The effect of energy R&D expenditures on CO2 emission reduction: estimation of the STIRPAT model for OECD countries

Energy innovations are critical to combating global warming and climate change. In this context, we focus on the impact of energy research–development (R&D) expenditures, which are the input of energy innovations, on CO2 emissions. For this purpose, we investigate the effect of disaggregated energy R&D expenditures on CO2 emission in 19 high-income OECD countries over the period 2003–2015. The dynamic panel data method is followed for empirical analysis. The results of the study show that R&D expenditures for energy efficiency and fossil energy have an increasing effect on CO2 emissions. Contrary to expectations, there is no significant relationship between renewable energy R&D expenditures and CO2 emissions. Remarkably, there is strong evidence that the power and storage R&D expenditures have a reducing effect on CO2 emissions. In light of the empirical findings, policy implications and recommendations to potential readers and authorities are further discussed.