A study of the innovative capacity in renewable energy technologies in the EU-15 countries: A sectoral innovation systems approach

Abstract: The unsustainability of the current energy provisions in the EU is becoming increasingly evident as the awareness concerning the finiteness of non-renewable resources is increasing, signs of climate change due to pollution arise and the vulnerability of relying on energy imports becomes apparent. One response to these challenges is the promotion of renewable energies, which however still are in an early state of technological development. The EU is therefore promoting innovations within renewable energy technologies, yet with very differing results between the member states. Based on the sectoral innovation systems approach and on the national innovative capacity model developed by Furman et al. (2002), this thesis applies a fixed effects regression model to the renewable energy technologies sector for the years 1998 to 2004 in order to identify the determinants of innovation capacity within renewable energies. The aim is thus to understand why some countries have been more successful in creating an innovative capacity in renewable energy technologies than others. It was found that the parameters in the regression are in fact not constant over the countries, but that the patent generation in this sector is determined differently in Germany than in the other countries. For the other 14 countries, the results show that population size, accumulated patents, R&D investments in the sector and the year of introducing tax measure incentives for promoting renewable energies determine the innovative capacity in renewable energy technologies. Besides the intercept dummy variable for Italy, the patent stock was found to have the largest impact on the patent generation in renewable energies, indicating that the national innovation system is in fact the largest determinant for the innovative capacity in the renewable energy sector. The implication of this is thus that it might be more worthwhile investing in the national innovative capacity than in factors specific to the renewable energy sector. Due to the restricted availability of data in this field, the results should however be treated with some caution.