Time and frequency-based effect of energy-related R&D investments on power sector CO2 emissions: evidence from leading R&D investing countries by WLMC approach

Environmental pollution has become highly important for countries and societies because climate change and global warming are stimulated by increasing carbon dioxide (CO₂) emissions. Hence, all related parties have been searching for solutions. Considering the high role of energy use in causing CO₂ emissions, energy-related research and development (R&D) investments are considered a strategic tool to curb the emissions. Accordingly, the study analyzes the effect of energy-related R&D investments on power sector CO₂ emissions. In doing so, the study examines leading R&D investing countries (namely, Canada-CAN; Switzerland-CHE; Germany-DEU; France-FRA; Japan-JPN; Norway-NOR; United States-USA), considering three R&D investment sub-types (i.e., energy efficiency R&D investments-EEF; renewable energy R&D investments-RRD; nuclear energy R&D investments-NRD), uses data from 1985/Q1 to 2022/Q4, and performs Wavelet Local Multiple Correlation (WLMC) approach to analyze over times and frequencies. The results show that (i) the effects of R&D investments are weak (strong) at lower (higher) frequencies; (ii) the effects of R&D investments vary based on times, frequencies, and countries; (iii) the most dominant R&D type is EEF (CHE, DEU, FRA, & JPN), RRD (CAN & NOR), and NRD (USA); (iv) there is an important externality among R&D types. Thus, the findings reveal the time, frequency, and country-based varying effect of R&D investments on power sector CO₂ emissions implying a need for comprehensively balanced planning for R&D investments. Hence, the countries should take the highly effective R&D investment types in combating power sector CO₂ emissions, allocate further budget to the effective ones, and re-consider the budget distribution among the R&D types.