Energy efficiency: The role of technological innovation and knowledge spillover

It is widely accepted that technological innovation reduces energy intensity and carbon emissions without compromising global economic growth. Although new innovative developments tend to be concentrated in a few developed countries, transboundary spillover of technological innovation influences the energy efficiency and sectoral performance of other countries. A more thorough assessment of international knowledge spillover related to energy intensity reduction can enhance understanding of mitigation opportunities and costs. This study investigated, therefore, the effects of technological innovation within certain countries on the energy efficiency performance of neighboring countries. We used data from the OECD Triadic Patent Families database for 24 innovating countries between the years 1994 and 2013. Accounting for geographical distance, our results showed a positive, significant relationship between knowledge spillover and country-specific energy efficiency performance. All countries showed a sustainable efficiency growth trend, which indicates a steady increase in energy efficiency. Germany, France, the UK, the Netherlands, and Switzerland are the most energy efficient countries. These results have policy implications for sustainable energy management and environmental sustainability, highlighting the need to develop domestic research and development capabilities that increase innovation-based infrastructure.