Innovation is an important part of energy policy, and encouraging clean energy innovation is often an explicit goal of policy makers. For local governments, promoting clean energy innovation is seen not only as a pathway to a cleaner economy but also as a tool for promoting the local economy. But is such optimism warranted? There is a substantial literature examining the relationships between innovation and environmental policy, but few studies focus explicitly on innovation at the state and local level. In this paper, I provide key lessons from research on clean energy innovation, focusing on lessons relevant for state and local governments. I then summarize the results of a recent working paper by Fu et al. (2018) that studied wind energy innovation across individual states in the United States. While state-level policies can promote clean energy innovation, it is overall market size that matters most. Thus, innovation need not occur in those states most actively promoting clean energy. I conclude with lessons for state and local governments drawn from both this work and the broader literature on energy innovation.

Prior tests of Hicks’ Induced Innovation Hypothesis (IIH) have been greatly hampered because the lack of supply-side data implicitly requires the untenable assumption that the marginal research cost is the same for different inputs. We document that, with appropriate model specification and panel data, a two-way fixed-effects estimator can account for much of the non-neutrality of the innovation function. Using a test procedure that is robust to a time-variant and non-neutral innovation function, we test the IIH in U.S. agriculture for the period 1960–2004. We use only readily available data for innovation demand and total public research expenditures.

This paper develops a framework for competitiveness that incorporates path dependency within production regions. Patterns of technological innovation, product development, institutions, and market orientation follow a certain local path. This evolution creates regional economies that emerge with unexpected competitive advantage. The model draws on previous work looking at, among other things, induced innovation. The framework is applied here to the major regional tomato producers in North America. The paper examines the role of various institutions (grower associations, governments, research institutions, and support industry) in influencing the path along which a regional sector evolves.

In the past four decades, productivity in United States field crops has been transformed by the mechanical and fertilizer revolutions. Since input data are typically not available by crop, most investigations of productivity have been at the aggregate level. This paper develops a simultaneous equation, partial adjustment model of the demand for inputs, which generates estimates of the technical change parameters for wheat, corn, soybeans, and cotton. These estimates allow comparisons of the factor saving biases in technical change, leading to a novel test of the induced innovation hypothesis and the suggestion that the productivity slowdown may yet affect agriculture in the United States.

Global wood consumption trends are reviewed in the context of framing a coherent forest policy in the era of climate change. Over the period 1980 to 2007, global wood consumption has been essentially stagnant, increasing by only 0.4% per year. In contrast over the same period, global consumption of wood products increased steadily, paper by an average 3.2% per annum and solid wood products (sawn timber and wood panels) by 0.8% per annum. Wood saving explains these significantly different growth trajectories in unprocessed wood and processed wood products. Wood saving strategies include recycling paper (in particular), investing in higher yielding pulp technologies, substituting reconstituted wood panels for sawn timber and plywood and growing high pulp-yielding trees in a plantation regime. China's rapidly growing wood products industry has lifted wood saving to a new high. Consistent with the theory of induced innovation, China has so far avoided triggering a global wood shortage and associated wood price increases through a progression of strategies: successful pre-emptive price negotiations, increased use of recycled paper, adoption of high-yielding pulp technologies, substitution of reconstituted wood panels for sawn timber and tree planting substituting for natural forest supply. If China's current wood saving strategies were emulated worldwide, through increased use of recycled paper in particular, and to a lesser extent, substitution of reconstituted wood panels for sawn timber and plywood, the already low growth in global wood consumption would flatten further and perhaps start to decline. These economic realities in the wood products industry align positively with the interlinked imperatives of biodiversity conservation and carbon storage in natural forests, if wood-saving is converted to forest-saving.