Insights on the past trends and determinants of energy innovation are essential to set the basis for efficient and effective climate and energy policies in the coming years. Yet, the understanding of energy-related innovation dynamics and in particular of the political economy of energy innovation, is still incomplete. This paper collects and harmonizes data on energy innovation and environmental policy across countries and empirically investigates the effects of environmental policy, institutions, political orientation, and lobbying on the incentives to innovate in the energy sector. Our results suggest that all these factors affect the incentives to devote resources to energy R&D and to create new clean and energy-efficient technologies. Specifically, we conclude that political economy factors may act as barriers even in the presence of stringent environmental policy. This implies that, in order to support the move towards a greener economy, countries should combine environmental policy with a general strengthening of institutional quality and consider the  influence of government’s political orientation on environmental policies as well as the implications of the size of energy intensive sectors in the economy.

This seminar has been jointly organized by FEEM and IEFE, Bocconi University.