Innovation or acquisition? Emissions mitigation strategies and the role of renewable technologies

One of the actions taken to mitigate the climate change is research, development and demonstration (RD&D) investments in renewable energy (RE) technology. In addition to domestic RD&D spending, the import of foreign technologies, as a main channel of technology transfer, is another option to obtain higher share of renewable energies in order to achieve climate objectives. In this study, a panel dataset of 28 OECD member countries from 2011 to 2020 is analyzed, using the OLS, fixed-effects, and two-step system GMM methods, to assess the impacts of public spending on renewable energy RD&D (RERD) and the import of renewable energy technologies on the energy-related CO2 emissions. To fully capture the significant regional differences, the 28 countries are re-divided into four regions in accordance with their renewable energy RD&D investment level and total CO2 emissions. This study uniquely investigates the impact of RERD and importation-as an alternative channel for obtaining renewable energy technologies-on energy-related CO2 emissions in OECD countries, while also analyzing regional differences to inform targeted local policies. The findings reveal that CO2 emission is significantly and negatively affected by renewable energy imports, for the full panel as well as for Low-RERD and Low-Emission regions. Furthermore, only in High-RERD and High-Emission regions can renewable energy RD&D decrease CO2 emissions. Accordingly, some policy implications are recommended concerning investments in renewable energy RD&D and renewables import.