Renewable R&D investments and carbon emissions in G7 countries: The mediating roles of technology and economic efficiency

Rajitha Rajendran, Jayaraman Krishnaswamy, Nava Subramaniam and P.K. Viswanathan

Utilities Policy, 2025, vol. 94, issue C

Abstract: The planet is at a critical juncture in addressing the ongoing climatic crisis, with increasing calls to reduce atmospheric CO2 concentrations to stabilise global climate change. A fundamental shift from fossil fuels to clean and renewable energy (RE) systems involves technological development. However, the mechanics of renewable energy funding are poorly understood, slowing the financing rate for renewable energy technology (RETs). This study explores the efficiency of RETs (hydropower, wind, solar, and biomass) and their role in determining the public Renewable R&D investments (RRDI) for CO2 reduction in G7 countries. The analysis focuses on the carbon efficiency of disaggregated energy production technologies, including hydropower, wind, solar, and biomass, as mediators between R&D funding and carbon emissions. The study introduces GDP per capita (GDPpc) as the sequential-mediator to examine the economic efficiency of these technologies. The proposed conceptual framework is supported by the multi-level perspective socio-technical transition theory. The G7 countries' annual data from 2000 to 2021 is used to evaluate the hypotheses. Multiple regression using SPSS Process-Macro was performed using bootstrap analysis to estimate robustness. The findings indicate that public R&D funding significantly improves the carbon-efficiency of G7 countries RETs. However, the technological interaction with GDPpc is unfavourable in increasing CO2 emissions, revealing that RETs are carbon-efficient but not economically efficient. G7 countries require policies to improve the profitability of RETs by incentivising demand-side technologies. The novelty of this study is its examination of the technological and economic effectiveness of the RETs in the G7 using a management conceptual framework, which offers country-specific recommendations for R&D investment portfolios.

Keywords: Economic efficiency; Carbon efficiency; Transition management; Macroeconomic factors; R&D investment (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:juipol:v:94:y:2025:i:c:s095717872500013x

DOI: 10.1016/j.jup.2025.101898

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