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The Impact of Intergovernmental Grants on Innovation in Clean Energy and Energy Conservation: Evidence from the American Recovery and Reinvestment Act

Taekyoung Lim, Tian Tang and William M. Bowen

Energy Policy, 2021, vol. 148, issue PA

Abstract: President Barack Obama signed the American Recovery and Reinvestment Act (ARRA) into law in 2009. It awarded massive temporary funding for the objective of reviving the national economy. The purpose of this research was to evaluate the effectiveness of some of the ARRA funds in terms of stimulating innovative activities specifically in renewable energy and energy efficiency technologies. The research question was about whether federal ARRA expenditures issued through decentralized state and local intergovernmental grant programs and designed to spur new energy technologies effectively achieved their legislatively stated objectives. The analysis was based upon a first differenced regression model with instrumental variables using data from 2005 to 2015. The analytical evidence indicates that all else held equal, the ARRA funds successfully stimulated innovative activities in these technology fields. We conclude that a decentralized delivery system conducted through intergovernmental grants can effectively allocate federal expenditures for promoting innovative activity in energytechnology-related fields. We also suggest that short-term and temporary funds such as those supplied by the ARRA can provide a positive longerterm return vis-a-vis innovative activity in these fields.

Keywords: Intergovernmental grants; American Recovery and Reinvestment Act (ARRA); Clean energy innovation; Energy efficiency and renewable energy (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1016/j.enpol.2020.111923

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