 Do energy prices induce progress in energy-related technology? An empirical studySimon Schmitz No 147, HWWA Discussion Papers from Hamburg Institute of International Economics (HWWA) Abstract: Research efforts towards new energy sources and towards the efficiency of energy use will be vital to reducing CO2 abatement costs in the long term. Can such efforts be induced by price instruments? Economists often cite induced technological change as a possible consequence of environmental market-based policies. Unfortunately, however, there is not much empirical evidence about the policy-induced development of environmentally friendly technology. I use patent data from 1976 to 1997 for the US, Japan and the major European countries in order to estimate the effect of energy prices on energy-efficient innovations. A further supply factor with presumably positive influence in the model is an OECD measure of government R&D expenditures in different energy domains. In order to prevent the model being biased by factors that change the propensity to patent over time in one country (such as changes in patenting laws and of course economic growth), I regard the ratio of energy-specific patenting activity to the overall patenting activity of the country as the dependent variable rather than mere patent counts.1 I find that energy prices (as a demand-side factor that influences the value of new innovations) have no significant positive effects on innovative activity as measured by patents. At the end of the 1970s, when energy prices were high due to the second OPEC crisis I can observe a little rise in the in the ratio of energy patenting activity to overall patenting activity across countries and energy-related technologies. This rise is mostly followed by a short decline, which is followed in turn by a very significant rise in the „intensity“ of energy-related patenting activity through to 1997. This last rise can obviously not be explained by energy prices that fell significantly during this period. Running additional regressions that include the ratio of energy taxes to the prices of energy yields that this ratio was significantly positively correlated with innovation in both Japan and the EU. A tentative interpretation might be that a rise in this ratio is regarded by economic agents as having the potential to increase the price of energy permanently, whereas mere price fluctuations like those experienced in the oil crises have no real credibility that influences future expectations. Furthermore, the tax ratio, which has consistently risen in Japan and especially the EU, could be seen as an indicator for government and public concern about the scarcity of fossil energy sources and about the urgency of ecological problems such as the greenhouse effect. This would then plausibly feed into the rise of energy-saving-related patenting activity observed. However, this result is weakened by the fact that there have been no taxes at all in the US, which nevertheless exhibits about the same pattern in terms of patenting activity. Date: 2001 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:zbw:hwwadp:26224 Access Statistics for this paper More papers in HWWA Discussion Papers from Hamburg Institute of International Economics (HWWA) Contact information at EDIRC. |
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