Patenting Activity in the Solar Industry : How to Speed Up the Transition to a Decarbonized Economy

Sammanfattning: Presently fewer than one in ten patented inventions are green, while it is broadly assumed that a substantially larger fraction will be needed to address the climate challenge. Recent literature has addressed this topic by developing theoretical growth models with endogenous and directed technical change. An empirical application of this theoretical framework on the automotive industry has shown that firms tend to innovate more in electric cars when fuel prices rise, and also when they can benefit from spillovers in clean technology. Although transitioning to electric cars is important for a green future, today's electricity is mainly derived from non-renewable sources. This paper focuses on solar power, which has large potential to provide the economy with clean energy. We construct micro-level panel data with observations from nearly 200 countries over a 20-year period and investigate how energy prices, R&D-subsidies, path-dependence and financial markets influence innovative activities. The results provide robust evidence for the role of directed technical change in the transition to clean energy.