Unveiling the dynamic relation between R&D and emission abatement National and sectoral innovation perspectives from the EU (original) (raw)
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Environmental Science & Policy, 2015
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Climatic change, 2009
Many European politicians argue that the EU should set tougher emission targets than what is required by the Kyoto protocol, and moreover, that emission trading with other countries outside EU should be limited so as to keep emission quota prices high. One of the arguments, frequently cited for such a policy, is the need for technological development. However, the literature on climate change and technological innovation does not unambiguously support the need for setting high emission taxes today. In this paper we investigate the relationship between emission taxes and technological change further by modeling innovation activity explicitly. In our model both the amount of R&D and the amount of carbon abatement are decided in a decentralized way by the market as a response to an emission tax. Moreover, we introduce several distinct failures in the market for new innovations, among others, insufficient patent protection and intertemporal knowledge spillovers. Our findings suggest that governments should under some circumstances set a higher carbon tax today if we have technological change driven by R&D than if we have pure exogenous technological change. Based on numerical simulations these circumstances are (a) positive intertemporal knowledge spillovers and/or (b) weak patent protection.
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Economics of Innovation and New Technology, 2019
This study has attempted to address prior knowledge gaps in the environmental economics literature by integrating the innovation shocks into the Environment Kuznets Curve (EKC) equation for twenty-six OECD economies using data from 1990 to 2014. Foreign direct investment (FDI), exports (EXP), renewable energy consumption (REC), and GDP per capita were included as control variables. The results from multiple empirical analyses indicated that positive shocks to innovation improve, but the negative shocks disrupt environmental quality. Data analyses also showed that a positive correlation exists between income per capita of OECD economies. From the negative coefficient of income per capita (squared) and the existence of a negative nexus between FDI and CO2e, both the EKC and the Pollution Halo Hypothesis (PHH) were confirmed in sampled economies, respectively. The paper offers empirical support for the favourable impacts of REC on the quality of the environment and calls for the adoption of innovation shocks as a policy instrument to formulate better environmental policies for a sustainable future.
Environmental Policy and Directed Technological Change: Evidence from the European carbon market
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International Journal of Finance & Economics, 2020
The researchers, environmental scientists and policymakers around the world are exerting substantial efforts to mitigate the growth of CO2 emissions to save the planet. A number of measures and initiatives, such as, energy efficiency, renewable energy technologies and emission-control are proposed in order to reduce CO2 emissions. This study examines the long-run relationship between R&D investment and environmental sustainability in a panel of 25 European Union (EU) member countries over a period of seventeen years (1998 to 2014). We use robust and reliable econometric methods to capture the interactions between R&D investment on renewable energy consumption and CO2 emissions. The findings confirm that the growth of R&D expenditures promotes renewable energy consumption and plays a significant role in reducing CO2 emissions in the sample countries. Furthermore, the findings suggest that increasing the share of renewable energy consumption in the total energy mix also reduces CO2 emissions. Given these results, we suggest that the EU policymakers provide more financial and regulatory assistance to the R&D activities, specifically in the energy sector, to ensure promoting low carbon economies in this region.
Environmental and innovation performance in a dynamic impure public good framework
2011
We model investment decisions regarding innovation and emissions abatement in a dynamic theoretical framework. Considering knowledge stock as an impure public good, we study the reaction function between one representative agent's investments in innovation and the other agents' investments in the public characteristic of the impure public good. We demonstrate that the reaction function has a positive slope under general conditions and that its sensitiveness is affected by assumptions on the elasticity of substitution in the benefit function. The positivity of the reaction function is then empirically tested in an econometric estimation. We exploit an original sector-based database by gathering innovation efforts as well as polluting emissions and economic dimensions over the time span 1996-2005 for 15 European countries and 23 manufacturing sectors. Empirical results show that sector-based innovation investment is positively driven by the public characteristics provided by other sectors. Different reactivity strength for different polluting emissions also allows us to disclose the role of complementarity in agents' decisions.