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Abstract

This paper analyses the impact of green innovation on energy intensity in a set of 14 industrial sectors in 17 OECD countries over the 1975–2005 period. We create a stock of green patents for each industrial sector and estimate a translog cost function to measure the impact of green innovation on energy intensity, next to other factors such as input substitution and autonomous technical change. We find that green innovation has contributed to the decline in energy intensity in the majority of sectors: the median elasticity of energy intensity with respect to green patenting is estimated at −0.03 in our sample. Hence, a 1% increase in green patenting activities in a given sector is associated with a 0.03% decline in energy intensity. The magnitude of the effect is robust across various specifications and is larger in more recent years. A decomposition exercise shows that, overall, half of the decrease in energy intensity over the sample period is related to changes in input prices and half to changes in production technologies.

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