How does digital economy development affect renewable energy innovation?

Abstract

The digital economy has been remarkably fueling the sustainability of renewable energy worldwide. However, how it accelerates renewable energy development, particularly renewable energy innovation, remains unknown. Using a panel of 65 countries from 2002 to 2019, this research applies a dynamic panel model to explore the relationship between the digital economy and renewable energy innovation and analyze their impact mechanisms. The heterogeneous effects of the digital economy on innovation are further investigated. The main empirical findings suggest that the digital economy has a significant positive impact on renewable energy innovation. Such an effect is also observed in solar, wind, and biomass energy but geothermal energy. Furthermore, the role of human capital, renewable energy investment, and market potential can contribute to this positive effect. Countries with high incomes, high policy intensity, and strong manufacturing fundamentals are found to have a more significant positive impact. It is therefore recommended that governments develop digital infrastructure and applications, integrate the digital economy with renewable energy, and improve renewable energy innovation.