Working paper No. 295: An Econometric Analysis of Divergence of Renewable Energy Invention Efforts in Europe

Abstract

The objective of this paper is to investigate the presence of convergence (or divergence) of invention efforts per capita in the renewable energy field across European Union (EU) countries. Divergence may imply a risk of a lower level of goal fulfilment regarding the share of renewable energy in the EU energy mix. This is due to free-rider issues and sub-optimal investment levels, in turn making it more expensive and cumbersome to expand renewable energy production. Convergence suggests a possible faster renewable energy goal achievement. The econometric analysis is based on patent application counts per capita for 13 EU Member States over the time period 1990–2012. The methods used draw on the economic convergence literature. First, we rely on a panel data set to test for conditional β-convergence. Moreover, a distributional dynamics approach is employed to test for σ- and γ-convergence, and analyse the intra-distributional dynamics. The results indicate conditional β- and σ-divergence in renewable energy invention capabilities across the 13 countries, thus suggesting that some EU countries tend to free-ride on the development efforts of other Member States.