Asymmetric response of energy efficiency to research and development spending in renewables and nuclear energy usage in the United States

Abstract

There is a broader consensus that efficient utilisation of energy forms vis-a-vis energy efficiency holds a key role in the attainment of cleaner economic productivity, thus driving the 2050 global carbon neutrality goal. With a deeper responsibility, the United States of America, being the largest economy and major emitter of greenhouse gas has continued to commit significant investment in energy innovation through research and development (R&D). In this context, the current study provides a clearer insight on how the asymmetric dimensions of R&D spending in renewables, nuclear, and fossil energy drives the country's energy efficiency outlook. The result of the non-linear econometric approach which reveals asymmetric results found that positive (negative) shock in economic growth hampers (improve) energy efficiency in the country at least in the long-run. Meanwhile, a positive shock in R&D spending in renewables present a significantly desirable effect on energy efficiency in both the short- and long-run. Likely expected, due to cost and environmental-related factors, there is no significant evidence that a shock in R&D spending in both nuclear and fossil energy profiles offer energy efficiency benefit. Moreover, the frequency domain Granger causality found only short-run evidence from R&D spending in nuclear energy to energy efficiency without any causality evidence between R&D spending in fossil fuel and energy efficiency. While only long-run causality is established from economic growth to energy efficiency, there are short-, medium-, and long-term evidence of causality from R&D spending in renewables to energy efficiency. This study offers important policy dimension for United States from the perspectives of energy efficiency and climate goal.