Expanding the Usage of Renewable Energy Through Innovation and Technology Transfer

Moving green growth forward requires acknowledging the well-known carbon dilemma facing all nations: carbon-based economic development versus carbon emission reductions. Switching conventional carbon energy to renewable energy offers a potential win-win solution to tackle this dilemma. This dissertation empirically examines innovation and technology transfer of renewable energy technology at the international level with its three essays. The first essay explores how oil endowments of a country influence its innovation paths, specifically in the automobile sector. I show that a country\u27s oil endowment is a negative driver for alternative technologies, while a positive driver for oil extracting technologies. Depending on their levels of fossil fuel endowment, it appears that countries alter their domestic climate policy to either increase or decrease their dependence on fossil fuels. International climate policy could be designed to incentivize countries with increasing dependence on fossil fuels, and thus reach agreements for more rigorous action on climate change. However, in smaller developing economies with traditionally low capacity to innovate, technology diffusion is more important than technology innovation. Technology diffusion from wealthier nation to the world\u27s poorest is the fastest way to make the transition to renewable energy at the current state. Hence, the second essay shifts the focus to technology diffusion, exploring how foreign aid helps developing countries increase their capacity to use renewable energy technologies. I find that foreign aid on technical cooperation (transferring intangible knowledge) increases future renewable energy production more than foreign aid on non-technical cooperation. This opens a new window for the on-going discussion of program and policy evaluation in the field of foreign aid, while also contributing to the fields of policy evaluation and climate change policy, especially for the diffusion of renewable energy technologies. Having shown the effectiveness of foreign aid in the energy sector, the third essay explores whether aid allocation by bilateral donors responds to the recipient needs in the renewable energy sector. Bilateral donors have been known for allocating their financial assistance based on political interests among recipients such as former colonies and political allies. The recent trends show that they allocate aid aligning more to their commercial interest. The findings support the recent trends of following the donors\u27 commercial interest. Donors select recipients based on their economic interest especially through expanding their market having higher number of recipients. When allocating, physical proximity drives the amount allocated. This sheds some light on future research to explore the potential of multilateral agencies in allocating aid to meet the needs of the poor