All Panel Estimation Results
The estimation results of panel data regression models (Pooled OLS, Fixed Effects, Driscoll Kraay) in which total R&D expenditure in energy sector is the dependent variable are given in Table 3. Pooled OLS and Fixed Effects estimators are included for comparison purpose. The coefficients obtained with the Driscoll and Kraay estimator have standard errors corrected for cross-section dependence, heteroskedasticity and autocorrelation. Therefore, coefficient estimates of the Driscoll Kraay estimator are the ones that we interpret in Table 3 and in the following estimation tables.
Table 3: Regression Results for Energy Sector R&D Expenditures
Variable
|
Pooled OLS
|
FE (Robust)
|
FE (DK)
|
e_int
|
-0.074
|
-0.390***
|
-0.390***
|
|
(0.055)
|
(0.044)
|
(0.050)
|
renew_share
|
-0.022***
|
0.039***
|
0.039***
|
|
(0.007)
|
(0.011)
|
(0.010)
|
imp_dep
|
-0.001***
|
0.005***
|
0.005***
|
|
(0.0006)
|
(0.0009)
|
(0.001)
|
lnco2
|
2.160***
|
0.604*
|
0.604
|
|
(0.246)
|
(0.337)
|
(0.389)
|
constant
|
1.080**
|
4.870***
|
4.870***
|
|
(0.463)
|
(0.905)
|
(0.764)
|
N
|
589
|
589
|
589
|
F
|
51.39
|
51.50
|
24.51
|
R2
|
0.26
|
0.27
|
0.27
|
Note: Dependent variable is lnrd_total in each regression. Values in parentheses show standard errors in pooled OLS, robust standard errors in FE(Robust), and Driscoll and Kraay standard errors in FE(DK). *, **, and *** indicate 10%, 5% and 1% significance levels, respectively.
|
Comparing three estimation results in the table, both coefficients and standard errors in pooled OLS are found to be different from the other two methods. However, these findings are biased. One must consider time-invariant characteristics of cross section units. Therefore, unbiased estimates are fixed effects coefficients.
The last two column show fixed effect coefficients. The difference between the two is the computation of standard errors, and hence probability values. Both are robust to heteroskedastic and auto-correlated errors, while only Driscoll and Kraay has standard errors that are robust to cross sectional dependency. According to overall group estimation results, only CO2 intensity is found to be statistically insignificant. The share of renewable energy and import dependency in IEA member countries have statistically significant and positive effect on energy R&D expenditures. Energy intensity has a negative and statistically significant effect on energy R&D expenditures.
Sub-Group Estimation Results
After overall group estimation of 29 IEA member countries, the member countries are grouped according to whether they use nuclear energy and their fossil energy use levels. The results in Table 4 show the results for nuclear energy sub-groups. Second column in the table gives coefficients for the sub-group of countries that have nuclear energy use, third column for the subgroup that have not nuclear energy and the last column for the overall IEA countries.
Table 4: Regression Results- Nuclear Energy Subgroups
Variables
|
Nuclear
|
Non-Nuclear
|
All
|
e_int
|
-0.173**
|
-0.977***
|
-0.390***
|
|
(0.069)
|
(0.086)
|
(0.050)
|
renew_share
|
0.0372
|
0.0328*
|
0.039***
|
|
(0.0247)
|
(0.0187)
|
(0.010)
|
imp_dep
|
0.0102***
|
0.00635***
|
0.005***
|
|
(0.003)
|
(0.0008)
|
(0.001)
|
lnco2
|
-0.429
|
0.979
|
0.604
|
|
(0.383)
|
(0.71)
|
(0.389)
|
constant
|
6.69***
|
5.37***
|
4.870***
|
|
(1.3)
|
(1.75)
|
(0.764)
|
N
|
348
|
241
|
589
|
F
|
10.93
|
89.89
|
24.51
|
R2
|
0.2775
|
0.4255
|
0.2703
|
Note: Dependent variable is lnrd_total in each regression. Values in parentheses show Driscoll and Kraay standard errors. *, **, and *** indicate 10%, 5% and 1% significance levels, respectively.
|
According to the results in Table 4, import dependency has a statistically significant and positive effect on energy R&D expenditures in both subgroups. Energy intensity also has a statistically significant but negative effect in the subgroups. CO2 intensity do not have a statistically significant effect on energy R&D expenditures. The coefficient and probability value of renewable energy share differ between nuclear and non-nuclear countries. In the nuclear countries, renewable energy share has a positive and statistically significant effect on energy R&D expenditures. In the non-nuclear group, it is insignificant. The impact of energy intensity on R&D tendency is lower in nuclear group since the nuclear technology countries have a higher overall R&D level compared to the other group.
In addition, since nuclear energy and renewable energy sources are alternative to each other, the coefficient of the renewable share does not have a significant effect in the country group with nuclear energy use. This finding shows that nuclear and renewable technology development activities are considered as alternatives to each other in these countries. The coefficient of the imp_dep variable is larger in the group of countries with nuclear technology. Therefore, it can be said that the sensitivity to import dependency is higher in R&D expenditures in countries using nuclear energy.
Table 5 shows the findings for the country groups classified according to the level of fossil resource use. According to table, CO2 intensity does not have a significant effect on energy R&D expenditures the three subgroups. Energy intensity is statistically significant and has a negative effect in “Low Fossil” IEA member countries where fossil fuel use is below 50% in total energy use. Import dependency, share of renewable energy, and carbon intensity variables do not have a statistically significant effect on energy R&D expenditures for this group. The share of renewable energy and import dependency have a statistically significant and positive effect on energy R&D expenditures in “Medium Fossil” countries where fossil fuel use is between 50%-80%. Energy intensity, on the other hand, has a statistically significant but negative effect.
Table 5: Regression Results - Subgroups of Fossil Resource Use
Variable
|
Low Fossil
|
Medium Fossil
|
High Fossil
|
All
|
e_int
|
-0.277**
|
-0.497***
|
-0.385***
|
-0.390***
|
|
(0.080)
|
(0.052)
|
(0.0985)
|
(0.050)
|
renew_share
|
0.00506
|
0.0375*
|
0.00505
|
0.039***
|
|
(0.0168)
|
(0.0181)
|
(0.051)
|
(0.010)
|
imp_dep
|
-0.0516
|
0.00489***
|
0.00787***
|
0.005***
|
|
(0.0239)
|
(0.0011)
|
(0.002)
|
(0.001)
|
lnco2
|
0.735
|
0.214
|
0.669
|
0.604
|
|
(0.582)
|
(0.553)
|
(0.663)
|
(0.389)
|
constant
|
7.74***
|
5.65***
|
5.45**
|
4.870***
|
|
(1.34)
|
(1.44)
|
(2.01)
|
(0.764)
|
N
|
83
|
307
|
199
|
589
|
F
|
37.24
|
24.55
|
10.43
|
24.51
|
R2
|
0.4389
|
0.3196
|
0.2155
|
0.2703
|
Note: Dependent variable is lnrd_total in each regression. Values in parentheses show Driscoll and Kraay standard errors. *, **, and *** indicate 10%, 5% and 1% significance levels, respectively.
|
In “High Fossil” IEA member countries with more than 80% fossil fuel use in total energy, import dependency has a statistically significant and positive effect on energy R&D expenditures, while energy intensity has a statistically significant and negative effect. CO2 intensity and the share of renewable energy do not have a significant effect on energy R&D expenditures in this group. In “Low Fossil” countries, import dependency is not effective on energy R&D expenditures compared to the other two groups. One explanation for this distinction between “Low Fossil” and the other groups can be interpreted as higher levels of fossil resource use call for the need for technologies that reduce import dependency.
e_int variable has the highest effect in “Medium Fossil” country group. As fossil resource utilization rate increases, the negative effect of energy density on the R&D tendency also increases. Since high energy density indicates low energy efficiency, it is seen that energy efficiency is more effective in R&D expenditures in countries with high fossil resource use. The variable renew_share does not have a significant effect in “Low Fossil” and “High Fossil” groups. In the “Medium Fossil” group, it has a positive and significant effect. This disparity points to the difficulties in changing the energy composition in the two extreme group of countries.
Energy R&D Strategy Implications
Our findings have economic and environmental implications for energy R&D strategy for the different groupings. Table 6 summarizes the empirical findings based on four indicators in three energy R&D strategy dimensions for the member countries in 1990-2015 period. Energy efficiency is found to be positively related with R&D expenditures in all groups. Dependency has positive effect on energy R&D expenditures in all groups except the country group with low fossil resource use. This exception is very plausible since low fossil resource use indicates diversity in energy composition. Dependency is by-passed by national alternative resources and has no significant pressure on energy R&D.
The environmental dimension is represented by two different indicators. The share of renewable energy represents environmental improvement, and CO2 intensity, represents environmental degradation. Our findings put forward that the countries with nuclear technology, low fossil resource use or high fossil resource use do not have a significant environmental improvement motivation in R&D expenditures. Non-nuclear countries and medium fossil resource using countries have a positive incentive of environmental improvement. Environmental degradation, on the other hand, does not have a significant effect on energy R&D expenditures in any groups.
Table 6: Summary of Regression Models
Dimension
|
Indicator
|
Nuclear
|
Non-Nuclear
|
Low Fossil
|
Medium Fossil
|
High Fossil
|
All Sample
|
Efficiency2
|
energy intensity
|
(-)*
|
(-)*
|
(-)*
|
(-)*
|
(-)*
|
(-)*
|
Dependency
|
import dependency
|
(+)*
|
(+)*
|
(-)
|
(+)*
|
(+)*
|
(+)*
|
Environmental Improvement
|
renewable share
|
(+)
|
(+)*
|
(+)
|
(+)*
|
(+)
|
(+)*
|
Environmental Degradation
|
CO2 intensity
|
(-)
|
(+)
|
(+)
|
(+)
|
(+)
|
(+)
|
Note: * indicates statistical significance with prob. value of 0.10 at least. (+) and (-) show direction of relationship with energy R&D expenditure.
|
In low and high fossil resource using countries, renewable energy and environmental degradation do not have a significant effect on R&D expenditures. In other words, countries using high fossil resources care more about energy efficiency and external dependency, and countries using low fossil resources care more about efficiency. Therefore, while countries with a high fossil resource use focus on economic factors in their energy R&D strategies, countries using moderate fossil fuels give prominence to environmental improvement in addition to economic factors. As the dependency on fossil fuels decreases, environmental recovery becomes more important.
[2]Since high energy intensity means low energy efficiency, the negative relationship between energy intensity and R&D expenditures has been interpreted in the opposite direction, i.e. as positively.