Export orientation and domestic electricity generation: Effects on energy efficiency innovation in select sectors

Why are some countries developing many energy efficiency innovations, while others are lagging behind? I argue that export orientation and electricity at low variable cost from nuclear and hydropower plants have an interactive effect on energy efficiency innovation. Export-oriented countries have strong incentives to invest in energy efficiency innovation, as they are in a position to export these technology innovations for global markets. But if inexpensive electricity is supplied in a country, the domestic demand for energy efficiency innovation is missing, and so the home market cannot serve as a springboard for international commercialization. I test this theory against international patent data on energy efficiency innovation in insulation, heating, and lighting for 22 OECD countries, 1991-2007. The statistical analysis indicates that export orientation has large positive effects on energy efficiency innovation in countries that do not rely on nuclear and hydroelectricity. - Highlights: → Export-oriented countries produce energy efficiency innovations. → Nuclear and hydropower reduce energy efficiency innovation. → Data on international patents from industrialized countries support the argument.