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Environmental Policy and Directed Technological Change: Evidence from the European Carbon Market

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  • Raphael Calel
  • Antoine Dechezleprêtre

Abstract

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%, 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 lowcarbon patenting compared to a counterfactual scenario.

Suggested Citation

  • Raphael Calel & Antoine Dechezleprêtre, 2012. "Environmental Policy and Directed Technological Change: Evidence from the European Carbon Market," CEP Discussion Papers dp1141, Centre for Economic Performance, LSE.
  • Handle: RePEc:cep:cepdps:dp1141
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    More about this item

    Keywords

    Directed technological change; EU Emissions 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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