The cost of energy and the future of green innovation Evidence from the food and beverage industry in Germany and the Netherlands during the Russia–Ukraine energy crisis

Abstract

The Russia–Ukraine war triggered a major energy crisis in Europe, resulting in sharp increases in gas and energy prices with potentially significant consequences for energy-intensive industries. This study examines how this energy supply shock affected green innovation in the food and beverage industry in Germany and the Netherlands over the period 2015–2024. The two countries were selected because they differed in their pre-war dependence on Russian gas imports. Drawing on the induced innovation hypothesis, the study investigates whether rising energy prices stimulated firms to engage in green innovation activities or whether increasing costs constrained such efforts. Green innovation is measured using annual green patent counts, while energy shocks are measured primarily through gas prices. Negative binomial regression models are applied to account for the count-based and overdispersed nature of the patent data. Contrary to the predictions of the induced innovation hypothesis, the findings show that higher energy prices are associated with lower levels of green patent activity. No significant differences are found between Germany and the Netherlands, nor between the pre-war and during-war periods. Robustness checks support these findings. The research concludes that severe energy supply shocks may constrain, rather than stimulate, green innovation. These findings contribute to the literature on energy crises and green and sustainable innovation.