A Study of Innovation in the Clean Energy Sector: Patent Trend Analysis

39 pagesDo most countries still stick to the guidelines to alleviate global warming since the Paris Agreement in 2008, and how well do domestic policies contribute to this global mutual goal? One avenue to answer these questions is to examine patenting trends in the clean energy sector, which serve as a proxy for the innovation of clean technologies. Prior research has documented the economic benefits of policies that buttress the scientific research and innovation process, including in the context of environmental regulation. There are also recent studies analyzing the effect of the stringency of environmental regulation on innovation in the clean energy sector. This paper extends the patenting trend analysis in clean sectors with multiple variables to study the effect of the stringency of environmental regulation on patenting. Empirical models explore the effects of regulatory stringency using different time lags, as well as accounting for other factors that vary over countries and time. Although the results are mixed, comparisons across models indicate that standardized variables perform better than non-standardized variables after a country-fixed effect is included in the model. Moreover, the result shows that the stimulative effect of regulation on innovation occurs over relatively short time horizons up to a few years