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Environmental Policy and Directed Technological Change: Evidence from the European carbon market

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  • Raphael Calel
  • Antoine Dechezlepretre

Abstract

This paper investigates the impact of the EU Emission 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%, 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% increase in European low-carbon patenting compared to a counterfactual scenario.

Suggested Citation

  • Raphael Calel & Antoine Dechezlepretre, 2012. "Environmental Policy and Directed Technological Change: Evidence from the European carbon market," Working Papers 1208, Chaire Economie du climat.
    • Handle: RePEc:cec:wpaper:1208
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    More about this item

    Keywords

    Directed technological change; EU Emission Trading Scheme; Policy evaluation;
    All these keywords.

    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • 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
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General

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