Renewables and Innovation - Empirical Assessment and Theoretical Considerations Volume 4 Jena Economic Research Papers 2010-01-15 2010 2007 2009-002 Renewable Energies Demand Pull Structural Change This study is about structural change in the energy system. In a first step an econometric model is presented and in a second step diffusion of GTs is embedded theoretically. By focusing on different green technology industries (GT sector) in Germany, we analyze how policy induced demand stimulates innovation. Taking the size of the market as a proxy for demand and patent counts as a proxy for innovation, we find support that the presence of institutions enabling diffusion of GTs are correlated with innovative activity. Public R&D expenditures also play a significant role. We additionally control for a structural break by comparing the two institutional settings incorporated into the legal system in Germany, namely the Stromeinspeisegesetz (SEG) and the Erneuerbare Energiengesetz (EEG). We cannot find support for the supposition that innovative activity significantly differs for diffusion under the SEG and EEG. The empirical findings also show that electricity prices are not the driving force for innovative activity within the GT sector. The discussion at the end of the paper comes to the result that diffusion of GTs – under the EEG – is difficult to be justified theoretically. jportal_jpjournal_00000016 2010-01-18T12:54:06.297Z 2010-12-17T11:54:14.822Z