International knowledge spillovers and climate-friendly technologies

The thesis empirically analyzes the role of international knowledge spillovers in climate-friendly technological change. The final goal is to add empirical evidence to the debate on policies and strategies that support the mitigation of climate change. The development and diffusion of new climate-friendly technologies are necessary to reduce carbon emissions without hindering economic growth (IPCC, 2011; Popp, 2011). The three papers that are included in the dissertation aim at improving our understanding of a crucial element of climate-friendly technological change, i.e. whether and how it arises from innovative activities of other countries. To this aim, the thesis focuses on carbon emissions from energy uses, and considers two groups of new energy-related technologies, i.e. renewable energy (RE) and energy-efficient (EE) technologies. Research questions and motivations of individual papers are illustrated in the following sections, but the main arguments that led me to identify the objectives and structure of dissertation are worth being discussed here. a) Carbon emissions cannot be curbed if RE and EE shares do not increase significantly. The diffusion of RE and EE technologies is necessary to reduce, respectively, carbon intensity (CI, carbon emissions carbon per unit of total primary energy supply), and energy intensity (EI, total primary energy supply per unit of GDP). CI and EI are the two precursors of carbon emissions, given the country GDP. A relevant part of the thesis will thus be devoted to the diffusion of RE and EE technologies. b) Nevertheless, I am aware that still today R&D activities are crucial for the challenge of climate change mitigation. More particularly, R&D activities on RE sources and technologies will continue playing a role in the next years for the following reasons (IPCC, 2011): today most RE sources can provide competitive energy services only in certain favorable locations; some RE technologies have to be modified in order to be integrated successfully in the energy system; finally a few RE technologies are still in the nascent phase. In addition, countries that are followers in the domain of climate-friendly technologies should engage in domestic R&D for absorptive and adaptive purposes (Lanjouw and Mody, 1996; Popp, 2006; Bosetti et al., 2008). As a result, I will also analyze RE development. c) Developing countries are called to play an increasingly relevant role in climate-friendly technological change. While only few developing economies are well positioned in the ranking of climate-friendly innovators (Dechezleprêtre et al., 2011), the diffusion of new climate-friendly technologies over less advanced countries is a priority. Developing countries are already responsible for more than 50% of world carbon emissions and are expected to account for two-thirds of global carbon increase over the next 30 years (IEA, 2011a, b; U.S Energy Information Administration, 2011). The diffusion process will be studied in both developed and developing countries. d) International technology transfers dominate the sector of climate-friendly technologies, because innovation is concentrated in a few countries, and new high-quality mitigation technologies are developed by a small number of advanced economies (Dechezleprêtre et al., 2011). At the same time, follower countries cannot limit themselves to importing new technologies, they should also engage in domestic R&D activities (see (b)). In order to overcome market, cost and infrastructure barriers to deployment, countries should also engage in the accumulation of operating and installation experience (learning-by-doing: Sagar and van der Zwaan, 2006; Clarke, 2008), an activity which is highly visible and whose benefits can spill over (Nemet, 2012a and 2012b). It thus seems plausible that technological change in RE and EE sectors is accompanied by an intense cross-country transfer of knowledge from R&D and learning. The most tacit elements of technological knowledge can hardly be acquired via market transactions (e.g. technology licensing). They are more likely to be transmitted via international knowledge spillovers (IKS; I follow Clarke et al. (2008), who define IKS in a broad way: technological change that arises from innovation activities of other countries, as distinct from domestic R&D, domestic learning-by-doing, domestic intra- and inter-industry spillovers). I thus considered the hypothesis that IKS from both R&D and learning are a key input to climate-friendly technological change as particularly promising. Based on these considerations, I targeted my efforts to studying IKS. Depending on the empirical setting I assumed IKS to be embodied in imported products or disembodied, and to arise from R&D or experience. At the same time, it appeared that the role of developing countries should not be overlooked, particularly with respect to the diffusion of new EE technologies, while developed countries can offer a more appropriate empirical test-bed for the development and diffusion of RE technologies, also because they are designing and enforcing appropriate policies to this purpose. Finally, the “disembodied” exchange of information is assumed to be particularly intense between more advanced economies, due to geographical and institutional proximity, i.e. knowledge externalities can occur through the Web, publications, patents, conferences, mobility of employees, students and scientists, and so on. Imports of capital goods are instead deemed the primary channel of technology transfer from developed countries to developing countries, because the latter have weaker and less frequent contacts with technological leaders. In sum two broad issues are empirically addressed in this thesis: the extent to which international knowledge spillovers determine the development and diffusion of new climate-energy technologies; factors that enable technological knowledge to spill over internationally in these sectors (e.g. geographic proximity, established cross-country connections, or imports of intermediary products). Figure 1 summarizes the general structure of dissertation, i.e. the contributions offered by the three papers to the research on climate-friendly technological change.