How Are Energy-Related R&D Investments Effective on Environment-Related Patents? Empirical Evidence from the USA and Canada

Abstract

All related economic actors have been interested in combating climate change as consistent with developing interest in environmental issues. In this context, R&D investment funds can be highly beneficial in developing environmental patents, which may have a key role in solving environmental problems. Accordingly, the study analyzes the marginal effect of sub-types of R&D investments on environment-related patents by focusing on the USA and Canada as the leading R&D investing countries, using data between 1990 and 2021, and adopting a kernel-based regularized least squares (KRLS) model. The results show that on the patents (i) R&D investments in cross-cutting technologies/research, nuclear, and renewable have a stimulating effect in the USA; (ii) R&D
investments in renewable support the increase in Canada; (iii) in both USA and Canada, R&D investments in fossil fuels have a decreasing effect, whereas R&D investments in energy efficiency have  no significant effect; (iv) Among all, R&D investments in cross cutting technologies/research (renewable) have the highest increasing effect on the patents in USA (Canada); (v) marginal effect of the  sub-types of R&D investments on the patents varies across factors, countries, and percentiles; (vi) the KRLS model has a high prediction performance, reaching ~97.1%. Overall, the study emphasizes the  average and pointwise marginal effects of R&D investments on the patents, which imply that R&D  investments should be re-distributed by considering their effects on the patents so that a successful policy on environmental patents can be designed by benefitting energy-related R&D investments.