The Impact of Carbon Pricing on Corporate Sustainability: Evidence From the European Union
Open accessAbstract
The European Union (EU) has played a leading role in the fight against climate change. One mechanism used to meet the targets for global greenhouse gas (GHG) emission reductions is carbon pricing. A prominent example is the EU Emissions Trading System (EU‐ETS). This study examines the effectiveness of political decisions to pursue environmental objectives from a firm‐level perspective. The aim of this research is to analyse how carbon prices affect firm‐level GHG emissions and environmental innovation. We also examine the relationship between environmental innovation and corporate GHG emissions, both independently and after including the effects of carbon pricing. Our findings show that carbon prices have a negative relationship with corporate CO 2 emissions and a positive relationship with green innovation in low‐carbon technologies. Our results confirm that green innovation exerts a limited impact on GHG emissions, with carbon prices acting as the main driver of corporate GHG emission reductions.
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Written from the paper’s full text.
TL;DR
Using EU-ETS firm-level data from 2008–2023, the paper finds that higher carbon prices are associated with lower corporate CO₂ emissions and higher green innovation. Green innovation alone is negatively related to emissions, but its effect becomes nonsignificant once carbon price is included, so carbon pricing appears to be the main driver rather than an indirect mediator.
Key findings
- Carbon price in year *t* has a significant negative relationship with corporate CO₂ emissions: GMM coefficient −0.002* for `P_CO2t`; the lagged interaction with EU-ETS participation is also negative (−0.002), supporting H1.
- Carbon price in year *t* has a significant positive relationship with green innovation: GMM coefficient 0.039* for `R&D_green`; the interaction `P_CO2t × Inst_t` is 0.064*, supporting H2.
- Green R&D alone has a significant negative relationship with CO₂ emissions: `R&D_green_t` coefficient −0.005* in the dynamic GMM model, supporting H3.
- When carbon price is included, the green R&D effect becomes nonsignificant (−0.001), and the Sobel-Goodman indirect effect is 0.000 (p = 0.374), supporting H4b: no mediation by green R&D.
Methods
- Firm-level panel of EU-ETS-regulated facilities/companies in the EU-27, 2008–2023. The paper reports an initial 189,969 facilities, 10,582 account holders, and 6,258 companies; 8,068 account holders were matched, and the final sample is reported as 1,967 companies in the introduction but 1,948 companies and 17,038 company-year observations in the data section.
- Variables: corporate GHG emissions proxied by annual CO₂ emissions (`ln[E_CO2]`); environmental innovation proxied by the Thomson Reuters Eikon environmental innovation score (`R&D_green`) because R&D expenditure data were unavailable; carbon price from Datastream; controls include sales, country CO₂ emissions, EU-ETS participation, and phase dummies.
- Analysis: panel data models with fixed effects and dynamic GMM (Arellano-Bond), Hansen overidentification and autocorrelation tests, plus Sobel-Goodman mediation tests with bootstrapping via Stata `sgmediation2`.
Limitations
- The paper states that identifying parent companies of all facilities forced exclusion of some observations; lack of data on overall and green R&D expenditure forced use of alternative measures; this creates lack of homogeneity across analyses; and the study covers only publicly traded companies, so results should be generalized with caution.
- Evident in the text: the final sample size is inconsistent across sections (1,967 vs. 1,948 companies), and variable-specific observation counts differ widely (e.g., 9,149 for `ln[E_CO2]`, 10,208 for `R&D_green`, 17,038 for `P_CO2`), indicating unbalanced panels.
- Evident in the text: environmental innovation is proxied by an environmental innovation score rather than actual green R&D expenditure, which limits interpretation of the innovation channel.
Model-written summary. Check it against the paper before relying on it.
Integrity signals
Registry
Cites
Statistics
Claims the paper makes
13 of 36 cited sources checked · 6 supported · 0 flagged · accuracy not yet measured
- Premisecitation§ 1 | Introduction · p. 1
The gradual reduction in free allocation forces companies to purchase emission allowances in the carbon market to cover their emission deficits.
“The gradual reduction in free allocation forces companies to purchase emission allowances in the carbon market to cover their emission deficits (Gaztañaga et al. 2022; Mañas- Álvarez et al. 2024).”
Quote in the paperSubstantial claim1 of 2 sources checked- cites Gaztañaga et al. 2022
Couldn’t be matched to a paper in Crossref, so it can’t be checked.
- cites Mañas-Álvarez et al. 2024 source
- Premisecitation§ 1 | Introduction · p. 1
Most studies on carbon pricing at the national level reveal a small impact on national emissions.
“These studies reveal a small impact of this type of policy on national emissions.”
Quote in the paperNot a substantial claim1 of 1 sources checked- cites Green 2021 source
The Results report that carbon pricing generally produces small emissions reductions, between 0% and 2% per year. But the Methods say most studies estimate reductions in sectors covered by the policy, while only some extrapolate to broader jurisdictional effects. The review therefore does not establish that most studies found a small impact specifically on national emissions. (LLM, conf=0.88)
Experimental — accuracy not yet measured
- Premisecitation§ 3.1 | The Relationship Between Carbon Prices and CO 2 Emissions · p. 6
Most studies have confirmed the effectiveness of carbon pricing in reducing emissions.
“Most studies have confirmed the effectiveness of carbon pricing in reducing emissions.”
Quote in the paperNot a substantial claim1 of 2 sources checked- cites Green 2021 source
The Abstract says the majority of studies suggest carbon pricing reduces emissions, but the estimated aggregate reductions are limited—generally 0%–2% per year. The Results (section 5) stress that there is little hard evidence of its performance. Thus the source supports a qualified finding of modest reductions, not the stronger claim that most studies have confirmed its effectiveness. (LLM, conf=0.86)
Experimental — accuracy not yet measured - cites Rafaty et al. 2025 source
- Premisecitation§ 5 | Results · p. 11
Previous studies document the limited effects of corporate environmental innovation on GHG emissions.
“previous studies (Chen et al. 2024; Rogge 2016; Teixidó et al. 2019), which document the limited effects of corporate environmental innovation on GHG emissions.”
Quote in the paperSubstantial claim2 of 3 sources checked- cites Chen et al. 2024 source
Section 4.1 (p. 13) says the effect of emissions trading systems on technological innovation is limited or moderate. That is the reverse of the claimed relationship: it does not assess whether corporate environmental innovation has limited effects on GHG emissions. Searches for innovation’s effects on emissions found no passage addressing that claim. (LLM, conf=0.76)
Experimental — accuracy not yet measured - cites Rogge 2016 source
The Conclusion (page unavailable) says EU ETS–driven organizational innovations have had limited effects on shifting corporate strategies toward low-carbon solutions. That supports a limited downstream effect of some corporate innovations, but the chapter does not establish that corporate environmental innovation has had limited effects on GHG emissions themselves. (LLM, conf=0.84)
Experimental — accuracy not yet measured - cites Teixidó et al. 2019
Couldn’t be matched to a paper in Crossref, so it can’t be checked.
- Findingown data§ ABSTRACT · p. 1
Green innovation exerts a limited impact on GHG emissions.
“Our results confirm that green innovation exerts a limited impact on GHG emissions, with carbon prices acting as the main driver of corporate GHG emission reductions.”
- Also stated in: § 6 | Conclusions · p. 13 · boosted
“our results confirm that green innovation exerts a limited impact on GHG emissions”
Quote in the paperSubstantial claim- The authors state this as an assumption: The environmental innovation score validly captures companies' efforts in environmental innovation.
- Also stated in: § 6 | Conclusions · p. 13 · boosted
- Findingreasoning§ ABSTRACT · p. 1
Carbon prices act as the main driver of corporate GHG emission reductions.
“Our results confirm that green innovation exerts a limited impact on GHG emissions, with carbon prices acting as the main driver of corporate GHG emission reductions.”
Quote in the paperSubstantial claim - Findingown data§ ABSTRACT · p. 1
Carbon prices have a negative relationship with corporate CO2 emissions.
“Our findings show that carbon prices have a negative relationship with corporate CO 2 emissions and a positive relationship with green innovation in low- carbon technologies.”
Quote in the paperSubstantial claim - Findingnone given§ 2 | The European EU- ETS Emissions Market · p. 4
Sector 20 (fuel combustion) accounts for the highest percentage of total verified emissions across all phases, declining from 63.42% in 2008 to 55.49% in 2023.
“Regarding verified emissions, Sector 20 (fuel combustion) accounts for the highest percentage of total emissions across all phases, declining from 63.42% in 2008 to 55.49% in 2023.”
Quote in the paperNot a substantial claim - Findingown data§ 5 | Results · p. 11
There is a significant negative relationship between carbon price in year t and companies' GHG emissions.
“we observed a significant negative relationship with carbon price in year t.”
Quote in the paperSubstantial claim - Findingown data§ ABSTRACT · p. 1
Carbon prices have a positive relationship with green innovation in low-carbon technologies.
“Our findings show that carbon prices have a negative relationship with corporate CO 2 emissions and a positive relationship with green innovation in low- carbon technologies.”
Quote in the paperSubstantial claim - Findingown data§ 5 | Results · p. 11
Sales volume had a significant positive relationship with GHG emissions.
“sales volume (used to indicate larger companies or those with higher production volumes) had a significant positive relationship with GHG emissions.”
Quote in the paperNot a substantial claim - Findingnone given§ 6 | Conclusions · p. 13
These relationships hold across both regulated and unregulated sectors.
“These relationships hold across both regulated and unregulated sectors”
Quote in the paperSubstantial claim - Findingown data§ 5 | Results · p. 11
Being headquartered in countries with high CO2 emissions had a significant positive relationship with GHG emissions.
“being headquartered in countries with high CO 2 emissions, a variable that potentially reflects national development or industrialisation levels, had a significant positive relationship with GHG emissions.”
Quote in the paperNot a substantial claim - Findingown data§ 5 | Results · p. 11
For companies operating EU-ETS facilities, there was a significant positive differential relationship between environmental innovation and carbon price in year t.
“for companies operating EU- ETS facilities, there was a significant positive differential relationship between environmental innovation and carbon price in year t.”
Quote in the paperSubstantial claim- The authors state this as an assumption: The environmental innovation score validly captures companies' efforts in environmental innovation.
- Findingown data§ 5 | Results · p. 11
The environmental innovation score had a significant negative relationship with the Phase IV variable.
“the environmental innovation score had a significant negative relationship with the Phase IV variable.”
Quote in the paperNot a substantial claim- The authors state this as an assumption: The environmental innovation score validly captures companies' efforts in environmental innovation.
- Findingown data§ 6 | Conclusions · p. 13
Carbon price has a positive relationship with innovation in low-carbon technologies.
“a positive relationship with innovation in low- carbon technologies.”
Quote in the paperSubstantial claim- The authors state this as an assumption: The environmental innovation score validly captures companies' efforts in environmental innovation.
- Findingown data§ 6 | Conclusions · p. 13
Carbon price has a negative relationship with corporate CO2 emissions.
“carbon price has a negative relationship with corporate CO 2 emissions”
Quote in the paperSubstantial claim - Findingown data§ 5 | Results · p. 11
There was no difference in behaviour depending on whether the company had facilities affected by the EU-ETS.
“There was no difference in behaviour depending on whether the company had facilities affected by the EU- ETS.”
- Also stated in: § 5 | Results · p. 11 · plain
“As for the analysis of GHG emissions, we did not observe any differentiating behaviour depending on whether the company had facilities in the EU- ETS.”
Quote in the paperSubstantial claim - Also stated in: § 5 | Results · p. 11 · plain
- Findingown data§ 5 | Results · p. 11
The Sobel-Goodman test confirmed the absence of mediation by rejecting the mediation hypothesis.
“The Sobel-Goodman test (Table 7) confirmed this absence of mediation by rejecting the mediation hypothesis.”
Quote in the paperSubstantial claim- The authors state this as an assumption: The environmental innovation score validly captures companies' efforts in environmental innovation.
- Findingown data§ 5 | Results · p. 11
Firm size had a positive influence on companies' environmental innovation.
“firm size had a positive influence on companies' environmental innovation.”
Quote in the paperNot a substantial claim- The authors state this as an assumption: The environmental innovation score validly captures companies' efforts in environmental innovation.
- Findingown data§ 5 | Results · p. 11
There was a significant negative relationship between environmental innovation and CO2 emissions.
“we observed a significant negative relationship between these variables”
Quote in the paperSubstantial claim- The authors state this as an assumption: The environmental innovation score validly captures companies' efforts in environmental innovation.
- Findingnone given§ 6 | Conclusions · p. 13
These relationships are particularly pronounced among companies operating facilities included in the EU-ETS.
“although they are particularly pronounced among companies operating facilities included in the EU- ETS.”
Quote in the paperSubstantial claim - Premisereasoning§ 3.1 | The Relationship Between Carbon Prices and CO 2 Emissions · p. 6
There is little evidence on the impact of carbon pricing on emissions at the firm level.
“Despite these findings, there is little evidence at the firm level.”
Quote in the paperSubstantial claim - Interpretationreasoning§ 2 | The European EU- ETS Emissions Market · p. 4
Sector 20 facilities have been forced to purchase emission allowances in the secondary market because emission reductions have not matched the pace of allowance allocation reductions.
“Consequently, these facilities have been forced to purchase emission allowances in the secondary market because emission reductions have not matched the pace of allowance allocation reductions.”
Quote in the paperNot a substantial claim - Premisecitation§ 1 | Introduction · p. 2
Few studies have explicitly examined the impact of carbon pricing on corporate GHG emissions.
“Few studies have explicitly examined the impact of carbon pricing on corporate GHG emissions (Adamolekun 2024, for the European market; Le and Azhgaliyeva 2023, for the Asian market).”
Quote in the paperSubstantial claim0 of 2 sources checked- cites Adamolekun 2024
Couldn’t be matched to a paper in Crossref, so it can’t be checked.
- cites Le and Azhgaliyeva 2023
Couldn’t be matched to a paper in Crossref, so it can’t be checked.
- Premisecitation§ 1 | Introduction · p. 1
Carbon pricing drives decarbonisation.
“Carbon pricing thus drives decarbonisation, embodying the principle that polluters should bear the cost of their emissions (European Commission 2024a).”
Quote in the paperSubstantial claim0 of 1 sources checked- cites European Commission 2024a
Couldn’t be matched to a paper in Crossref, so it can’t be checked.
- Study design and conductown data§ 5 | Results · p. 11
The Hausman test indicated that estimation with fixed effects was more suitable than estimation with random effects because there was a correlation between the individual effects and the explanatory variables.
“The test indicated that estimation with FEs was more suitable than estimation with REs because there was a correlation between the individual effects and the explanatory variables.”
Quote in the paperSubstantial claim - Study design and conductown data§ 5 | Results · p. 11
The Hansen test confirmed instrument validity.
“The Hansen test confirmed instrument validity”
Quote in the paperSubstantial claim - Premisecitation§ 4.2 | Methodology · p. 10
Panel data technique captures unobservable heterogeneity both between individuals in the sample and over time.
“the panel data technique captured unobservable heterogeneity both between individuals in the sample and over time (Arellano 1992).”
Quote in the paperSubstantial claim0 of 1 sources checked- cites Arellano 1992
Couldn’t be matched to a paper in Crossref, so it can’t be checked.
- Premisecitation§ 1 | Introduction · p. 2
Results of studies on emissions trading markets outside Europe remain inconclusive, showing little impact or none.
“However, the results remain inconclusive, showing little impact (Arimura and Abe 2021) or even none (Wakabayashi and Kimura 2018).”
Quote in the paperNot a substantial claim0 of 2 sources checked - Premisereasoning§ 1 | Introduction · p. 2
Company-level evidence on how carbon allowance prices affect corporate GHG emissions remains limited.
“In contrast, company- level evidence remains limited, despite its potential to provide important insights into how carbon allowance prices affect corporate GHG emissions.”
Quote in the paperSubstantial claim - Premisecitation§ 3.1 | The Relationship Between Carbon Prices and CO 2 Emissions · p. 4
When the marginal cost of investment exceeds carbon prices, companies choose to purchase carbon emission allowances.
“When the marginal cost of this investment exceeds carbon prices, companies choose to purchase carbon emission allowances.”
Quote in the paperSubstantial claim0 of 1 sources checked- cites Le and Azhgaliyeva 2023
Couldn’t be matched to a paper in Crossref, so it can’t be checked.
- Premisecitation§ 3.1 | The Relationship Between Carbon Prices and CO 2 Emissions · p. 6
The impact of carbon pricing on emissions remains modest, with estimated annual emission reductions ranging from 0% to 2% at the aggregate level.
“However, the impact remains modest, with estimated annual emission reductions ranging from 0% to 2% at the aggregate level.”
Quote in the paperNot a substantial claim - Premisecitation§ 4.2 | Methodology · p. 11
The Sobel-Goodman test has low statistical power.
“given that the SobelGoodman test has low statistical power, we used bootstrapping to calculate the statistical significance of the parameters.”
Quote in the paperSubstantial claim0 of 1 sources checked- cites Mize 2022
Couldn’t be matched to a paper in Crossref, so it can’t be checked.
- Study design and conductown data§ 6.2 | Limitations and Future Research · p. 14
The research focused solely on publicly traded companies.
“the research focused solely on publicly traded companies, given data availability restrictions.”
Quote in the paperSubstantial claim - Study design and conductown data§ 5 | Results · p. 11
Control variable results were consistent across estimation methods.
“Regarding control variables, the results were consistent across estimation methods.”
Quote in the paperNot a substantial claim - Interpretationreasoning§ 5 | Results · p. 11
This finding implies the absence of a mediating effect.
“This finding implies the absence of a mediating effect.”
Quote in the paperSubstantial claim- The authors state this as an assumption: The environmental innovation score validly captures companies' efforts in environmental innovation.
- Interpretationreasoning§ 6 | Conclusions · p. 13
Carbon pricing acts as the main driver of corporate GHG emission reductions.
“with carbon pricing acting as the main driver of corporate GHG emission reductions.”
Quote in the paperSubstantial claim- The authors state this as an assumption: The environmental innovation score validly captures companies' efforts in environmental innovation.
- Interpretationown data§ 6 | Conclusions · p. 13
Innovation efforts focus primarily on technology rather than practical applications.
“the analysis of the relationship between green innovation and CO 2 emissions suggests that innovation efforts focus primarily on technology rather than practical applications.”
Quote in the paperSubstantial claim- The authors state this as an assumption: The environmental innovation score validly captures companies' efforts in environmental innovation.
- Interpretationreasoning§ 5 | Results · p. 11
The negative Phase_III coefficient indicates significant emission reductions attributable to reduced emission allowances, changes in free allowance allocation mechanisms, and COVID-19 effects.
“indicating significant emission reductions attributable to factors including reduced emission allowances, the change in free allowance allocation mechanisms and, among others, the effects on business activity due to COVID- 19.”
Quote in the paperSubstantial claim - Interpretationown data§ 6 | Conclusions · p. 13
The EU-ETS is fulfilling its objective.
“Our findings demonstrate that the EU- ETS is fulfilling its objective.”
Quote in the paperSubstantial claim - Study design and conductreasoning§ 6.2 | Limitations and Future Research · p. 14
These limitations result in a lack of homogeneity in the sample used in each analysis.
“these limitations result in a lack of homogeneity in the sample used in each analysis.”
Quote in the paperNot a substantial claim - Interpretationreasoning§ 5 | Results · p. 11
These results validate Hypothesis 4b.
“These results validate Hypothesis 4b”
Quote in the paperSubstantial claim- The authors state this as an assumption: The environmental innovation score validly captures companies' efforts in environmental innovation.
- Interpretationown data§ 5 | Results · p. 11
The effect of green R&D on GHG emissions was absorbed by carbon price.
“(i.e., the effect was absorbed by carbon price)”
Quote in the paperSubstantial claim- The authors state this as an assumption: The environmental innovation score validly captures companies' efforts in environmental innovation.
- Classified as probably not a substantial claim. 22
- May combine two claims. 10
Probably not a substantial claim: may not pass S3 (load-bearing). May combine two claims.
Premisecitation§ 1 | Introduction · p. 2Most studies have identified a positive relationship between implementing emissions trading markets and innovation investment, attributed to the carbon pricing mechanism creating direct financial incentives for regulated firms to invest in low-carbon technologies.
“Most have identified a positive relationship, attributed to the carbon pricing mechanism, which creates direct financial incentives for regulated firms to invest in low- carbon technologies (Calel and Dechezleprêtre 2016)”
Quote in the paperNot a substantial claim1 of 1 sources checked- cites Calel and Dechezleprêtre 2016 source
Split into 2 atoms — 1 confirmed, 1 partially supported, 0 disputed, 0 misattributed, 0 unverifiable. Expand the claim to see per-atom verdicts.
Experimental — accuracy not yet measured
Classified as probably not a substantial claim.
Premisecitation§ 1 | Introduction · p. 1The EU ETS requires companies to purchase emission allowances to cover their carbon emissions.
“As the world's first carbon market, the EU- ETS requires companies to purchase emission allowances to cover their carbon emissions (Colmer et al. 2023; Mañas- Álvarez et al. 2024).”
Quote in the paperSubstantial claim1 of 2 sources checked- cites Colmer et al. 2023
Couldn’t be matched to a paper in Crossref, so it can’t be checked.
- cites Mañas-Álvarez et al. 2024 source
Section 2.1 (page unavailable) says auctioning became the main allocation method and electricity-sector companies had to obtain all the allowances needed to cover their emissions. It also says some sectors continued to receive free allowances, so the paper does not support the unqualified claim that companies must purchase allowances for all their emissions. The paper dates the EU ETS to 2005 but does not establish that it was the world's first carbon market. (LLM, conf=0.88)
Experimental — accuracy not yet measured
Probably not a substantial claim: may not pass S2 (checkable), S3 (load-bearing).
Premisecitation§ 3.3 | The Relationship Between CO 2 Emissions and Green R&D · p. 7Technological change is necessary to address climate change without compromising economic growth.
“Technological change is necessary to address climate change without compromising economic growth.”
Quote in the paperNot a substantial claim1 of 2 sources checked- cites Chen et al. 2024 source
The paper says that addressing the climate crisis requires transforming high-emission technologies (Abstract, p. 2), supporting the technological-change part of the claim. Its discussion of innovation and climate goals (section 4.1, p. 13) does not establish that this can be done without compromising economic growth. (LLM, conf=0.82)
Experimental — accuracy not yet measured - cites Teixidó et al. 2019
Couldn’t be matched to a paper in Crossref, so it can’t be checked.
Probably not a substantial claim: may not pass S3 (load-bearing).
Premisecitation§ 5 | Results · p. 11Previous research establishes a relationship between environmental innovation and CO2 emission reductions.
“previous research (Albitar et al. 2023; Gonenc and Poleska 2023; Lee and Min 2015) that establishes a relationship between environmental innovation and CO 2 emission reductions.”
Quote in the paperNot a substantial claim1 of 3 sources checked- cites Albitar et al. 2023
Couldn’t be matched to a paper in Crossref, so it can’t be checked.
- cites Gonenc and Poleska 2023
Couldn’t be matched to a paper in Crossref, so it can’t be checked.
- cites Lee and Min 2015 source
Probably not a substantial claim: may not pass S3 (load-bearing).
Premisecitation§ 5 | Results · p. 11Prior studies document the positive impact of the EU-ETS on business innovation.
“These studies document the positive impact of the EU- ETS on business innovation”
Quote in the paperNot a substantial claim3 of 3 sources checkedProbably not a substantial claim: may not pass S3 (load-bearing).
Premisecitation§ 5 | Results · p. 11Calel and Dechezleprêtre (2016) observed small and statistically nonsignificant spillover effects.
“Calel and Dechezleprêtre (2016), who observed small and statistically nonsignificant spillover effects.”
Quote in the paperNot a substantial claim1 of 1 sources checked- cites Calel and Dechezleprêtre (2016) source
May combine two claims.
Findingnone given§ 2 | The European EU- ETS Emissions Market · p. 4In Sector 20, free allowance allocation fell from 56.73% in 2008 to 16.31% in 2023, while verified emissions decreased proportionally less.
“In this sector, free allowance allocation fell from 56.73% in 2008 to 16.31% in 2023, while verified emissions decreased proportionally less.”
Quote in the paperNot a substantial claimMay combine two claims.
Findingnone given§ 2 | The European EU- ETS Emissions Market · p. 4In facilities in other sectors, they have received a higher percentage of allocations, while verified emissions declined from 36.58% in 2008 to approximately 33% during Phase III, rising to 39% in Phase IV.
“Conversely, in facilities in other sectors, the trend has been the opposite. They have received a higher percentage of allocations, while verified emissions declined from 36.58% in 2008 to approximately 33% during Phase III, rising to 39% in Phase IV.”
Quote in the paperNot a substantial claimClassified as probably not a substantial claim.
Premisenone given§ 1 | Introduction · p. 2Studies examining the relationship between implementing emissions trading markets and innovation investment have yielded mixed results.
“Studies examining the relationship between implementing emissions trading markets and innovation investment have yielded mixed results.”
Quote in the paperSubstantial claimProbably not a substantial claim: may not pass S3 (load-bearing). May combine two claims.
Premisecitation§ 1 | Introduction · p. 2Some studies have found no significant relationship between emissions trading markets and innovation investment, attributing this to low carbon prices that fail to generate meaningful innovation incentives.
“Some studies have found no significant relationship, attributing this finding to low carbon prices, which fail to generate meaningful innovation incentives (Löfgren et al. 2014; Lunde 2022).”
Quote in the paperNot a substantial claim0 of 2 sources checked- cites Löfgren et al. 2014
Couldn’t be matched to a paper in Crossref, so it can’t be checked.
- cites Lunde 2022
Couldn’t be matched to a paper in Crossref, so it can’t be checked.
May combine two claims.
Interpretationreasoning§ 3.3 | The Relationship Between CO 2 Emissions and Green R&D · p. 7Pollution pricing can stimulate environmental innovation and consequently reduce GHG emissions.
“We argue that pollution pricing, as discussed previously, can stimulate environmental innovation and consequently reduce GHG emissions.”
Quote in the paperNot a substantial claimProbably not a substantial claim: may not pass S3 (load-bearing).
Premisecitation§ 1 | Introduction · p. 2Some studies have reported a negative relationship between emissions trading markets and innovation investment, emerging when carbon trading policies create resource allocation distortions that redirect funds from innovation to regulatory compliance.
“Others have reported a negative relationship, which emerges when carbon trading policies create resource allocation distortions that redirect funds from innovation to regulatory compliance (Zhang et al. 2022)”
Quote in the paperNot a substantial claim0 of 1 sources checked- cites Zhang et al. 2022 source
Classified as probably not a substantial claim.
Premisecitation§ 3.2 | The Relationship Between Carbon Prices and Green R&D · p. 6An increase in the price of a production factor stimulates innovation to reduce the use of that factor (induced innovation hypothesis).
“According to the hypothesis of induced innovation formulated by Hicks (1932), an increase in the price of a production factor stimulates innovation to reduce the use of that factor.”
Quote in the paperSubstantial claim0 of 1 sources checked- cites Hicks (1932)
Couldn’t be matched to a paper in Crossref, so it can’t be checked.
May combine two claims.
Premisecitation§ 3.1 | The Relationship Between Carbon Prices and CO 2 Emissions · p. 4Companies invest in reducing emission intensity when the marginal cost of such investment per carbon unit falls below the carbon price, continuing until cost equalisation occurs and the policy is effective.
“As noted by Le and Azhgaliyeva (2023), companies invest in reducing emission intensity when the marginal cost of such investment per carbon unit falls below the carbon price, continuing until cost equalisation occurs and the policy is effective.”
Quote in the paperSubstantial claim0 of 1 sources checked- cites Le and Azhgaliyeva 2023
Couldn’t be matched to a paper in Crossref, so it can’t be checked.
Probably not a substantial claim: may not pass S3 (load-bearing). May combine two claims.
Premisenone given§ 3.1 | The Relationship Between Carbon Prices and CO 2 Emissions · p. 6Although most studies have shown positive relationships between carbon pricing and emission reductions, the results vary.
“Although most studies have shown positive relationships between carbon pricing and emission reductions, the results vary.”
Quote in the paperNot a substantial claimProbably not a substantial claim: may not pass S1 (asserted), S3 (load-bearing), S4 (based).
Premisenone given§ 3.1 | The Relationship Between Carbon Prices and CO 2 Emissions · p. 6Prior studies report conflicting findings on whether carbon pricing reduces emissions.
“Several studies have documented a positive relationship between carbon pricing and emission reductions (or negative with GHG emissions).”
Quote in the paperNot a substantial claimMay combine two claims.
Interpretationreasoning§ 3.1 | The Relationship Between Carbon Prices and CO 2 Emissions · p. 4Carbon pricing can have different impacts on different companies and does not always result in emission reductions.
“Therefore, carbon pricing can have different impacts on different companies and does not always result in emission reductions.”
Quote in the paperSubstantial claimClassified as probably not a substantial claim.
Premisecitation§ 3.2 | The Relationship Between Carbon Prices and Green R&D · p. 7Findings regarding emissions trading markets and innovation investment lack consensus.
“findings regarding emissions trading markets and innovation investment lack consensus.”
Quote in the paperSubstantial claimProbably not a substantial claim: may not pass S3 (load-bearing). May combine two claims.
Premisecitation§ 3.2 | The Relationship Between Carbon Prices and Green R&D · p. 6Environmental regulations can stimulate innovation and improve production efficiency, potentially strengthening competitive advantage.
“Porter (1991) argued that environmental regulations can stimulate innovation and improve production efficiency, suggesting that climate policies would not compromise the competitive advantage of companies and could even strengthen it.”
Quote in the paperNot a substantial claim0 of 1 sources checked- cites Porter (1991) source
Classified as probably not a substantial claim.
Interpretationreasoning§ 5 | Results · p. 11These findings confirm Hypothesis 1.
“Therefore, these findings confirm Hypothesis 1”
Quote in the paperSubstantial claimClassified as probably not a substantial claim.
Study design and conductnone given§ 5 | Results · p. 11It was impossible to find a variable that reflected companies' efforts in environmental innovation.
“it was impossible to find a variable that reflected companies' efforts in this area.”
Quote in the paperSubstantial claimProbably not a substantial claim: may not pass S3 (load-bearing).
Study design and conductown data§ 6.2 | Limitations and Future Research · p. 14Difficulty in identifying the parent companies of all facilities forced the exclusion of some observations.
“the difficulty in identifying the parent companies of all facilities forced us to exclude some observations.”
Quote in the paperNot a substantial claimMay combine two claims.
Interpretationown data§ 6 | Conclusions · p. 13Carbon pricing is an effective instrument for enhancing corporate environmental performance and strengthening sustainability commitments.
“Our results show that carbon pricing is an effective instrument for enhancing corporate environmental performance and strengthening sustainability commitments.”
Quote in the paperSubstantial claimProbably not a substantial claim: may not pass S3 (load-bearing).
Premisecitation§ 5 | Results · p. 11Certain studies have indicated limited effects of the EU-ETS on business innovation.
“although certain studies have indicated limited effects (Rogge 2016).”
Quote in the paperNot a substantial claim0 of 1 sources checked- cites Rogge 2016
Couldn’t be matched to a paper in Crossref, so it can’t be checked.
Classified as probably not a substantial claim.
Interpretationown data§ 5 | Results · p. 11These findings support Hypothesis 2.
“These findings support Hypothesis 2”
Quote in the paperSubstantial claim- The authors state this as an assumption: The environmental innovation score validly captures companies' efforts in environmental innovation.
Classified as probably not a substantial claim.
Premisecitation§ 5 | Results · p. 11Miller (2015) reported an induced innovation effect in unregulated companies.
“Miller (2015), who reported an induced innovation effect in unregulated companies.”
Quote in the paperSubstantial claim0 of 1 sources checked- cites Miller (2015)
Couldn’t be matched to a paper in Crossref, so it can’t be checked.
Classified as probably not a substantial claim.
Interpretationown data§ 5 | Results · p. 11This result confirms Hypothesis 3.
“confirming Hypothesis 3.”
Quote in the paperSubstantial claim- The authors state this as an assumption: The environmental innovation score validly captures companies' efforts in environmental innovation.
Probably not a substantial claim: may not pass S2 (checkable), S3 (load-bearing).
Interpretationreasoning§ 6.2 | Limitations and Future Research · p. 14The results should be generalised with caution.
“Therefore, the results should be generalised with caution.”
Quote in the paperNot a substantial claim
The paper relies on this without support.
The EU ETS is the world's leading carbon market and accounts for more than three quarters of global carbon trading.
“The EU- ETS has established itself as the world's leading carbon market. It accounts for more than three quarters of global carbon trading and serves as a reference for analogous systems worldwide.”
The authors state this as an assumption.
The environmental innovation score validly captures companies' efforts in environmental innovation.
“we proxied this variable using the environmental innovation score, which captured a company's ability to reduce environmental costs and burdens for customers and therefore create new market opportunities through new environmental technologies and processes or eco- designed products.”
Self-check
Percentages, sums and reported differences re-computed from the paper’s own numbers.
Each contradiction between two passages listed here was confirmed by an independent check.
Claim of complete variable data conflicts with observation counts
MinorThe data section says the final sample has complete data on the variables of interest. The descriptive-statistics table instead reports 9,149 observations for emissions and 10,208 for environmental innovation, versus 17,038 for carbon price.
“Our final sample consisted of companies for which Thomson Reuters Eikon provided complete data on our variables of interest for the period 2008 to 2023: GHG emissions, proxied by CO₂ emissions; corporate environmental R&D measures; and sales volume, used as a control variable for firm size or production volume.”
“| Observations | 9,149 | 10,208 | 17,038 | 17,028 | 17,038 |”
Country-and-sector sample distribution is assigned the wrong table number
MinorThe text directs readers to Table 2 for the sample distribution, but that distribution is titled Table 3; Table 2 defines the variables.
“Table 2 shows the distribution of the companies in the sample by country and sector.”
“TABLE 3 | Sample by sector and country.”
Final sample is reported as both 1967 and 1948 companies
MinorThe introduction gives a final sample of 1967 companies, whereas the data section gives 1948.
“Given data availability constraints, the final sample consists of 1967 companies.”
“These data requirements reduced our sample to 1948 companies, yielding 17,038 company- year observations.”
Hypothesis 2 states the opposite of the predicted relationship
MinorThe paper predicts a positive relationship between allowance prices and green R&D and later says the results support Hypothesis 2. H2 itself states an inverse relationship.
“H2. The price of emission allowances is inversely related to green R&D .”
“we expect to observe a positive relationship between emission allowance prices and green R&D.”
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- Authors
- García, C. J., Herrero, B., & Morillas‐Jurado, F.
- Affiliations
- Universitat de València (ES)
- Department of Applied Economics University of Valencia Valencia Spain
- Corresponding author
- Herrero, Begoña
- ORCID
- Herrero, Begoña
- Venue
- Business Strategy and the Environment
- Publisher
- Wiley
- Published
- 2025-11-14
- Volume
- 35
- Issue
- 3
- Pages
- 3218-3232
- ISSN
- 0964-4733 (ISSN-L)
- 1099-0836
- OpenAlex
- W4416231289
- Semantic Scholar
- 107502bd0d6a65f44cf9ec80d4556e67f9da0d56
- Cited by
- 4
- References
- 28
- Citations by year
- 2026: 4
- FWCI
- 3.76
- Type
- journal article
- Language
- en
- Open access
- hybrid
- doi.org
- Licence
- Locations
- Business Strategy and the Environment (publishedVersion, cc-by-nc-nd)
- Repository of Digital Objects for Teaching Research and Culture (University of Valencia) (submittedVersion, cc-by-nc)
- Funders
- Banco Santander
- Universitat de València
- Topics
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Climate Change Policy and Economics
- Social Sciences › Business, Management and Accounting › Marketing › Environmental Sustainability in Business
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Energy, Environment, Economic Growth
- Keywords
- carbon pricing, EU Emissions Trading System, corporate sustainability, greenhouse gas emissions, green innovation, low-carbon technologies, climate policy effectiveness, firm-level emissions
About these checks
Registry, retraction, Cites and statistics results are computed, not judged, with one exception: a printed reference that no index lists is read once by a model before it counts as a citation error. Claims are extracted by a model and kept only when their quote appears verbatim in the text; each cited source is then checked, with a model’s help, for whether it says what the claim relies on. Those verdicts can be wrong — read the claim’s quote and the cited source before relying on one.
Claims read by deepseek-v4.1-flash under definition version 3 (extract-v3) on 2026-10-23.
Classified by jev-1.13-20260917 (gold-guideline-v0.2) on 2026-10-23.
Cited sources are checked by gpt-6-sol.
Statistics and arithmetic are recomputed, not judged.
Confidence bands are shown only for fields calibrated on our annotated test set. None is calibrated yet, so no band is shown.
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