Environmental Regulation and Innovation in Renewable Energy Technologies

Abstract

This paper examines the impact of renewable energy support policies on patent applications in solar and wind power technologies. The analysis is conducted using policy data and patent data for a sample of 225 countries and territories between 1990 and 2011. The policy data allows distinguishing two dimensions of regulation, design and intensity and their effects on innovation. The patent data is based on the new Y02E system and covers the recent years with strong increases in patent activity. The results show that, first, more intense portfolios of renewable energy support policies increase patenting in solar- and wind-power-related technologies, and, second, that this inducement effect is strongest for public RD&D programs, greenhouse gas trading systems, and fiscal incentives. In contrast to previous studies, this paper does not find technology-specific differences in the effectiveness of policy instruments.

Keywords: Innovation, renewable energy technologies, environmental regulation

JEL Classification: Q55, Q58, O31