Spillover from private energy research

Technological progress is generally considered a key element in the move towards a less carbon-intensive energy use, and therefore public energy research expenditure has increased in many countries. The purpose of this paper is to investigate whether relatively high subsidies to private energy research can be justified by higher external knowledge spillovers from private energy research compared to knowledge spillovers from other private research. Estimation of spillover effects is carried out using an unbalanced panel of more than a thousand Danish private companies observed over the period 2000–2007. We reject that there are higher spillovers from private energy research compared to other types of private research. Instead the results suggest that the external knowledge spillovers from energy research may be lower than for other types of private research. This implies that high subsidies earmarked for private energy research should not be an element in a first best policy to reduce CO₂ emissions.