Climate Policy and Clean Technology Innovation: Evidence from FITs Policy Influence on Global VC Renewable Energy Investment Success

99 Pages Posted: 28 Apr 2021

See all articles by Lingyu Li

Lingyu Li

Strome College of Business, Information Technology & Decision Sciences

Date Written: January 15, 2019

Abstract

This paper examines the impact of climate policy on technology transformation toward clean innovation in the context of private sector investment, providing empirical evidence supporting subsidy policy effect on alleviating global warming. In principle, the novelty of research root in that I provide conceptual view of efficient clean innovation, on which intuition discussion and supportive reasoning for utilizing sustainable VC success exit as appropriate proxy for clean technology progress along renewable energy investment value continuum were provide. I prove for validity by incorporating various green patent measurements into baseline regression model and result was robust. In practice, I analyze the global Venture Capital (VC) renewable energy investment success (proxy for cleantech entrepreneurship innovation) in relation to Feed-in-Tariffs (FITs) policy, I distinguish the empirical importance of FITs policy using variations in industry and VC participation, justifying industry exclusiveness and VC inclusive policy features. I hypothesize that FITs policy function by stimulating VC do a better job on soring and due diligence, along with enhancing portfolio company product market competition advantage; and accordingly, I construct specific test for individual pathways relying on VC characteristics, and prove for the coexistence of selecting explanation and product market competition explanation. I find strong and robust evidence that generous FITs policy significantly enhances sustainable VC investment performance, simulating clean technology innovation. Finally, in line with prior endogenous concerns, I exclude issues such as VC non-random matching, unrevealed latent variable concern and alternative explanations. I analyze research questions with multiple samples, including 1159 global VC investment in cleantech companies across 17 OECD countries as the major one, 541 cleantech project from developing economy, 1480 non-VC backed cleantech projects and 13891 VC backed projects from traditional sectors as supplemental samples.

Keywords: Climate Policy, Venture Capital, Clean Innovation, Positive Exit, Impact Investment, Renewable Energy Sector

JEL Classification: G24, Q01, O3, Q2, H2, Q54, N7, P33

Suggested Citation

Li, Lingyu, Climate Policy and Clean Technology Innovation: Evidence from FITs Policy Influence on Global VC Renewable Energy Investment Success (January 15, 2019). Available at SSRN: https://ssrn.com/abstract=3829298 or http://dx.doi.org/10.2139/ssrn.3829298

Lingyu Li (Contact Author)

Strome College of Business, Information Technology & Decision Sciences ( email )

5115 Hampton Blvd
Norfolk, VA Norfolk 23529
United States

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