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Induced innovation in power generation technologies: Evidence from the Tokyo–Saitama Emissions Trading System

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  • Jia, Xiao
  • Takeuchi, Kenji

Abstract

Innovation in energy technology plays a critical role in the transition to net zero emissions. This study investigates the effect of a regional carbon cap-and-trade program on firms’ innovations in power generation technologies using renewable sources and fossil fuels. A difference-in-differences analysis based on matched firms from 2006 to 2016 indicates that the Tokyo–Saitama Emissions Trading System boosts innovations in renewable and fossil fuel technologies, with a greater impact on the latter. Furthermore, we find that firms innovating in both technology areas are more responsive than those only innovating in renewable technology and that a stricter regulatory scheme has a greater impact on technological innovation. These findings suggest the potential impact of a regional cap-and-trade program on green innovations.

Suggested Citation

  • Jia, Xiao & Takeuchi, Kenji, 2024. "Induced innovation in power generation technologies: Evidence from the Tokyo–Saitama Emissions Trading System," Energy Economics, Elsevier, vol. 129(C).
    • Handle: RePEc:eee:eneeco:v:129:y:2024:i:c:s0140988323007259
    DOI: 10.1016/j.eneco.2023.107227
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    Keywords

    Carbon pricing; Emissions trading system; Innovation; Renewable energy; Energy transitions;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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