Subsidizing the people who buy green tech actually drives more innovation than giving money to the inventors.
March 24, 2026
Original Paper
Going Green Like China
SSRN · 6435520
The Takeaway
Common sense suggests that to get better technology, you should give money to the people building it. This study of China's green transition found that direct R&D subsidies to suppliers failed, while giving money to the utility companies buying the tech triggered massive innovation and growth upstream.
From the abstract
China has become the world's leading producer and innovator in renewable energy technologies, accounting for over 80% of global green patent filings. This paper examines how China's hybrid system-state-owned electricity enterprises dominating downstream and private firms manufacturing upstream equipments-has driven this transition. National renewable energy targets, enforced through career incentives for SOE managers, create strong and predictable downstream demand that stimulates upstream innov