Dynamic effects on modern renewable energy generation: The role of patents in clean energy technology

The shift to renewable energy is essential for addressing climate change and reducing reliance on fossil fuels. This paper analyzes the relationship between patent applications for renewable energy technologies and clean energy production in 45 countries from 2000 to 2019. Using a System Generalized Method of Moments Panel Vector Autoregressive (GMM-PVAR) model, Impulse Response Functions (IRFs), and Granger causality tests, the findings show that a shock to renewable energy patents does not immediately affect clean energy production. However, a temporary decline occurs in the second period, followed by gradual increases that stabilize in the long run. This suggests a delayed but sustained impact of innovation on energy generation due to the time required for technology implementation and infrastructure adaptation. Bidirectional causality between patents and energy production reveals a feedback loop, where innovation drives energy development, and increased energy production fosters further advancements. Additionally, GDP per capita, foreign direct investment, political stability, and trade openness significantly affect clean energy production. Political stability positively influences long-term renewable energy generation, while GDP and trade openness show short-term fluctuations before stabilizing. These findings highlight the evolving nature of the renewable energy sector and the critical role of innovation and economic factors in driving growth.