Environmental policy and directed technological change: evidence from the European carbon market
Produced as part of the Governments, markets and climate change mitigation CCCEP research programme theme
Working Paper 75
This paper was updated in February 2013
This paper investigates the impact of the EU Emissions Trading Scheme (EU ETS)on technological change.
We exploit installations-level inclusion criteria to estimate the impact of the EU ETS on firms patenting.
We find that the EU ETS has increased low-carbon innovation among regulated firms by as much as 10 per cent, while not crowding out patenting for other technologies.
We also find evidence that the EU ETS has not impacted patenting beyond the set of regulated companies.
These results imply that the EU ETS accounts for nearly a 1 per cent increase in European low-carbon patenting compared to a counterfactual scenario.
Raphael Calel and Antoine Dechezleprêtre