Exploring the determinants of renewable energy innovation considering the institutional factors: A negative binomial analysis

Replacing traditional energy sources with renewable energy sources is an effective way to achieve emission reduction targets. Focusing on OECD countries from 1990 to 2018, this study examines the determinants of renewable energy innovation by applying a negative binomial model. There are four main findings: (1) Renewable energy patents show an inverted U-shaped curve, peaking in 2010; solar energy accounts for the largest share of patents; and the US is the largest renewable energy innovator, followed by South Korea and Germany. (2) Renewable electricity installed capacity, share of expenditure on research and development (R&D) of GDP, and implementation of the Kyoto Protocol are all found to promote innovation; by comparison, the proportion of renewable energy power generation of the total electricity generating capacity shows a negative effect. The price of crude oil shows no significant effect due to the offset effect between the European and nonEuropean country groups. (3) Share of R&D expenditure of GDP is confirmed to be the force driving technological progress in the solar, geothermal, and marine sectors, and it plays a more important role in Japan than in the US or Europe. Implementation of the Kyoto Protocol has no significant effect on innovation in European countries. (4) Three institutional factors-namely, the legal system and property rights; regulations; and freedom to trade internationally-are confirmed to be the driving forces, whereas this is not the case for the growth and free circulation of money. Policy implications for the optimization of the renewable energy sector's structure, the enhancement of renewable energy capacity, and the improvement of R&D investment and the institutional environment are proposed. Future research should shed light on a broader sample, using micro-level and sociotechnical analysis.