Private R&D, environmental policy, and greenhouse gas emissions

Abstract

This study examines the hypothesis that private research and development (R&D) reduces greenhouse gas (GHG) emissions conditional on the stringency of environmental policies. Using panel data for 23 countries over the period 1990-2020, we find that the interaction of privately financed R&D and the stringency of market-based policies has a long-run negative effect on GHG emissions. We find no evidence of a long-run effect of non-interacted private R&D on GHG emissions. We also find no evidence that GHG emissions change permanently due to interactions between private R&D and overall policy stringency, private R&D and the stringency of non-market-based policies, and private R&D and the strength of technology support policies.