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This paper aims to contribute to the longstanding technology-push vs. demand-pull debate and to the literature on renewable energy policy assessment. We argue that in addition to the traditional push–pull dichotomy, the drivers of technological change must be differentiated by whether they are exogenous or endogenous to the economic system and must be assessed with respect to their contribution to both the creation and the diffusion of innovation. We apply this perspective to study innovation in the renewable energy (RE) industry in 15 European Union countries from 1990 to 2012. Using different panel data estimators, we find that public R&D investments, policies supporting RE and per capita income all have a positive effect on either innovation creation or diffusion, whereas the variability of policy support has a negative impact on diffusion. However, impacts are heterogeneous and differ depending on the innovation dimension considered. Most importantly, we find that economic growth is a stronger driver of RE diffusion than technology-push or exogenous demand-pull mechanisms, whereas it is relatively ineffective at stimulating innovation creation. The effect of economic growth on RE diffusion exhibits a nonlinear, U-shaped pattern that resonates with the Environmental Kuznets Curve hypothesis. RE penetration remains negligible at low levels of growth whereas it increases sharply only after income per capita has reached a given threshold. This effect has both a direct cause (with increased affluence demand for environmental quality rises) and an indirect cause (with increased affluence expensive RE policies become more affordable and get implemented more extensively). Our findings have implications for policy making. They suggest that for RE diffusion to increase, innovation policies should be carefully balanced. Government action should be directed not only at shielding renewables from competition with fossil fuel technologies, but also at stimulating aggregated demand and economic growth.

Confronted by increasingly tight budgets and a broad range of alternative options, policy makers need empirical methods to evaluate the effectiveness of policies aimed at supporting the diffusion of renewable energy sources (RES). Rigorous empirical studies of renewable energy policy effectiveness have typically relied on panel data models to identify the most effective mechanisms. A common characteristic of some of these studies, which has important econometric implications, is that they assume that the contribution of RES to total electricity generation will be stationary around a mean. This paper reviews such assumptions and rigorously tests the time series properties of the contribution of RES in the energy mix for the presence of a unit root. To that end, we use both individual and panel unit root tests to determine whether the series exhibit non-stationary behavior at the country level as well as for the panel as a whole. The analysis, applied to a panel of 19 OECD countries over the period 1990-2012, provides strong evidence that the time series of the renewable share of electricity output are not stationary in 17 of the 19 countries examined. This finding has important implications for energy policy assessment and energy policy making, which are discussed in the paper.

International audience; Notwithstanding their many environmental, economic and social advantages, renewable energy technologies (RE) account for a small fraction of the world's primary energy supply. One possible cause for this limited diffusion is that private investments in the RE sector, although potentially appealing, remain insufficient. The lack of adequate financing is also a clear indication that our understanding of the process by which investors fund RE ventures is still incomplete. This paper aims to fill in this gap and to shed new light on RE investment decisions. Building upon behavioral finance and institutional theory, we posit that, in addition to a rational evaluation of the economics of the investment opportunities, various non-financial factors affect the decision to invest in renewables. We analyze the investment decisions of a large sample of investors, with the objective to identify the main determinants of their choices. Our results shed new light on the role of institutional and behavioral factors in determining the share of renewable energy technologies in energy portfolios, and have important implications for both investors and policy makers: they suggest that RE technologies still suffer from a series of biased perceptions and preconceptions that favor status quo energy production models over innovative alternatives.