The Threshold and Contingency Effects of Technological Innovation on Renewable Energy

ABSTRACT

The global temperature has increased since the past century due to the over-reliance on fossil fuels. This scenario has triggered an energy transition toward environmentally friendly sources of energy. Technological innovation plays a key role in this energy transition scenario. Therefore, we examine the threshold and contingency effects of technological innovation on renewable energy. The panel threshold regression model is applied to estimate the relationships. Our findings suggest that technological innovation is important in enhancing renewable energy. However, we find that the relationship between technological innovation and renewable energy is contingent upon the level of technological innovation itself and other determinants, namely institutional quality, financial development, FDI, and human capital. These findings suggest that the aims of policies should not only focus on strategies to improve technological innovation but should also consider measures to support the drivers that facilitate the impact of technological innovation on renewable energy.

KEYWORDS:

• Renewable energy
• technological innovation
• institutional quality
• financial development
• fdi
• human capital

Acknowledgments

We would like to thank the three anonymous reviewers for their constructive suggestions and comments that significantly improved this research paper. Additionally, the financial support from the Universiti Sains Malaysia Research University (RU) Grant (1001.CDASAR.8016127) is acknowledged.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

¹ Pollution emissions are excluded from the contingent effects of technological innovations on renewable energy because it is believed that improved technological innovations would reduce pollution emissions, rather than reduce pollution emissions would improve technological innovations.

Additional information

Funding

This work was supported by the Universiti Sains Malaysia [1001.CDASAR.8016127].