Energy Technology RD&D Budgets, sustainable transition, carbon risk, and climate change : Fresh insights from IEA member countries under policy uncertainty

Using intensive large panel data from thirty-one IEA-member economies for the period of 1974-2020, we provide cross-country evidence on the roles of public energy technology RD&D budgets in renewable energy transition and climate risk mitigation under policy uncertainty in the era of climate change. In line with the Environmental Kuznets curve (EKC) hypothesis, the study first affirms the positive impacts of energy technology innovations on sustainable energy transition through the increase in renewable energy consumption and renewable electricity output as a percentage of total energy use across the sample countries. Based on the STIRPAT/IPAT framework, the role of energy technology RD&D budgets is irrefutable toward SDGs through the world’s uncertain times when we test for both the global economic policy uncertainty (GEPU) and climate policy uncertainty (CPU) using the newly-developed newspaper-based indexes. Given energy technology RD&D budgets have been mainly dependent on public sectors, the study provides economically meaningful findings with critical policy implications for financing sustainable energy transitions, climate action, and among other SDGs by the United Nations for the world economy including IEA member economies. We validate our empirical findings with a rich set of econometric approaches including dynamic panel data (DPD) estimations with the dynamic generalized method of moments using instrumental variables (DGMM-IVs), and other famous panel data regression methods with the tests for cross-sectional dependence (CD), unit roots and tests for panel cointegration