Closing the Renewable Energy Gap in OECD : The Role of R&D Investment and Trade Openness in Attaining SDGs

ABSTRACT

Persistent disparities in renewable energy transition across OECD economies—even among countries with similar income levels and institutional frameworks—raise critical questions about the drivers of clean energy adoption and their varying effects across transition stages. This study examines the joint effects of research and development (R&D) investment and trade openness on renewable energy transition across 18 OECD countries from 2010 to 2023, controlling for technological innovation, regulatory quality, carbon productivity, economic policy uncertainty, and energy prices. Bootstrap quantile regression captures heterogeneity across low‐, middle‐, and high‐transition economies, while the Cross‐Sectionally Augmented ARDL (CS‐ARDL) estimator ensures dynamic robustness. The findings reveal strong distributional differences. R&D investment has a significant positive effect at the lowest and highest quantiles, underscoring its role in initiating transition and driving frontier innovation at advanced stages. Trade openness becomes significant only from the 70th quantile, indicating a threshold where sufficient absorptive capacity is required for technology spillovers. Technological innovation and regulatory quality consistently enhance transition outcomes, while carbon productivity exerts a universal negative effect by reinforcing fossil fuel efficiency lock‐in. Economic policy uncertainty encourages renewable diversification in high‐transition economies as a hedge against fossil fuel risks. CS‐ARDL estimates confirm these results and show a long‐run adjustment speed of 71% annually. Policy implications suggest prioritizing R&D and institutional reforms in low‐transition economies, addressing carbon lock‐in in middle‐transition economies, and deepening trade integration and regulatory frameworks in high‐transition economies to sustain progress toward SDG 7 and SDG 13.