization generate more RE patents per year. JEL CLASSIFICATION Q13; Q42; Q55
... Energies 2020, 13, 4034 2 of 19 on energy supply and climate change in the world [1], especially in big developing countries such as China, accelerating green energy technology innovation as an important means to promote energy transformation has reached a broad consensus on a global scale [2][3][4]. Therefore, it is necessary to analyze the key influencing factors of energy technology innovation. The induced innovation hypothesis proposed by Hicks [5] highlights the important role of energy price in spurring innovation, and energy price is supposed to play a leading role in the improvement of green energy innovation capacity. ...
... In recent years, with the increasing availability of patent data which are widely used to measure technological innovation [22], more and more scholars begin to focus on the field of energy and investigate the impact of energy price on green energy technological Energies 2020, 13, 4034 4 of 19 innovation. As discussed above, these studies mainly focus on developed countries, and most of them demonstrate the positive impact of energy price on green energy innovation [2,[6][7][8][9][10][11]. More recently, some studies have made empirical findings in developing countries. ...
... The number of patents reflects the output level of new knowledge [40], which can reflect the connotation of innovation and thus be widely used to measure the innovation capacity or innovation performance of a country or region [3,22,35,36,41]. In this regard, like Cheon and Urpelainen [2], Ley et al. [6] and Lin and Chen [3], this paper measures the green energy innovation capacity in China's provinces through the number of green energy patents. In addition, the number of patents includes the number of patent applications and the number of patent grants. ...
Article
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This paper aims to comprehensively analyze the relationship between energy price and green energy innovation in China, and first studies the impact of energy price on China's green energy innovation, then further investigates the moderating role of energy price distortion in the price-innovation relationship, especially in the context of lagging energy marketization level in the process of China's transition from planned economy to the market economy. Based on the data of 30 provinces in China from 2003 to 2017, this paper provides a measurement of green energy innovation capacity through the number of "alternative energy production" and "energy conservation" patents. Our results show that energy price has a significantly positive impact on China's green energy innovation, no matter the number of green energy patent applications or the number of green energy patent grants is used as the proxy of green energy innovation capacity. However, there exists heterogeneity related to the influence of energy price on green energy innovation. Specifically, energy price has a noticeable role in promoting green energy innovation in central and western China, but not in eastern China. Further research results show that energy price distortion significantly reduces the inducing effect of energy price on green energy innovation. Meanwhile, the distortion degrees of energy price in the central and western regions of China are significantly lower than that in the eastern region, which explains to a large extent why the inducing effect of energy price on innovation is more prominent in the central and western regions.
... In particular, we refer to a number of studies that use patents to measure environment-friendly and/or energy-efficient innovations and, by means of panel data across countries, estimate how their number is affected by environmental policies (along with other factors). Relevant examples of such empirical studies are Popp (2002Popp ( , 2010, Johnstone, Hascic, and Popp (2010), Cheon and Urpelainen (2012), Nesta, Vona, and Nicolli (2014), Calel and Dechezleprêtre (2016). However, while most of the previous studies focus upon specific environmental or energy technologies (and policies), our analysis is concerned with a broad set of energy innovations (and a composite index of environmental policies). ...
... Accordingly, the demand of energy innovations can be assumed to grow in response to exogenous and country-invariant increases of international oil prices. In this regard Cheon and Urpelainen (2012) consider patents on renewable energy for 23 countries over the years 1989-2007 and find a positive impact of oil prices when interacted with the countries' shares of electricity generation coming from renewable sources. ...
... First, as the incentives to patent in the energy field are likely to be affected by the trend of energy demand, we include ENCONS which denotes the total energy consumption at country level expressed in ktoe (thousands tons of oil equivalent) and taken from IEA. Secondly, we add the variable RENEW which is the country share of electricity generation coming from renewable sources (also taken from IEA): thus, as in Cheon and Urpelainen (2012), we conjecture that an intensive use of renewables should stimulate the introduction of environment-friendly innovations in the energy sector. Then, we insert the variable PMR which stands for the OECD indicator of Product Market Regulation in the electricity sector: such an index varies from 0 to 6 according to the level of regulatory restrictiveness (or lack of competition). ...
Article
This paper examines the relationship between energy innovations, environmental policies and oil prices. With a panel of 19 OECD countries over the period 1990–2013, we test how the stringency of environmental policies has affected the intensity of energy patents, while controlling for the effect of oil prices and other country-level variables. We found that the overall level of policy stringency has exerted a more significant impact than individual country measures. Moreover, the recent reduction of energy patenting is discussed, especially in the light of the staggering drop of oil prices.
... Secondly, while previous studies state that concentrating on OECD countries does not bias findings (Cheon and Urpelainen, 2012), we argue that a study on a larger sample of countries is necessary. Observing absence of patent activity contains important information for the test of existing hypotheses. ...
... The literature on innovation in the energy sector can be broadly divided into two categories. While studies following the idea of an innovation system focus mainly on grand patterns of technological change (Grubler and Nemet, 2014;Jacobsson and Bergek, 2004), a second strand of contributions investigates political and economic factors that might influence innovation activities (Cheon and Urpelainen, 2012;Geller et al., 2006). In addition, the literature can be further subdivided based on whether the level of analysis is set at the firm (Costa-Campi et al., 2015), state (Bointner, 2014), sector (Iyer, 2016), or technological level (Jacobsson and Johnson, 2000). ...
... The theoretical argument on energy prices is also backed by empirical evidence. For instance, increasing oil prices have been found to reinforce innovation within developed renewable energy sectors (Cheon and Urpelainen, 2012) and the transportation sector (Kim, 2014). This leads us to the following hypotheses, where we consider R&D expenditures and patents as two separate dependent variables: ...
Article
This paper analyzes the effects of fossil fuel rents on R&D expenditures and patent grants in the field of energy-related technology. We argue that an increasing share of fossil fuel rents lessens the innovation of new energy technologies. We consider a sample of countries beyond the common selection of OECD members and investigate innovation efforts in the energy sector of 116 countries from 1980 to 2012. We observe the gradually growing influence of resource-abundant countries on global R&D expenditures and find that increasing fossil fuel rents have a negative effect on patent grants. This study contributes to the ongoing debate concerning the potential effects of resource abundance. More importantly, it increases our understanding of innovation activities within the energy sector and further underscores the need to extend future research to countries that have not been taken into account thus far.
... Energy prices and government policies are pointed as the two main drivers of technology innovation in the energy area (Kim, 2014;Cheon & Urpelainen, 2012;Dechezleprêtre & Glachant & Haščič & Johnstone, 2011;Johnstone & Haščič & Popp, 2010;Popp, 2005). Rises in the prices of fossil fuels originate incentives to innovate in the generation of electricity from renewable energy sources (Cheon & Urpelainen, 2012;Johnstone et al., 2010). ...
... Energy prices and government policies are pointed as the two main drivers of technology innovation in the energy area (Kim, 2014;Cheon & Urpelainen, 2012;Dechezleprêtre & Glachant & Haščič & Johnstone, 2011;Johnstone & Haščič & Popp, 2010;Popp, 2005). Rises in the prices of fossil fuels originate incentives to innovate in the generation of electricity from renewable energy sources (Cheon & Urpelainen, 2012;Johnstone et al., 2010). Moreover, Noailly & Smeets (2015) show that higher fossil fuel prices cause a positive and significant impact on alternative energy patenting. ...
... Yet, according to the literature convention, private innovation, as an indicator that focuses on outputs, can be measured by using counts of patent applications and innovation in environmental technologies has been commonly studied using patents (Kim, 2014;Bayer & Dolan & Urpelainen, 2013;Cheon & Urpelainen, 2012;Johnstone et al., 2010;Popp, 2005). ...
Conference Paper
Full-text available
On our planet, the traditional energy source is limited thus inefficiency of fossil fuel energy and ecological damage made by heat and nuclear power engineering make it extremely important to develop alternative energy sources, for instance, solar. This article provides tendencies of solar energy use, analyses problems of substituting conventional types of energy for solar, talk about Nearly Zero Energy Buildings (nZEB), present the nanofluid technology to enhance the thermal energy efficiency and an economic analysis to build up a solar thermal plant using Greenius software.
... For example, multiple studies have confirmed the essential role of research and development (R&D) in promoting renewable innovation [18,19] and have shown that technological innovation positively affects renewable energy consumption [20]. Cheon and Urpelainen [21] specially investigated the relationship between crude oil prices and innovation in energy technology and found that energy innovation is an effective way to resist the sharp fluctuation of oil prices and that the rising oil prices have consolidated the innovation system both economically and politically, making investments in new energy technology profitable for both government and enterprises. The significance of their study lies in its theoretical proof of the feasibility of renewable energy investment in the context of the current dominance of traditional energy. ...
... We use the total renewable electricity installed capacity to represent this variable; the unit is million Kilowatts. In addition, we use renewable energy power generation as a proportion of total generating capacity (Renewable Share) to test the effectiveness of the renewable energy innovation system [21]; the unit is billion Kilowatt-hours. Hille et al. [26] found the aggregated share of solar and wind in total electricity generation shows no significant relationship with renewable energy innovation; this study tries to further investigate whether the aggregated share of total renewable energy in total electricity generation has a significant effect on innovation in the OECD context. ...
... Due to the existence of the "induced innovation effect" [11,12], a rise in crude oil prices will raise production and living costs, thus stimulating renewable energy innovation as an alternative choice [18,21]. In this study, the crude oil prices (Oil Price) are extracted from the Statistical Review of World Energy 2019 in US dollars per barrel (Dubai dated) [10]. ...
Article
Replacing traditional energy sources with renewable energy sources is an effective way to achieve emission reduction targets. Focusing on OECD countries from 1990 to 2018, this study examines the determinants of renewable energy innovation by applying a negative binomial model. There are four main findings: (1) Renewable energy patents show an inverted U-shaped curve, peaking in 2010; solar energy accounts for the largest share of patents; and the US is the largest renewable energy innovator, followed by South Korea and Germany. (2) Renewable electricity installed capacity, share of expenditure on research and development (R&D) of GDP, and implementation of the Kyoto Protocol are all found to promote innovation; by comparison, the proportion of renewable energy power generation of the total electricity generating capacity shows a negative effect. The price of crude oil shows no significant effect due to the offset effect between the European and non-European country groups. (3) Share of R&D expenditure of GDP is confirmed to be the force driving technological progress in the solar, geothermal, and marine sectors, and it plays a more important role in Japan than in the US or Europe. Implementation of the Kyoto Protocol has no significant effect on innovation in European countries. (4) Three institutional factors-namely, the legal system and property rights; regulations; and freedom to trade internationally-are confirmed to be the driving forces, whereas this is not the case for the growth and free circulation of money. Policy implications for the optimization of the renewable energy sector's structure, the enhancement of renewable energy capacity, and the improvement of R&D investment and the institutional environment are proposed. Future research should shed light on a broader sample, using micro-level and socio-technical analysis.
... The main hypothesis of the study is that the reduction of cost barriers for energy efficiency induces variegated rates of energy technology innovation in different regions mostly depending on the effectiveness of the innovation system in the relevant regions. This idea was initially formulated to explain international variation in the form of reaction to oil shocks and energy price increases (Newell 2010, Popp 2002 and then empirically tested for national innovation systems of 23 industrialized countries that joined the OECD before the year 1989 (Cheon, Johannes 2012). In our study, we test this theoretical argument on the regional level using the Russian Federal State Statistic Agency database. ...
... It is known from the theory of innovation that external shocks (such as the rise in energy prices) initiate different responses in energy efficiency in the countries with advanced national innovation system (NIS) and in countries with underdeveloped NIS (Cheon, Johannes 2012, Popp 2002. The reaction of the countries that have developed NIS and a strong technological base is usually the growth of innovative activity in the field of energy efficiency and renewable energy, resulting in an increase in the number of patents in relevant areas of science and technology. ...
Article
Full-text available
In this paper, we study the reasons for extremely high difference in energy intensity of the Russian regions under different methodological approaches. We compare the most popular measures of state’s energy efficiency policy in Russia with best world practices and investigate the factors of their effectiveness. We test the hypothesis that the level of development of regional innovation system determines how the regional economy reacts to the removal of market barriers to energy efficiency. Our findings reveal that in the face of rising electricity prices regions with well-developed regional innovation systems induce technical and other kinds of innovation in the field of energy efficiency, while other regions are not able to reduce their energy intensity. The main practical implementation of the study is that market measures for improvement of energy efficiency do not work in the regions with underdeveloped innovation systems.
... Although hydrocracking cannot be considered as representative of the generality of technological dynamics, its development pattern resembles those of many mature technologies and it is, therefore, a relevant case for the understanding of the longterm patterns of technological development. Innovation in energy-related technologies has been found to be particularly prone to path-dependence and lock-in effects (Kalkuhl et al., 2012;Cheon and Urpelainen, 2012). ...
... It is clear that patenting has highs and lows, respectively in 1983 and 1998, and 1979, 1992 and 2006. These fluctuations indicate that the technology is a suitable candidate for an uncertainty study (Cheon and Urpelainen, 2012). ...
Article
This paper examines whether technological advances benefit more from path-dependent or path-creating capabilities. Consistently with recent advances in the literature, we argue that multiple technological trajectories can coexist in a field; therefore, firms may contribute to technological development by recombining in novel ways the capabilities that are widespread in the field, or by building novel and rare capabilities. The paper also conceptualises how technological uncertainty affects the value of such capabilities. Using patent data from 1977 to 2007 for firms developing the hydrocracking technology, the paper finds that both rare and widespread capabilities are valuable to the invention process, thereby suggesting that both path-dependent and path-creating strategies are beneficial for technological development. The paper shows that uncertainty has an inverted U-shaped effect on invention value. In particular, under conditions of low uncertainty, path-dependent capabilities tend to be more valuable.
... Previous studies have drawn links between national RD&D expenditures for energy-related technology and potential external oil supply risks such as, for example, global oil price level (Cheon and Urpelainen, 2012) or the world market share of oil production from the Middle East (Cheon and Urpelainen, 2015). This suggests that oil-importing countries, indeed, react to certain developments in international energy markets or geopolitical conditions (Yergin, 1991(Yergin, , 2012. ...
... Particularly, as these global developments might affect local level gasoline and electricity prices. Previous contributions found that high(er) oil prices are associated with an increase in the number of patents in the energy sector (Cheon and Urpelainen, 2012;Popp, 2002), faster construction of nuclear power plants (Csereklyei et al., 2016) and more growth in renewable energy (Cadoret and Padovano, 2016). Further studies also find heterogeneous effects of oil prices on innovation in the energy sector (Brutschin and Fleig, 2016) depending on the economy's resource endowment. ...
Article
While supply disruptions of oil imports are widely considered a serious threat to a country's energy and overall national security, systematic investigations into the effects of security concerns on investments in energy technology are rare. Complementing existing energy policy literature, this paper investigates the impact of conflict involvement of major oil suppliers on RD&D expenditures in biofuels among import-dependent economies, i.e. geopolitically induced investments. Utilizing the recently released data set on Integrated Crisis Early Warning System (ICEWS), our sample comprises information on 12 EU member states from 1997 to 2014. Among those we find that RD&D expenditures in biofuels are positively associated with the conflict involvement of the respective country's major oil supplier. The results are robust across different model specifications and measurements of conflict. We argue that joining arguments from political economy and conflict research can help to explain the heterogeneous pattern of investments in energy technology in resource-poor European countries. In addition, it increases our understanding of innovation activities within the energy sector.
... Sadorsky (2009) (2020), and Samour and Pata (2022) are among the recent studies looking at the association between real oil prices and green energy consumption. According to Cheon and Urpelainen (2012), oil prices increase renewable energy consumption via technological advancements. According to Brini et al. (2017), a surge in oil prices has a significant impact on REC in Tunisia. ...
Article
Full-text available
This study investigates the impact of carbon emissions, real oil prices, income inequality, economic growth, and trade openness on renewable energy consumption (REC) in twenty-three (23) OECD economies. The study employs the Westerlund panel cointegration technique to verify the existence of long-run equilibrium and the Augmented Mean Group (AMG) estimator to assess the long-run relationship between the variables, which allows for slope heterogeneity and cross-sectional dependency. Moreover, the panel causality test of Dumitrescu and Hurlin (DH) is utilized to gauge the causal relationship between the variables. The findings of our study reveal that REC is positively related to economic growth, real oil prices, income inequality, and trade openness, but negatively related to CO2 emissions in OECD countries. In addition, there is one-way causality from GDP per capita to renewable energy consumption and a bidirectional causality between income inequality and REC. Furthermore, the results indicate that OECD policymakers and governments should regard foreign trade as a “clean energy fostering mechanism” while developing energy demand policies that are environmentally friendly.
... Another way in which oil prices influence renewable energy is through their influence on renewable R&D. Cheon and Urpelainen (2012) conducted an empirical analysis of how oil prices influence renewable energy development showing that an increase in oil prices increases countries' incentives to invest more in renewable energy technology. Similarly, Wong et al. (2013) found that oil prices and renewable R&D are positively correlated. ...
Article
Purpose One of the key drivers behind the recent growth in the global solar energy market is the decline in solar module prices. Many empirical analyses have been carried out to identify the mechanism behind this price reduction. However, studies on the price reduction mechanism of solar modules over the years have focused purely on the technological aspect of manufacturing. The purpose of this study is to consider the influence of economic and monetary factors such as the interest rate and exchange rate on solar module pricing in addition to other factors that considered in earlier studies including technology, wage rate and other energy prices. Design/methodology/approach In this paper, an oligopolistic model and econometric method are used to determine the economic factors that have an influence on solar module prices. The paper constructs a solar module pricing model and conducts a fully modified ordinary least squares analysis to estimate the influence of each factor. Analysis is conducted for the top five solar module producing countries in the world from 1997 to 2015. The five countries are the People’s Republic of China, Germany, Japan, the Republic of Korea and the USA. Findings Empirical analysis provides several findings concerning the solar module pricing mechanism. These vary for each country. However, generally the interest rate has a positive correlation with solar module prices, while the exchange rate, knowledge stock and oil price have a negative correlation with solar module prices. Practical implications First, the government must expand channels for renewable energy funding. As renewable industries are high-tech, the influence that capital cost has on technology price is significant. Government efforts to provide industries with low-interest finance will accelerate renewable business. There have been many attempts to lower interest rates for renewable energy technology to accelerate growth in the green technology market. Second, the government must expand research and development (R&D) expenditures focused on renewable energy technology. The technological advancements acquired through R&D enhance module performance efficiency, thereby reducing costs. Therefore, government policies aimed at increasing targeted R&D expenditure will be an effective means of expanding the installation of renewable energies. Originality/value Studies on the price reduction mechanism of solar modules over the years have focused purely on the technological aspect of the manufacturing. This is the first research to bring economic, monetary and technological factors of solar module pricing together.
... Their discussion suggests that maintaining the oil price plays a role in smoothing the transition to a sustainable energy system. Cheon and Urpelainen (2012) carry out an empirical analysis of the influence that the oil price has on the technological advances in renewable energy. The analysis shows that an increase in oil prices results in an increase in factors such as public renewable R&D expenditure and renewable patents. ...
Preprint
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Scaling up private investment in renewable energy is indispensable for achieving decarbonization of the global economy, low carbon transformation, and climate-resilient growth. As advocated by the United Nations, governments should create a level playing field for private investment in renewable energy, and they should use fiscal policies to incentivize engagement from the private sector. While studies on renewable energy are abundant and focus on topics ranging from unlocking renewable energy investment to the effects of environmental policies on innovation, energy efficiency policies, investment policies in renewable energy, and the adoption of feed-in tariffs, studies that uncover the determinants of private investment in the renewable energy sector are limited. Unlike the previous literature, which concentrates on the total green investment, this study distinguishes between private sector investment and government investment in renewable energy. Using multilevel data from 13 countries over the period 2004-2016, this chapter investigates the impact of 4 fiscal and financial policy instruments, namely (i) feed-in tariffs, (ii) taxes, (iii) loans, and (iv) grants and subsidies, on private investment in renewable energy. A multilevel random-intercept and random-coefficient model provides evidence of the effectiveness of two policy instruments, feed-in tariffs and loans. This study could benefit policy makers and researchers by enhancing their understanding of the factors enabling the scaling up of renewable energy investment. Paper is available from here https://www.adb.org/sites/default/files/publication/445076/adbi-wp861.pdf
... Their discussion suggests that maintaining the oil price plays a role in smoothing the transition to a sustainable energy system. Cheon and Urpelainen (2012) carry out an empirical analysis of the influence that the oil price has on the technological advances in renewable energy. The analysis shows that an increase in oil prices results in an increase in factors such as public renewable R&D expenditure and renewable patents. ...
Article
Full-text available
Scaling up private investment in renewable energy is indispensable for achieving decarbonization of the global economy, low-carbon transformation, and climate-resilient growth. As advocated by the United Nations, governments should create a level playing field for private investment in renewable energy, and they should use fiscal policies to incentivize engagement from the private sector. While studies on renewable energy are abundant and focus on topics ranging from unlocking renewable energy investment to the effects of environmental policies on innovation, energy-efficiency policies, investment policies in renewable energy, and the adoption of feed-in tariffs, studies that uncover the determinants of private investment in the renewable energy sector are limited. Unlike earlier literature, which concentrates on the total green investment, we distinguish between private sector investment and government investment in renewable energy. Using multilevel data from 13 countries over the period 2004–2016, we investigate the impact of 4 fiscal and financial policy instruments: (i) feed-in tariffs, (ii) taxes, (iii) loans, and (iv) grants and subsidies, on private investment in renewable energy. A multilevel random-intercept and random-coefficient model provides evidence of the effectiveness of two policy instruments, feed-in tariffs, and loans. Full paper can be downloaded from here https://www.adb.org/publications/implications-fiscal-financial-policies-unlocking-green-finance-and-green-investment
... Real GDP per capita(GDP p.c) in US$ in constant 2005 prices in order to allow for an impact of income on material use, 2) Total population (Population), which is essential to account for size differences across countries, 3) Urban population ratio (Urban % P) as a proxy for the population living under the industrial socio-metabolic mode, i.e., depending on a fossil fuel based energy system(Fischer-Kowalski and Schaffartzik, 2015), 4) Value added by the services sector as percentage of GDP (Service % GDP) as a proxy for economic structure, 5) Exports and imports of goods and services in percentage of GDP (Export % GDP and Import % GDP) to capture the role of trade for the country,6) Number of patents filed under the Patent Cooperation Treaty (Technology (t-1))as an indicator for technology. This variable is lagged by one year (t-1) to account for the time lag in patent diffusion(Bayer et al., 2013;Cheon and Urpelainen, 2012). Data were sourced from the OECD Patent Statistics Portal(Version, 2011) 2 , and 7) Signature of the Kyoto Protocol (KP) as a dummy variable which takes on the value 1 after the signing of the Kyoto Protocol in 1998 and of 0 before that. ...
Article
Dematerialization at the national level occurs almost exclusively during periods of economic recession or low growth. While recession is not a sustainable strategy to curb environmental impact, such periods may offer important insights on the possibilities of reducing material use. Economic recession research has focused on the interactions between macroeconomic and financial variables with little systematic research dedicated to uncovering how resource use develops during periods of recession. Using a dynamic panel model, we investigate whether and to what extent material use in a sample of 150 economies between 1970 and 2010 was affected by recession and low growth. Recession occurred most frequently and in more than two thirds of all countries during the 1980s and the 1990s. In the 2000s, more than half of the recessions occurred during the financial crisis of 2008. Periods of recession were significantly and negatively correlated with material use - they tended to coincide with dematerialization. Material use decreased in recession years, but the significant correlations with growth in material use became weaker as growth rates increased. Construction minerals and metals, used to build stocks of manufactured capital, reacted more strongly to economic fluctuations than the throughput-dominated flows of biomass and fossil fuels. We conclude that the systematic link between recession and dematerialization can become policy-relevant if the mechanisms causing reductions in material use during these periods are identified.
... Their discussion suggests that maintaining oil price played a role in smoothing the transition to a sustainable energy system. Cheon and Urpelainen (2012) carried out an empirical analysis on the influence oil price has on technological advances in renewable energy. The analysis shows that an increase in oil prices results in the increase of factors such as public renewable R&D expenditure and renewable patents. ...
Article
The solar energy market has seen huge growth in recent years with a vast increase in solar cumulative capacity worldwide. One of the key drivers behind this growth is the decline in solar module prices. Thus, the price reduction mechanism in solar modules has become an important topic as the role of solar electricity in the overall energy supply and the market value of solar modules grow globally. Many empirical analyses have been carried out to unveil the mechanism behind this price reduction. However, the researches performed on the price reduction mechanism of solar modules over the years have focused purely on the technological aspect of the manufacturing. When analyzing price, the influence of economic factors such as interest rate and exchange rate must also be taken into consideration to achieve a precise analysis. In this paper, an oligopolistic model and econometric method are used to determine the economic factors that have an influence on solar module prices.
... Many studies discuss the link between energy and technological advancements (Gallagher et al., 2006;Cheon and Urpelainen, 2012;Ghaffour et al., 2015;Ekpung, 2014;Henry, 2014;Gideon, 2014;Danbaba et al., 2016;Edwin et al., 2017;Singh and Issac, 2018;Mukadasi, 2018). Among them, the majority of the investigations are inclined towards exploring the relationship between energy consumption and technological innovations (Sohag et al., 2015;Tang and Tan, 2013;Popp, 2001). ...
Article
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The present study not only focuses on single measure of technological innovation but included three core dynamics of measuring technological innovations. These include research and development expenditures, High-tech exports and patents by residents. This kind of extensive examination will provide greater understanding regarding which form of technological innovation have the tendency to curtail or augment levels of energy intensity in Indonesia. The awareness derived from such broad inspection would be able to identify not only the overall contribution of technological innovations in affecting country’s power intensity but highlight the specific role of each form of innovation in influencing energy intensity levels and the particular association to guide effective policy making process. The current study has adopted the refined methodology of auto-regressive distributed lags (ARDL) bound testing approach to examine the dynamic relationship among energy intensity and technology innovation with amplified understanding of the critical association to support the course of economic planning and policy making. The results of ARDL bound testing approach confirm that high technology exports, research and development expenditure and number of registered patents are strong determinants of energy inefficiency in Indonesia. Likewise, the outcomes affirm that all the three proxies of technology innovation have a constructive and negative effect on energy inefficiency in Indonesia which implies that the high technology exports, number of registered patents and R&D expenditure are the main source of reducing energy inefficiency in Indonesia in the long run and short run. Also, the results of Granger causality method confirm a bi-directional causal relationship between energy intensity and technology innovation in Indonesia.
... Since forests play as important a role as CO 2 emissions sinks, the Reducing Emissions from Deforestation and Degradation (REDD+) mechanism was developed by the UNFCCC, aiming to provide an incentive for developing countries to protect their forest resources (Hickmann, 2013;Lederer, 2011;Wibowo & Giessen, 2015). However, most principal mitigation actions include measures that aim to cut emissions and are predominantly achieved by replacing fossil fuels by renewable energy (i.e., by fostering new technologies; see Cheon & Urpelainen, 2012;Negro, Alkemade & Hekkert, 2012;Pacala & Socolow, 2004) and energy savings (i.e., by promoting more energy efficient equipment; see Lechtenb€ ohmer & Luhmann, 2013;Lipscy & Schipper, 2013). ...
Article
In this study we examine the adoption of climate framework laws in 20 member states of the European Union (EU) from 1990 until 2015. Our analysis is guided by the following research questions: First, which EU member states have adopted climate change legislation that addresses mitigation, adaptation, or both? Second, do EU countries act coherently or do we observe differences across countries regarding the response strategy or point in time of policies directed towards climate change? Third, comparing mitigation and adaptation frameworks, which approach came first and did it affect the adoption of the respective other? Our findings show that all countries save one (i.e., Hungary) covered in the analysis have adopted framework laws tackling mitigation and/or adaptation to climate change. While we did not observe a coherent pattern with respect to timing or sequence of adaptation and mitigation frameworks, we found that the best predictor of a national government’s behavior is the behavior of the governments of other countries. However, the response of EU member states to climate change is less homogenous than one would have expected based on previous literature. In addition, by highlighting that mitigation and adaptation measures are equally prominent, at least within our sample of EU countries, we complement current climate change literature that often places mitigation efforts at the forefront in terms of legislation activity. Future research should examine this issue more closely, as this dynamic is likely to continue since the Paris Agreement gave prominence to adaptation.
... On the one hand, low oil prices encourage the overconsumption of carbon-intensive fuels and reduce the incentives for energy conservation. Low oil prices could also make renewables relatively even more expensive and hence scare off much-needed investment in the renewable energy sector (Cheon and Urpelainen 2012). On the other hand, falling oil prices presents an invaluable opportunity to phase out FFSs IEA 2015a;World Bank 2015). ...
Chapter
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Fossil-fuel subsidies are economically inefficient and harmful for the environment yet efforts to phase them out at the national and international levels have not been effective. The existing international legal framework is too weak and fragmented to support this process and an international agreement is essential.This paper explores the challenges and prospects of, and avenues for negotiating a binding multilateral agreement on phasing out fossil-fuel subsidies. The paper posits that the Friends of Fossil-Fuel Subsidy Reform are in a position to take the lead and that the ball is in the court of the World Trade Organization.
... Emphasis on environmental sustainability, or "going green," has become increasingly important in the planning, construction, and renovation of major development projects (Binstock et al. 2009). Concerns about climate change and increases in energy costs have contributed to heightened public awareness as well (Cheon and Urpelainen 2012). Overall, the case for green development seems to be gaining national and international acceptance, and the benefits of sustainable design and construction are garnering more attention (Barton and Tsourou 2000;Brawley 2006). ...
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Impact of Games on the physical environment includes the building of new sport facilities, accommodation, changes in the outlook of the city, and transport links as well as industrial space. The IOC’s environmental awareness initiatives simply followed the lead of society’s shifting values towards environmental sustainability. Sustainable environment is emerging as an important factor which is capable of influencing sustainable games. Also, it emphasizes the importance of Olympic Games, carried out as much as possible without harming the environment and humanity, and without changing their natural habitats. The IOC’s declaration that environmental protection has become the third dimension of the Olympic movement, alongsides sport and culture, is problematic; the IOC policy statements suggest that the IOC led in the development of environmental protection. The aim of this paper is to examine and compare IOC’s perspective on environmental sustainability with Candidate Cities of Istanbul, Tokyo and Madrid, participating in the nomination process of 2020. According to IOC’s evaluation report; all candidate countries should give great importance to sustainable environmental projects and these projects should be managed properly. Furthermore, these projects should identify and be very well adapted to the local community. This study reports that all the candidate countries’ sustainable environmental projects were all found to be admirable, however, their existing infrastructure were also pointed out.
... This suggests that the rise of international crude oil price increases the cost of fossil energy and the rising demand for alternative energy sources promotes the technological innovation of renewable energy. This conclusion is also consistent with Popp (2002) and Cheon and Urpelainen (2012), who found that energy prices have a strong positive impact on boosting technological innovation. In addition, there is bidirectional causality between GDP per capita and technological innovation, implying that R&D investment will be increased to promote renewable energy development when the economy is prosperous. ...
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Technological innovation plays an important role in the process of renewable energy development. This paper mainly discussed the influenced mechanism of the technological innovation on renewable energy development in six major developed countries during 1980-2010 employing panel cointegration and panel error correction models. The empirical results indicate that renewable energy consumption has a long-run equilibrium relationship with technological innovation and other external driving factors. The results from the panel error correction model indicate that bidirectional causality exists between technological innovation and renewable energy consumption in the long run. This shows that the manifestation of the promoting effect of technological innovation on renewable energy development requires a certain amount of time. Moreover, there is significant unidirectional causality from other external driving factors including GDP per capita, carbon dioxide emissions per capita and international crude oil price to renewable energy technological innovation.
... A range of supporting contextual factors has enabled Germany to utilize and further develop the existing coordination mechanisms for renewable energy policy (Laird & Stefes, 2009). The most notable were changes in global energy prices (Cheon & Urpelainen, 2012) as well as the nuclear accidents in Chernobyl and Fukushima that raised public awareness about energy-related environmental risks and facilitated the acceptance of renewable energy technologies (Jahn & Korolczuk, 2012). ...
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Renewable energy sources are central to building low-carbon energy systems but there is little secured knowledge about the structural factors that shape national renewable energy policies and energy transition pathways. Drawing on the literature on ‘varieties of capitalism’ , this article offers an in-depth account of the evolution and impact of renewable energy policies in two countries that are commonly labelled in the literature as two opposite forms of capitalism: ‘coordinative market economy’ (CME) in Germany and ‘liberal market economy’ (LME) in the UK. Based on recent political economy literature, this dual perspective is complemented by including a third subtype, ‘dependent market economies’ (DMEs), which are found in the transition states of central and eastern Europe. The analysis reveals an initial convergence of the three varieties of capitalism towards stronger government involvement and CME-style targeted policy measures. The effectiveness and scope of these measures, however, continues to be constrained by the political economic settings. More recently, centralization and market-based renewable energy governance has gained the upper hand at both national and EU-level. The article concludes with emphasizing the risks of national and EU climate and energy policies driven by short-termism and cost-effectiveness for both renewable energy and climate change goals in the long-run.Policy relevanceThe article has policy implications for EU and national policy makers and stakeholders concerned with renewable energy and climate change governance. It underlines the need for comprehensive renewable energy policies targeting domestic market creation and industrial development as well as civic participation. Domestic and external constraints that different varieties of capitalism within the EU face in advancing these three components of renewable energy development are emphasized. The article stresses the need for enhanced coordination and balanced development of renewable energy sectors across all EU economies as essential for achieving climate change goals and a genuine low-carbon energy transition.
... Moreover, the very well-established and subsidized production of bio-ethanol and biofuel appears to be copied and not considered to be a key enabler. The low oil price, strong competition with food, and general shortcomings of bioenergy compared to other renewables might be some reasons for this [81,83,101,108,109]. As a result, it seems reasonable that the most important criteria dimension identified by this study -not only by hightech countries or employees in industry-related organizations or private companies but also by NGOs and policy makers -is the economic one. ...
Article
As new technologies based on renewable raw materials and biological principles are becoming available, bioeconomic transformation could help to achieve the United Nations’ Sustainable Development Goals (SDGs). However, bioeconomic transformation is not necessarily sustainable. To design effective enabling and regulatory governance frameworks for bio-based transformation, policy makers have to identify potentially game-changing future technologies and assess associated sustainability gains and risks. Drawing on the concept of key enabling technologies (KETs) put forward by the European Commission (EC) in 2009, this paper defines KETs for the bioeconomy. Based on an international expert survey, we identified KET criteria for bioeconomic transformation and developed overarching super-categories describing technology pathways and criteria dimensions according to the existing society–environment–economy triangle. In this way, this study contributes not only in providing advice allowing new technologies to foster but also in elucidating relationships between the regional origin and the perceived future of bio-based technology development. Moreover, bioeconomy KET visions from different stakeholders have been analyzed, thus providing a basis for future technology research, evaluation, politics, and management.
... Their discussion suggests that maintaining oil price played a role in smoothing the transition to a sustainable energy system. Cheon and Urpelainen (2012) carried out an empirical analysis on the influence that oil price has on technological advances in renewable energy. The analysis shows that an increase in oil prices results in the increase of factors such as public renewable R&D expenditure and renewable patents. ...
Chapter
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Private investment in renewable energy must be scaled up to achieve decarbonization of the global economy, low carbon transformation, and climateresilient growth. The United Nations advocates that governments should create a level playing field for private investment in renewable energy, where fiscal policies shall be used to incentivize engagement from the private sector. While the studies on renewable energy are abundant and range from unlocking renewable energy investment to effects of environmental policies on innovation, energy efficiency policies, investment policies in renewable energy, and adoption of feed-in tariffs, studies that uncover the determinants of private investment in the renewable energy sector are limited. Unlike the previous literature, which is concentrated on the total green investment, this chapter distinguishes private sector investment and government investment in renewable energy. Using multilevel data from 13 countries over the period 2004–2016, this chapter investigates the impact of four fiscal and financial policy instruments, namely (1) feed-in tariffs, (2) taxes, (3) loans, and (4) grants and subsidies, on private investment in renewable energy. Estimation using multilevel random intercept and random coefficient model provides evidence of the effectiveness of two policy instruments, feed-in tariffs and loans. This study could benefit policymakers and researchers in understanding the factors enabling a scale-up of renewable energy investment.
... The relationship between oil price shock and technological progress has been veri ed by many studies. According to Cheon and Johannes (2012), technological progress de nitely will a ect electricity consumption, either by more electrical devices produced or advance in power e ciency. In Column 2, total factor productivity is used to measure technological progress. ...
Article
Do countries consume more electricity as they become richer? This study uses an instrumental variables approach to investigate the connection between electricity consumption and economic growth. With panel data of 32 countries spanning the period of 1996-2014, two potential instruments, which are an oil price shock as the main focus and past saving rates, are used for estimation. Controlling for country and time-¿xed e൵ects, the estimation results show no evidence of unidirectional causality runs from national income to electricity consumption.
... Emphasis on environmental sustainability, or "going green," has become increasingly important in the planning, construction, and renovation of major development projects (Binstock et al. 2009). Concerns about climate change and increases in energy costs have contributed to heightened public awareness as well (Cheon and Urpelainen 2012). Overall, the case for green development seems to be gaining national and international acceptance, and the benefits of sustainable design and construction are garnering more attention (Barton and Tsourou 2000;Brawley 2006). ...
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Environmental Sustainability for Future Generations (A Comparison of 2020’s Candidate Cities)
... ARDL Error Correction Model (ECM) was performed to ensure that there was a short-term relationship between the dependent variable and the independent variables, as well as to identify the rate of correction of shortterm deviations over the long term (Cheon and Urpelainen 2012). In other words, the speed at which correction of the short-term deviations and return to the long-term equilibrium position was performed (Tables 7, 8, and 9). ...
... In comparison, limited land supply induces innovation in high yielding fertilizer and biological technologies. Moreover, recent studies use the case of new energy technologies to further test this hypothesis arguing that the supply shortage and price increase of conventional energy inputs stimulate the development of green energy technologies (Goulder, 1999;Cheon & Urpelainen, 2012;Bayer et al., 2013;Aghion et al., 2016). In his pioneering article, Popp (2002) found that anticipated energy prices strongly predicted patents designed for green and sustainable energies across a range of industrial sectors. ...
Thesis
This thesis studies outward foreign direct investment (OFDI) of Chinese multinational enterprises (CMNEs) and technological innovation. The first three chapters explore how home country contexts influence OFDI decisions, strategies and post investment performance. Chapter 1 develops a “three internationalization advantages” framework in which CMNEs invest abroad not only on the basis of firm-specific advantages (FSA) but also on state-created and network-based advantages which can make up for the shortage of FSA. The necessary condition for the OFDI of Chinese firms is “relative FSA” over domestic competitors, to get access to state-created and network-based advantages. Chapter 2 combines the local-global connectivity literature with host location choice studies to explain the location strategies of CMNEs. Firms originating from different subnational home regions (31 Chinese provinces), show heterogenous spatial patterns in global expansion patterns, which can be partly attributed to prior connectivity between home regions and foreign countries. Export, patent co-invention activities as well as the “friendship city” relationship facilitate OFDI, and such an influence differs across investment motives. Chapter 3 focuses on post-OFDI innovation performance of CMNEs and the influence of inward FDI (IFDI). Using quasi-experimental models, empirical results indicate that OFDI has a significant impact on their subsequent innovation performance, which is affected by Chinese firms’ prior within- and between-firm interactions with IFDI and also moderated by the country of origin of the IFDI. Chapter 4 focuses on technological dynamics and rare metals (RMs). Through text mining 5,214,307 USPTO granted patents over the period 1976-2015, we found that RMs work as an important material basis for modern technologies. At the level of technology subgroups, increases in the supply of a certain RM significantly boost the innovation output of technology areas which rely heavily on this RM.
... Another way in which oil prices influence renewable energy is through their influence on renewable R&D. Cheon and Urpelainen (2012) conducted an empirical analysis of how oil prices influence renewable energy development showing that an increase in oil prices increases countries' incentives to invest more in renewable energy technology. Similarly, Wong et al. (2013) found that oil prices and renewable R&D are positively correlated. ...
Article
This paper analyzes the influence of certain factors on the demand and supply of solar modules by employing the fully modified ordinary least squares method using Japanese data. Our regression analysis shows that interest rates and money supply (M2) significantly impact the solar photovoltaic module supply, indicating that lower interest rates and more funding channels for the renewable energy sector will increase solar photovoltaic module production. Based on this finding, the paper concludes that, for Japan to increase its energy self-sufficiency rate, the Government of Japan should implement green financing policies, providing renewable energy business owners with a wider variety of funding channels with lower interest rates, and ultimately invigorating investments in solar photovoltaic installation.
... Bayer et al (2013) find that for 1990-2009, for each $2 increase in oil price, patents filed for solar PV and wind technologies increased 13% on average over the following year (across 74 countries, with the impact greatest outside the OECD). Within the OECD, Cheon and Urpelainen (2012) demonstrate that the marginal effect of increasing oil prices on renewable patent applications increases with existing share of renewables in electricity generation, which (as with alternate vehicle technologies) suggests an important role for the existing knowledge stock and path dependency in innovative activity, found also by Kruse and Wetzel (2016), who in their primary specification (1983-2009) find highly varied energy price to patent elasticities across a range of 11 (low carbon) supply and energy efficiency technologies, including e pp = 1.12 (solar PV); 0.56 (CCS); 0.37 (geothermal), and 0.61 (ocean energy). Under their alternative specification (for the period 1998-2009), energy prices also become influential for energy storage technologies, and more so for solar and geothermal, but insignificant for ocean energy and CCS. ...
Article
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We conduct a systematic and interdisciplinary review of empirical literature assessing evidence on induced innovation in energy and related technologies. We explore links between demand-drivers (both market-wide and targeted); indicators of innovation (principally, patents); and outcomes (cost reduction, efficiency, and multi-sector/macro consequences). We build on existing reviews in different fields and assess over 200 papers containing original data analysis. Papers linking drivers to patents, and indicators of cumulative capacity to cost reductions (experience curves), dominate the literature. The former does not directly link patents to outcomes; the latter does not directly test for the causal impact of on cost reductions). Diverse other literatures provide additional evidence concerning the links between deployment, innovation activities, and outcomes. We derive three main conclusions. (1) Demand-pull forces enhance patenting; econometric studies find positive impacts in industry, electricity and transport sectors in all but a few specific cases. This applies to all drivers - general energy prices, carbon prices, and targeted interventions that build markets. (2) Technology costs decline with cumulative investment for almost every technology studied across all time periods, when controlled for other factors. Numerous lines of evidence point to dominant causality from at-scale deployment (prior to self-sustaining diffusion) to cost reduction in this relationship. (3) Overall Innovation is cumulative, multi-faceted, and self-reinforcing in its direction (path-dependent). We conclude with brief observations on implications for modeling and policy. In interpreting these results, we suggest distinguishing the economics of active deployment, from more passive diffusion processes, and draw the following implications. There is a role for policy diversity and experimentation, with evaluation of potential gains from innovation in the broadest sense. Consequently, endogenising innovation in large-scale models is important for deriving policy-relevant conclusions. Finally, seeking to relate quantitative economic evaluation to the qualitative socio-technical transitions literatures could be a fruitful area for future research.
... Destek and Sinha [27]; found an inverted U-shaped relationship between renewable energy consumption and economic growth in 24 OECD countries. Further, A positive relationship between economic growth and renewable energy consumption was also found by Belaid and Zrelli [28] for 9 Mediterranean countries, Rahman and Velayutham [29] for South Asia, Razmi, et al. [30] for 130 developing countries, Fan and Hao [31] for Chinese provinces and Chen and Stengos [32] for Iran. Alam and Murad [33] also found that economic growth promotes renewable energy consumption in the long-run and has an adverse effect in the short-run for 25 OECD countries. ...
Article
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This study examines the impact of globalization(s) on renewable energy consumption in OECD countries by endogenizing per capita GDP, oil prices and per capita carbon emissions. We use robust globalization(s) as measured by the “classic”, “reconstructed” and “revisited” globalization indexes. The novel method of Machado and Silva Panel quantile regression (2019) approach is used to obtain robust findings for the renewable energy consumption-globalization nexus. The results confirm the presence of a long-run association between renewable energy consumption with globalization(s), per capita GDP, oil prices and per capita carbon emissions. The empirical results also describe that there are positive effects for per capita income, the real price of oil and carbon emissions per capita on the renewable energy consumption. In addition, a higher level of (overall, economics, social and political) classic globalization promotes renewable energy consumption, while the “reconstructed” and “revisited” economic globalization reduces the use of renewable energy consumption, and this finding is also robust to different measures of economic globalization. Moreover, the panel quantile regression reveals that renewable energy consumption increases the domestic economy in the middle (0.50) quantile group of the population through importing more advanced technology and positive spilling over markets, while the lower quantile group and the higher quantile group of the population are using non-renewable (coal, wood) energy because of the livelihood practice that is based on coal and wood (for the lower quantiles group of the population) and for the sake of speedy growth (for the higher quantiles group of the population) that worsens the environmental quality without caring for the contents of globalization.
... On the one hand, low oil prices encourage the overconsumption of carbon-intensive fuels and reduce the incentives for energy conservation. Low oil prices could also make renewables relatively even more expensive and hence scare off much-needed investment in the renewable energy sector (Cheon and Urpelainen 2012). On the other hand, falling oil prices represent an invaluable opportunity to phase out fossil-fuel subsidies (Coady et al. 2015;IEA 2015a;World Bank 2015b). ...
... Destek and Sinha [27]; found an inverted U-shaped relationship between renewable energy consumption and economic growth in 24 OECD countries. Further, A positive relationship between economic growth and renewable energy consumption was also found by Belaid and Zrelli [28] for 9 Mediterranean countries, Rahman and Velayutham [29] for South Asia, Razmi, et al. [30] for 130 developing countries, Fan and Hao [31] for Chinese provinces and Chen and Stengos [32] for Iran. Alam and Murad [33] also found that economic growth promotes renewable energy consumption in the long-run and has an adverse effect in the short-run for 25 OECD countries. ...
... First, widespread adoption of RE use requires technological innovations which enables an increase in production and reduction in the unit cost of main RE energy forms including solar and wind (see e.g. Cheon and Urpelainen 2012;Bayer, Dolan, and Urpelainen 2013). Given the level of innovation required in RE production, highly industrialized countries have historically been the key sources of technological innovations in RE. ...
Article
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This paper examines the asymmetric responses of renewable energy (RE) technology to globalization and economic growth shocks across the G7 countries using the Nonlin-ear Cointegrating Auto-Regressive Distributed Lag (NARDL) model. Our results indicate asymmetries across these countries and that positive shocks on globalization increase RE in Canada, Germany, the United Kingdom (UK), and the United States (US) while negative shocks decrease RE. However, both positive and negative globalization shocks promote RE consumption in Italy and Japan but decrease it in France. In contrast, both income shocks increase RE in France whilst positive income shocks increase RE in Canada, Germany, and Italy while negative shocks decrease RE. Positive income shock facilitates RE in the UK and the US while negative income shocks are detrimental to RE in Japan. Further analysis using panel cointegration, Fully Modified Ordinary Least Squares, and Panel Dynamic Ordinary Least Squares suggests that RE deployment in the G7 countries is mainly driven by positive shocks on income, globalization, and capital. We discuss the implications of the findings.
Article
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Energy policy comprises rules concerning energy sources, energy efficiency, energy prices, energy from abroad, energy infrastructure, and climate and environmental aspects of energy production, utilization and transit. The main theme in energy policy concerns the trade-offs between affordable, secure, and clean energy. Energy policy is a cross-sectoral – or boundary-spanning – policy area, which means that energy policy has implications for or is affected by decisions taken in adjacent policy areas such as those addressing agriculture, climate, development, economy, environment, external relations, and public health. The cross-sectoral character of energy policy is reflected in how it is proposed, adopted, implemented, and evaluated. Putting an energy policy issue on the political agenda can be attained easily, while the diversity of interests of the actor groups that are potentially affected by the proposal can complicate the policy process. The implementation depends on whether the energy policy measure in question is of a local, national or international nature, and to what extent the implementation entails joint efforts by state and non-state actors. As with policy instruments adopted in any other policy area, the evaluation of an energy policy's success is likely to vary across the different actor groups involved. The analytical perspectives on energy policy depend on the energy source of interest. Research concentrating on fossil energy sources (i.e., coal, oil, and natural gas) has traditionally adopted the analytical lens of international relations and international political economy. A similar research interest can be observed for studies of unconventional fossil energy sources (i.e., oil shale, oil sands, and shale gas) and nuclear power, although the
Article
The present study aimed to expansively evaluate the association between the green innovations and the natural resource commodity prices in China. China has been focusing on green policy implementations and green innovation for development of a green economy, however, it is integral to evaluate the impact of these considerations on the natural resource commodity prices. Thus, the paper evaluates the impact of the green innovation on the natural resource commodity prices within China. The research is based on data from 30 eastern, western, and central Chinese provinces for the period 2002–2020. The paper provides a measurement method for green innovation through the number of the “alternative energy production and energy conservation patents”. The overall number of patent applications and the number of grants issued for the patents were taken as indicators for the green innovation. The results indicated that there is a positive impact of the green innovation measures on the natural resource commodity prices. Although, when the sample is evaluated based on regional differences, there is presence of heterogeneity related to the impact of the green innovation on the natural resource commodity prices. Explicitly, green innovation has a specific role in the promotion and influence of the commodity prices in the western and central Chinese regions whereas it posits no influence in the eastern regions.
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This paper uses a new measure of international trade, i.e. the international trade potential index, to measure the welfare gains from trade across countries. The measure is based on the import shares of countries in their gross domestic products. It is observed that gains from international trade are low in prosperous economies, but they are larger in poorer economies. Then, the paper investigates the impact of the index of international trade potential on renewable energy consumption in the unbalanced panel dataset of 36 Organisation for Economic Co-operation and Development member countries from 1966 to 2016. The novel evidence is that international trade potential is positively related to renewable energy consumption. It is also found that per capita income, per capita carbon dioxide emissions, and energy prices increase the demand for renewable energy.
Chapter
Researchers in international environmental politics (IEP) have devoted little attention to their field’s methods. With a few exceptions, they have simply carried out their research without exploring which methods are best for the field as a whole. This is a laudable approach to an area of research whose data can range from the cultural discourses in global negotiations to measurements of CO2 in the atmosphere. On the one hand, the absence of a hegemonic methodological discourse in the field fits its diversity well. On the other hand, the lack of extended reflection about the methodologies appropriate to the field may prevent IEP researchers from thinking more creatively about their research approaches. Greater attention to research design and methodology would help them avoid unnecessary weaknesses in their studies. To that end, this chapter outlines a number of different approaches and specifies how they are used and for which kinds of analytical projects, focusing on issues of research design. It also identifies characteristic pitfalls and critiques of the approaches.
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The development of the new energy vehicle (NEV) industry to alleviate the global energy shortage and environmental pollution has attracted much attention. An econometric model is established to investigate the influence of oil price on innovation in new energy vehicle technologies, based on the induced-innovation theory. Taking advantage of enterprise-level panel data, the method of individual-fixed effect estimation is employed to capture time-invariant enterprise attributes in the analysis. We found that oil price spurs innovation in NEV enterprise, when controlling the influences of other factors, which is consistent with the theoretical hypothesis. The effect is substantively significant and robust. Further study implies that increasing research and development expenditure is a channel to increase innovation for enterprises when oil prices raise. Our findings are helpful to policymakers who are trying to understand the heterogeneity effects of oil price on NEV innovation. This paper suggests that central government should provide relevant policies and incentives to deal with price shocks, and enterprises should also have long-term plans to promote continuous corporate innovation.
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The theoretical chapter looks at the concept of sustainability with regard to the main objectives of biofuel policies while it considers the importance of innovation and technological development in order to reach a transition towards sustainability and sustainable mobility. The Environmental Kuznets Curve is quoted in order to explain technological optimism with regard to innovations which imply that a transition towards sustainability can be reached. Different strands of economic research are concisely presented in order to identify a theoretical framework where innovation is put at the center of attention. Evolutionary economic theory is hereby considered as the most applicable approach that provides an explanation for technological development and innovation. Different concepts that reflect on the importance of innovation and technological change are subsequently presented. The strong connection between institutional economics and evolutionary economic theory is referred to in detail in especially with regard to the concepts of innovation systems. The technicalities and attributes of Technology Innovation Systems are introduced as the concept of Energy Technology Innovation System (ETIS) is being introduced and further elaborated upon. The feature of product/process level and institutional level analysis that provides comprehension of physical technologies and social innovations is explained in more detail since the ETIS concept is applied to the analysis of the Brazilian sugarcane complex.
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This presentation examines the combined effects of crude oil prices and environmental policy on technological innovation for alternative sources of energy. The analysis is conducted using patent data on a panel of 17 countries. A more stringent environmental policy can soften the impact that crude oil prices have on innovation and can also attenuate the asymmetric response of innovation to oil price increases or decreases. In turn, international environmental agreements, although having positive effects on patenting activity, fail to buffer the impact of crude oil prices on innovation. These results should be considered by policymakers that are conducting climate change policy to increase energy security and to accelerate technology diffusion towards a decarbonized energy system, while inevitably dealing with the uncertainty associated with the crude oil market.
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Recently, significant interaction has been established for oil price shocks with some economic and financial variables, yet our understanding of the environmental burdens of oil price shocks is still limited. We study the co-movements between oil shocks and CO2 emissions intensity in the United States from February 1975 to July 2018 using wavelet techniques. Key findings suggest that the dis-aggregation of oil price shocks into demand and supply shocks yield novel insights into the pattern of co-movements between oil shocks-CO2 emissions relationships across different frequency bands and scales. Moreover, we find that higher oil prices triggered by oil demand and global economic activity shocks cannot serve as a substitute for environmental policies aiming at reducing carbon emissions. Contrary to expectations, we highlight that oil supply shock does not result in lower levels of carbon emissions in the U.S. Besides, we also show that an increase in the intensity of CO2 emissions leads to more uncertainty in the global oil market and drives down oil inventory across different frequency bands. Given the strong predictability of the oil price shocks for environmental burdens, it is hoped that our results will trigger further discussion on environmental problems.
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Do lower oil prices translate into less innovation more than higher oil prices translate into more innovation? Is a long-run sustainability transition taking place or are countries just encouraging innovation in alternative energies in a short-run approach, given the conditions of fossil fuel markets? In this paper we apply negative binomial regression to a panel data set of the 10 most innovative countries concerning alternative energy technologies, in order to assess the impact of oil price variations on this innovation, using counts of patent applications as a proxy. The data includes the declining prices period after 2014. The results show that the impact of oil prices on patent applications for alternative energies is asymmetric: when prices are decreasing the reduction in innovation is more pronounced than the expansion when prices are rising. This result may denote some absence of commitment to find sustainable alternatives to the use of fossil fuels.
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Understanding the dynamic relationship between oil prices and renewable energy is beneficial to promoting the development of the renewable energy market and the transition from fossil fuels to renewable energy, which will finally protect the environment. Based on the data of G7 countries from 1980 to 2018, this paper analyzes the short-term and long-term dynamic relationship between oil prices and renewable energy consumption (REC) by using linear and nonlinear autoregressive distributed lag models under the condition of structural fractures and then discusses its asymmetric characteristics. The results show that, except for France and Germany, the oil prices of other countries have a significant asymmetric effect on REC, but there is great heterogeneity between the countries. Specifically, in Canada, the U.S., and Italy, a positive change in oil prices has a greater impact on REC than a negative change, whereas in England and Japan, the results are just the opposite. Therefore, based on the heterogeneity between countries and the long- and short-term dynamic relationships reflected in the research results, this paper further discusses the policy implications.
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The main objective of this article is to contribute empirically to the understanding of the impact that eco-innovation has on firms’ financial performance within the framework of the resources-based view. Specifically, eco-innovation is measured by using eco-innovative activities and financial resources applied to eco-innovation to argue that the identification and measurement of certain resources of firms allow companies that are particularly active in investing in eco-innovation to be more competitive. Furthermore, the analysis attempts to ascertain whether firms that own green patents and other characteristics exhibit different level of financial performance than firms without registered green patents. The empirical partial least squares structural equation modeling results indicate a positive relationship between the investment of resources and the financial performance of eco-innovative firms. The effects of involving managers in eco-innovative processes as an environmental capability of firms are also tested.
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Social science has a crucial role to play in informing policymakers about political and institutional strategies conducive to implementing more ambitious energy-related climate change policies. In this chapter I review major avenues of research in political science and related disciplines that examine the politics of energy and climate change. I focus on how individuals, civil society, business, and governments, affect climate-related energy policies. In the second section of the chapter I suggest three issues with the potential to promote more rapid decarbonization of energy systems, but which have not been a sustained focus of research to date: 1) the politics of low-carbon economic development; 2) innovation and the deployment of new technologies; 3) the politics of negative emissions and geoengineering technologies.
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This paper constructs a knowledge-stock indicator to explore the trend of renewable energy technology innovation (RETI) levels across China's provinces during 1997–2015. First, the spatial-temporal evolution is analyzed. Second, the convergence characteristics and patterns are identified through the nonlinear time-varying factor model and the relative transition path curves. Third, the drivers of convergence behaviors are examined. The results are as follows: (i) China's RETI experienced a spurt of development. Its spatial pattern has changed significantly, and the average annual growth rate has also shown spatial differences; (ii) China's provincial RETI level was not converged as a whole during the sample period, but exhibited club convergence characteristics. The 30 provinces eventually converged to three clubs with large differences in average RETI level and annual growth rate; (iii) the provinces with a more optimized industrial structure, a greater R&D investment intensity, and a higher environmental regulation intensity tended to converge to the club with a higher innovation level and growth rate.
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This article examines the importance of national and sub-national policies in supporting the development of successful global wind turbine manufacturing companies. We explore the motivations behind establishing a local wind power industry, and the paths that different countries have taken to develop indigenous large wind turbine manufacturing industries within their borders. This is done through a cross-country comparison of the policy support mechanisms that have been employed to directly and indirectly promote wind technology manufacturing in 12 countries. We find that in many instances there is a clear relationship between a manufacturer's success in its home country market and its eventual success in the global wind power market. Whether new wind turbine manufacturing entrants are able to succeed will likely depend in part on the utilization of their turbines in their own domestic market, which in turn will be influenced by the annual size and stability of that market. Consequently, policies that support a sizable, stable market for wind power, in conjunction with policies that specifically provide incentives for wind power technology to be manufactured locally, are most likely to result in the establishment of an internationally competitive wind industry.
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Energy policies may lead to important industrial outcomes. This paper investigates the impacts of energy policies on industry growth in renewable energy. Research tools employed include the commercialization process, value chain analysis, and empirical case studies. Different renewable energy technologies and geographical regions are considered covering over 50% of the world markets of the technology fields considered. Market deployment measures that enhance home markets of domestic industries will in most cases lead to growing industrial activities. Irrespective of the domestic market situation, pure investment or R&D support alone to already strong industries in related fields may be powerful to help with diversification into sustainable energy business. Several exogenous factors such as timing, size factors, geography, etc. will influence both the industrial and policy positioning in practice. The results indicate that there are increased industrial opportunities in renewable energy to be captured not only by large countries or through large public resources, but also smaller countries can gain success through clever policies and optimal managing of the commercialization process.
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This article examines whether democracies contribute more to the provision of global public goods. It thus contributes to the debate on the effects of domestic institutions on international cooperation. The focus is on human-induced climate change, in Stern's words Using new data on climate change cooperation we study a cross-section of 185 countries in 1990 words-deeds gaps also in other policy areas, and whether there are systematic differences of this kind between domestic and international commitments and across different policy areas.
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Predicting corporate distress can have a significant impact on the economy because it serves as an efficient early warning signal. This study develops distress prediction models incorporating both governance and financial variables and examines the impact of major corporate governance attributes, i.e., ownership and board structures, on the likelihood of distress. The two widely documented methods, i.e., logit and neural network approaches are used. For an emerging market economy where ownership concentration is common, we show that not only financial factors but also corporate governance factors help determine the likelihood that a company will be in distress. Our prediction models perform relatively well. Specifically, in our logit models that incorporate governance and financial variables, more than 85% of non-financial listed firms are correctly classified in our models. When we consider the Type I error, on average the models have the Type I error of about 9%. Likewise, the neural network prediction models appear to have good results. Specifically, the average accuracy of the neural network prediction models ranges from approximately 84% to 87% with the average Type I error raging from about 10% to 16%. Such evidence indicates that the models serve as sound early warning signals and could thus be useful tools adding to supervisory resources. We also find that the presence of controlling shareholders and the board involvement by controlling shareholders reduce the probability of corporate financial distress. This evidence supports the monitoring/alignment hypothesis. Finally, our results suggest evidence of the benefits of business group affiliation in reducing the distress likelihood of member firms during the East Asian financial crisis.