Impact of Renewable Energy Policy and Use on Innovation: A Literature Review

41 Pages Posted: 18 Sep 2013

See all articles by Felix Groba

Felix Groba

German Institute for Economic Research (DIW Berlin)

Barbara Breitschopf

Fraunhofer Institut für Systemtechnik und Innovationsforschung

Date Written: July 1, 2013

Abstract

Technological changes in renewable energy technologies play an important role in the context of climate change as they contribute to a reduction of technology costs and lead to an increasing market penetration of emission reducing technologies. This paper provides a comprehensive literature review highlighting numerous motivations and necessities underlying the introduction of renewable energy policies. Starting with a brief overview on the induced innovation hypothesis, we show that policy intervention has been an effective tool to change relative prices, thus, incentivizing innovation, but that also various influencing factors are at play. We show that the literature agrees on the need for specific renewable energy policies in order to overcome concomitant market failures and barrier. We highlight that technology specific policies are generally understood as necessary complements to environmental non-technology specific policies in order to generate adequate demand in energy markets. However, in that respect, we outline the ongoing debate on the effectiveness of different technology specific policies on the demand-pull side and the role of technology-push policies. Additionally we provide a summary on methodological approaches to measure policy efforts and technological change respecting different impact levels and stages within the technological change process. Finally, by focusing on international competitiveness and technology cost we highlight two aspects of the effects renewable technology innovation and respective policy support.

JEL Classification: N70, O31, O32, O57

Suggested Citation

Groba, Felix and Breitschopf, Barbara, Impact of Renewable Energy Policy and Use on Innovation: A Literature Review (July 1, 2013). DIW Berlin Discussion Paper No. 1318. Available at SSRN: https://ssrn.com/abstract=2327428 or http://dx.doi.org/10.2139/ssrn.2327428

Felix Groba (Contact Author)

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Barbara Breitschopf

Fraunhofer Institut für Systemtechnik und Innovationsforschung ( email )

Breslauer Str. 48
Karlsruhe, 76139
United States

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