Heterogeneous Effects of Green Technology Innovations on Renewable Energy Supply Share: A Dynamic Panel Evidence

This study examines the determinants of renewable energy efficiency (REE) in a balanced panel of 17 countries (1995–2021), focusing on green technology innovations (GTI), economic growth (EG), and energy taxation (ET). The analysis accounts for heterogeneity, common shocks, and dynamic adjustment by combining two-way fixed effects with dependence-robust and dynamic common correlated effects (CCE) estimators using Driscoll–Kraay inference. The results show strong persistence in REE and a robust positive association between GTI and REE in the preferred common-factor framework, while the average effects of EG and ET are weaker and model-sensitive. Dumitrescu–Hurlin panel causality tests indicate feedback between REE and EG and bidirectional linkages between REE and ET at the level, whereas innovation dynamics are asymmetric. Overall, the evidences support innovation-centered transition strategies and emphasizes evaluating policy instruments over multi-year horizons given strong persistence and cross-country heterogeneity.