Does Technological Innovation Promote Renewable Energy Investment?

Technological innovation (TI) is conducive to economic growth, but whether it promotes the development of renewable energy remains controversial. This study aims to analyze the interrelation between TI and renewable energy investment (REI) to see how to promote the coordinated development of TI and REI. By using the bootstrap rolling-window subsample Granger causality test and the sample from January 2010 to July 2022 in China, we find that the influence of a country's overall TI level on REI is twofold. On the one hand, the increase in a country's overall TI level has a positive influence on REI by reducing the renewable energy risk. On the other hand, TI can reduce REI by bringing more demand for relatively stable non-renewable energy. Conversely, REI has both positive and negative influences on a country's overall TI level. Additional REI promotes renewable energy-related TI, but it may crowd out the investment in other fields and impede TI. Based on these results, policymakers intended to achieve sustainable development should encourage renewable energy TI, which is conducive to reducing the risk of renewable energy. In addition, policymakers should pay attention to REI's role in crowing out the investment in other fields, and take measures to promote TI of the whole society.JEL Classification: C32, O32, Q2. The improvement of a country's technological innovation (TI) level is conducive to economic growth, but whether it promotes the transition from non-renewable energy (e.g., oil, gas, coal) to renewable energy (e.g., solar, hydropower, wind, biomass, and geothermal energy) remains controversial. By using the data from January 2010 to July 2022 in China, we find that the influence of a country's overall TI level on renewable energy investment (REI) is twofold. On one hand, a country's overall TI level promotes REI by reducing REI risk. On the other hand, TI reduces REI by benefiting non-renewable energy. Conversely, REI promotes TI by providing more funds for renewable energy-related TI, but REI may crowd out the funds for the research in other fields and therefore impede a country's overall TI. Based on these results, policymakers intended to develop renewable energy should encourage renewable energy-related TI to reduce the risk of REI. In addition, policymakers should pay attention to REI's role in crowing out the investment in other fields, and take measures to promote TI of the whole society.