Public Research and Development Funding for Renewable Energy Technologies in Europe: A Cross-Country Analysis

Abstract

The European Union recognizes the vital role that innovation in renewable energy technologies plays in accelerating the energy transition. In the largest ever transnational research and innovation program, Horizon Europe (2021–2027), the EU allocated 35% of the total budget of €95.5 billion to green technology research. This paper examines public research and development (R&D) funding for renewable energy technologies in 17 European countries from 2000 to 2020 by analyzing its extent, composition, and effectiveness. While large economies lead in the size of total available public R&D support, Nordic countries lead when it comes to available public R&D funding relative to the sizes of their respective economies. Thereby, the share of the European Union’s funding within the total public R&D support available in each country is vastly heterogeneous across countries, ranging from 13% to 63%. Furthermore, based on detailed and recent data, the effectiveness of public R&D funding is estimated through a Negative Binomial Regression model with fixed effects. Overall, public R&D funding is confirmed as an effective driver of green innovation. Like in previous studies, limitations stem from restricted data availability and temporal uncertainty of innovation. These limitations are addressed, which shall incentivize future research and policymaking.