Time and frequency-based effect of energy-related R&D investments on power sector CO2 emissions: evidence from leading R&D investing countries by WLMC approach

Abstract

Environmental pollution has become highly important for countries and societies because climate change and global warming are stimulated by increasing carbon dioxide (CO2) emissions. Hence all related parties have been searching for solutions. Considering the high role of energy use in causing CO2 emissions energy-related research and development (R&D) investments are considered a strategic tool to curb the emissions. Accordingly the study analyzes the effect of energy-related R&D investments on power sector CO2 emissions. In doing so the study examines leading R&D investing countries (namely Canada-CAN, Switzerland-CHE, Germany-DEU, France-FRA, Japan-JPN, Norway-NOR, United States-USA) considering three R&D investment sub-types (i.e. energy efficiency R&D investments-EEF, renewable energy R&D investments-RRD, nuclear energy R&D investments-NRD) uses data from 1985/Q1 to 2022/Q4 and performs Wavelet Local Multiple Correlation (WLMC) approach to analyze over times and frequencies. The results show that (i) the effects of R&D investments are weak (strong) at lower (higher) frequencies, (ii) the effects of R&D investments vary based on times frequencies and countries, (iii) the most dominant R&D type is EEF (CHE DEU FRA & JPN) RRD (CAN & NOR) and NRD (USA), (iv) there is an important externality among R&D types. Thus the findings reveal the time frequency and country-based varying effect of R&D investments on power sector CO2 emissions implying a need for comprehensively balanced planning for R&D investments. Hence the countries should take the highly effective R&D investment types in combating power sector CO2 emissions allocate further budget to the effective ones and re-consider the budget distribution among the R&D types.