Green Innovation and Environmental Policy Stringency: Heterogeneous Drivers of Sustainable Energy Transition in OECD Countries
Year: 2026
Type: article
Abstract: Achieving Sustainable Development Goal 7 (SDG-7) requires not only technological progress but also effective environmental regulation. Although previous studies have examined green innovation and environmental policy separately, less is known about how these two drivers are jointly associated with different dimensions and stages of sustainable energy transition. This study investigates the heterogeneous relationships of green innovation, proxied by public support for R&D in low-carbon energy technologies, and environmental policy stringency (EPS) with sustainable energy transition, across 27 OECD countries during 2002–2020. Sustainable energy transition is captured through three dimensions of SDG-7: electricity access, renewable energy deployment, and energy efficiency. The empirical strategy combines conventional panel estimators, GMM robustness estimates, and panel quantile regression, allowing both average relationships and heterogeneity across the conditional distributions of the SDG-7 outcomes to be examined. The results show that electricity access is already near-universal across the OECD sample, whereas substantial cross-country differences remain in renewable energy deployment and energy intensity. Baseline estimates indicate that the green innovation proxy is positively associated with renewable energy use and energy intensity, whereas higher EPS is associated with greater renewable energy use and lower energy intensity. The quantile estimates reveal substantial heterogeneity in the green innovation–renewable energy relationship: the association is negative at the lower quantile, statistically insignificant at the median, and positive at the upper quantile. In contrast, EPS exhibits comparatively stable favourable relationships with renewable energy use and energy efficiency across the analysed quantiles. Overall, the findings indicate that green innovation and environmental policy stringency are associated with sustainable energy transition through distinct patterns. While the relationship between policy-supported low-carbon technological development and energy-transition outcomes is more context- and distribution-dependent, environmental policy stringency provides a comparatively stable correlate of renewable energy deployment and energy efficiency. These results highlight the importance of combining credible environmental regulation with innovation policies adapted to countries’ technological readiness, absorptive capacity, infrastructure, and existing energy-system conditions.
Source: Sustainability
DOI: 10.3390/su182211448
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: gold
Estimated APC paid: $2,896
OpenAlex ID: W7225742592