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Environmental Policy and Directed Technological Change: Evidence from the European Carbon Market
Open accessAbstract
This paper investigates the impact of the European Union Emissions Trading System (EU ETS) on technological change, exploiting installations level inclusion criteria to estimate the System’s causal impact 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 affected 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.
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In the citing paper
“In all, the EU ETS accounts for only 1% of the surge in low-carbon patenting, depicted in .”
From Why does emissions trading under the EU Emissions Trading System (ETS) not affect firms' competitiveness? Empirical findings from the literature (2019) · cites this paper as Calel & Dechezleprêtre, 2016
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Experimental — accuracy not yet measuredThe source backs part of the claim, not all of it — or backs it for a different population, condition or comparison.
In the citing paper
“In fact, it has been demonstrated elsewhere that EU ETS-regulated firms reacted to the introduction of the policy by filing 30% more patents in lowcarbon technologies compared to a counterfactual scenario (Calel and Dechezlepr ˆ etre, 2016).”
From The joint impact of the European Union emissions trading system on carbon emissions and economic performance (2023) · cites this paper as Calel and Dechezlepr ˆ etre, 2016
Experimental — accuracy not yet measuredThe source backs part of the claim, not all of it — or backs it for a different population, condition or comparison.
In the citing paper
“This percentage drops to 8.1% when extrapolating results to the whole non-matched sample of EU ETS firms, covering 80% of regulated emissions.”
From Why does emissions trading under the EU Emissions Trading System (ETS) not affect firms' competitiveness? Empirical findings from the literature (2019) · cites this paper as Calel & Dechezleprêtre, 2016
Experimental — accuracy not yet measuredThe source backs part of the claim, not all of it — or backs it for a different population, condition or comparison.
In the citing paper
“The overall contribution of China’s pilot ETS to regional low-carbon innovation was similar to that of the EU ETS22.”
From Low-carbon innovation induced by emissions trading in China (2019) · cites this paper as [22]
Experimental — accuracy not yet measuredThe source backs part of the claim, not all of it — or backs it for a different population, condition or comparison.
In the citing paper
“Data about patent filing, instead of patent granted, have been used in the analysis, following the previous innovation research in Europe and China22,39,41,43.”
From Low-carbon innovation induced by emissions trading in China (2019) · cites this paper as [22]
Experimental — accuracy not yet measured
The source backs part of the claim, not all of it — or backs it for a different population, condition or comparison.
In the citing paper
“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)”
From The Impact of Carbon Pricing on Corporate Sustainability: Evidence From the European Union (2026) · cites this paper as Calel and Dechezleprêtre 2016
Experimental — accuracy not yet measuredThe cited source says what the claim attributes to it.
In the citing paper
“The evidence shows that the system boosted low-carbon patenting by 36.2% among regulated firms relative to non-regulated ones.”
From Why does emissions trading under the EU Emissions Trading System (ETS) not affect firms' competitiveness? Empirical findings from the literature (2019) · cites this paper as Calel & Dechezleprêtre, 2016
The cited source says what the claim attributes to it.
In the citing paper
“In parallel, they show that the EU ETS did not crowd out patenting for other technologies and even encouraged it moderately.”
From Why does emissions trading under the EU Emissions Trading System (ETS) not affect firms' competitiveness? Empirical findings from the literature (2019) · cites this paper as Calel & Dechezleprêtre, 2016
The cited source says what the claim attributes to it.
In the citing paper
“Calel and Dechezleprêtre (Citation2016) do not find evidence of the EU ETS causing spill-over effects on third parties’ patenting activity, implying a limited scope of innovation effects, so far.”
From Why does emissions trading under the EU Emissions Trading System (ETS) not affect firms' competitiveness? Empirical findings from the literature (2019) · cites this paper as Calel & Dechezleprêtre, 2016
The cited source says what the claim attributes to it.
In the citing paper
“Innovation and investment in low-carbon technologies are essential to influence long-term abatement and create a sustainable low-carbon path (Calel & Dechezleprêtre, Citation2016; Martin, Muûls, & Wagner, Citation2013; Pizer & Popp, Citation2008).”
From Why does emissions trading under the EU Emissions Trading System (ETS) not affect firms' competitiveness? Empirical findings from the literature (2019) · cites this paper as Calel & Dechezleprêtre, 2016
The cited source says what the claim attributes to it.
In the citing paper
“Interestingly, the disaggregated level of data shows the strong reaction of a small group of firms.”
From Why does emissions trading under the EU Emissions Trading System (ETS) not affect firms' competitiveness? Empirical findings from the literature (2019) · cites this paper as Calel & Dechezleprêtre, 2016
The cited source says what the claim attributes to it.
In the citing paper
“the EU ETS, in comparison, led to two additional low-carbon patents filed per firm in five years22.”
From Low-carbon innovation induced by emissions trading in China (2019) · cites this paper as [22]
The cited source says what the claim attributes to it.
In the citing paper
“The empirical literature confirms that increased energy price20, carbon tax21, and the EU ETS22 can facilitate low-carbon innovation.”
From Low-carbon innovation induced by emissions trading in China (2019) · cites this paper as [22]
The cited source says what the claim attributes to it.
In the citing paper
“The second step applied a nonparametric Tobit-modified empirical-likelihood-based DID estimator that has been used in estimating the effect of the EU ETS22.”
From Low-carbon innovation induced by emissions trading in China (2019) · cites this paper as [22]
The cited source says what the claim attributes to it.
In the citing paper
“These studies document the positive impact of the EU- ETS on business innovation”
From The Impact of Carbon Pricing on Corporate Sustainability: Evidence From the European Union (2026) · cites this paper as Calel and Dechezleprêtre (2016)
The cited source says what the claim attributes to it.
In the citing paper
“Calel and Dechezleprêtre (2016), who observed small and statistically nonsignificant spillover effects.”
From The Impact of Carbon Pricing on Corporate Sustainability: Evidence From the European Union (2026) · cites this paper as Calel and Dechezleprêtre (2016)
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Metadata
- Authors
- Calel, R., & Dechezleprêtre, A.
- Affiliations
- Georgetown University (US)
- London School of Economics and Political Science (GB)
- Venue
- Review of Economics and Statistics
- Publisher
- MIT Press
- Published
- 2016-03
- Volume
- 98
- Issue
- 1
- Pages
- 173-191
- ISSN
- 0034-6535 (ISSN-L)
- 1530-9142
- OpenAlex
- W3122318714
- Cited by
- 1,147
- References
- 86
- Citations by year
- 2026: 227 · 2025: 151 · 2024: 161 · 2023: 134 · 2022: 139 · 2021: 80 · 2020: 74 · 2019: 39 · 2018: 69 · 2017: 25 · 2016: 20
- FWCI
- 52.77
- Type
- journal article
- Language
- en
- Open access
- bronze
- doi.org
- Locations
- The Review of Economics and Statistics (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- London School of Economics and Political Science Research Online (London School of Economics and Political Science) (submittedVersion)
- Funders
- Grantham Foundation for the Protection of the Environment
- Economic and Social Research Council (ES/K006576/1, ES/I015760/1, PTA-026-27-2756, ES/M010341/1)
- 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 › Business, Management and Accounting › Management of Technology and Innovation › Intellectual Property and Patents
- Keywords
- EU Emissions Trading System, carbon pricing, environmental policy, directed technological change, low-carbon innovation, patenting, crowding out, emissions regulation, European Union
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