Strategic R&D Budget Allocation to Achieve National Energy Policy Targets
42 Pages Posted: 2 Feb 2017 Last revised: 24 Jun 2017
Date Written: February 1, 2017
While recent international negotiations to combat climate change have led governments around the world to invest in R&D in the energy sector, funds allocated to R&D investment are limited during global economic downturns and depending on national economic conditions. A systematic approach and strategic budget allocation is required to achieve various national energy policy targets. In this study, we describe the optimal investment portfolio for achieving energy policy targets in any nation based on three budget allocation criteria: past investment performance, expected future effects, and additional investment risk. We outline the analytic hierarchical process by which policy target priorities are set, developing a market allocation model to analyze expected future effects and a system dynamics model to calculate the investment volume. Then, we apply these models to an example in an empirical analysis. The systematic approach suggested in this study may increase the efficiency of budget spending by helping government makes investment decisions based on clear criteria and the results of a quantitative analysis regarding government investment in R&D.
Keywords: R&D investment; budget allocation; R&D portfolio; energy technology; government investment; public R&D
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