Environmental policy and the international diffusion of cleaner technologies for power

Technology transfer is an important channel of technological change and sustainable development for countries with less innovative ability than technological leaders. This paper studies whether domestic environmental policies affect the inward technology transfer of cleaner innovation from abroad. We focus specifically on the energy sector, for its important role in the decarbonization process, by looking at zero-carbon (renewable) and carbon-saving (efficient fossil) technologies for energy production. Using data on cross country patent applications, we provide evidence that environmental policy contributes to attracting foreign cleaner technology options to OECD markets but not in non-OECD markets. We show that this is due to the nature of the implemented policy instruments.