Strategic R&D Budget Allocation to Achieve National Energy Policy Targets

42 Pages Posted: 2 Feb 2017 Last revised: 24 Jun 2017

See all articles by Jungwoo Lee

Jungwoo Lee

Korea Institute of Energy Technology Evaluation and Planning (KETEP)

Jae-Suk Yang

Korea Advanced Institute of Science and Technology (KAIST)

Date Written: February 1, 2017

Abstract

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

Suggested Citation

Lee, Jungwoo and Yang, Jae-Suk, Strategic R&D Budget Allocation to Achieve National Energy Policy Targets (February 1, 2017). Available at SSRN: https://ssrn.com/abstract=2909823 or http://dx.doi.org/10.2139/ssrn.2909823

Jungwoo Lee

Korea Institute of Energy Technology Evaluation and Planning (KETEP) ( email )

114-gil, Teheran-ro
Gangnam-gu
Seoul, 06175
Korea, Republic of (South Korea)

Jae-Suk Yang (Contact Author)

Korea Advanced Institute of Science and Technology (KAIST) ( email )

291 Daehak-ro
Yuseong-gu
Daejeon, 34141
Korea, Republic of (South Korea)

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