scholarly journals Carbon Pricing Induces Innovation: Evidence from China's Regional Carbon Market Pilots

2018 ◽  
Vol 108 ◽  
pp. 453-457 ◽  
Author(s):  
Jingbo Cui ◽  
Junjie Zhang ◽  
Yang Zheng
Keyword(s):  
Patent Application ◽  
Emission Trading ◽  
Carbon Price ◽  
Low Carbon ◽  
Firm Level ◽  
Listed Firms ◽  
Allowance Trading ◽  
Application Data ◽  
Trading Scheme ◽  
Low Carbon Technologies

China has launched seven regional pilots of emission trading scheme (ETS) to limit its carbon emissions. Taking advantage of the variations in the regional ETS pilots across regions and sectors and over time, we employ a difference-in-difference-indifferences (DDD) approach to evaluate the effect of ETS on low-carbon innovation at the firm level. Using patent application data of publicly-listed firms in China between 2003 and 2015, we find that the ETS pilots induced innovation in low-carbon technologies. The more active pilots—measured by carbon price and turnover rate of allowance trading—are associated with more intense low-carbon innovation.

scholarly journals Effects of emission trading schemes on corporate carbon productivity and implications for firm-level responses

2021 ◽  
Vol 11 (1) ◽  
Author(s):  
Hail Jung ◽  
Seyeong Song ◽  
Young-Hwan Ahn ◽  
Ha Hwang ◽  
Chang-Keun Song
Keyword(s):  
Emission Trading ◽  
Green Technologies ◽  
Firm Level ◽  
Investment Policies ◽  
South Korean ◽  
High Emission ◽  
Trading Scheme ◽  
Corporate Profits ◽  
Carbon Productivity ◽  
Conflicting Goals

AbstractSince the South Korean government enacted the Emission Trading Scheme (ETS), companies have been striving to simultaneously improve productivity and reduce carbon emissions, which represent conflicting goals. We used firm-level emissions and corporate variables to investigate how ETS enactment has affected carbon productivity, which is a firm-level revenue created per unit of carbon emission. Results showed that firm-level carbon productivity increased significantly under the ETS, and such a trend was more evident for high-emission industries. We also found that companies with high carbon productivity were (1) profitable, (2) innovative, and (3) managed by CEOs with experience in environmental fields. These findings suggest that to achieve the conflicting goals of increasing corporate profits while reducing emissions, firms have to invest in green technologies, and such decisions are supported by green leadership. Our findings also have implications for corporate leadership; data highlight the importance of managing human resources and deploying investment policies to respond to ETS.

scholarly journals Low-carbon innovation induced by emissions trading in China

2019 ◽  
Vol 10 (1) ◽  
Author(s):  
Junming Zhu ◽  
Yichun Fan ◽  
Xinghua Deng ◽  
Lan Xue
Keyword(s):  
Emissions Trading ◽  
Low Carbon ◽  
Firm Characteristics ◽  
Firm Level ◽  
Permit Price ◽  
National Market ◽  
Allowance Allocation ◽  
Quasi Experimental ◽  
Price Auction ◽  
Trading Scheme

Abstract Emissions trading scheme (ETS) has been adopted by an increasing number of countries and regions for carbon mitigation, but its actual effect depends on specific program design and institutional context. Before launching the world largest ETS, China experimented with seven independent regional pilots, whose effects are only indirectly explored. Here we provide firm-level evidence of the innovation effect directly from China’s pilot emissions trading, based on latest patenting information and a quasi-experimental design. China’s pilots increase low-carbon innovation of ETS firms by 5–10% without crowding out their other technology innovation. The increase from ETS firms accounts for about 1% increase of the regional low-carbon patents, while a similar increase from large non-ETS firms is also induced by the ETS. Most importantly, the effect is not associated with permit price, auction, or firm characteristics, but is driven by mass-based allowance allocation. A rate-based approach, however, is adopted by China’s national market.

scholarly journals The effectiveness of China’s regional carbon market pilots in reducing firm emissions

2021 ◽  
Vol 118 (52) ◽  
pp. e2109912118
Author(s):  
Jingbo Cui ◽  
Chunhua Wang ◽  
Junjie Zhang ◽  
Yang Zheng
Keyword(s):  
Negative Impact ◽  
Emission Trading ◽  
Economic Consequences ◽  
Public Utility ◽  
Climate Mitigation ◽  
Low Carbon ◽  
Emission Abatement ◽  
Regulated Firms ◽  
Allowance Trading ◽  
Carbon Prices

China has implemented an emission trading system (ETS) to reduce its ever-increasing greenhouse gas emissions while maintaining rapid economic growth. With low carbon prices and infrequent allowance trading, whether China’s ETS is an effective approach for climate mitigation has entered the center of the policy and research debate. Utilizing China’s regional ETS pilots as a quasi-natural experiment, we provide a comprehensive assessment of the effects of ETS on firm carbon emissions and economic outcomes by means of a matched difference-in-differences (DID) approach. The empirical analysis is based on a unique panel dataset of firm tax records in the manufacturing and public utility sectors during 2009 to 2015. We show unambiguous evidence that the regional ETS pilots are effective in reducing firm emissions, leading to a 16.7% reduction in total emissions and a 9.7% reduction in emission intensity. Regulated firms achieve emission abatement through conserving energy consumption and switching to low-carbon fuels. The economic consequences of the ETS are mixed. On one hand, the ETS has a negative impact on employment and capital input; on the other hand, the ETS incentivizes regulated firms to improve productivity. In the aggregate, the ETS does not exhibit statistically significant effects on output and export. We also find that the ETS displays notable heterogeneity across pilots. Mass-based allowance allocation rules, higher carbon prices, and active allowance trading contribute to more pronounced effects in emission abatement.

Determinants of firm-level energy productivity – Evidence from the Korean emission trading scheme

2021 ◽  
pp. 0958305X2110292
Author(s):  
Jung Youn Mo ◽  
Wooyoung Jeon
Keyword(s):  
Environmental Policy ◽  
Panel Data Analysis ◽  
Emission Trading ◽  
Innovation Activity ◽  
Level Energy ◽  
Emission Trading Scheme ◽  
Energy Productivity ◽  
Firm Level ◽  
Frontier Analysis ◽  
Trading Scheme

With increasing global pressure on transition to carbon neutrality, various technical and policy efforts such as emission trading scheme and carbon tax are being made to improve energy productivity. Yet, there are not many literatures that analyze determinants of firm-level energy productivity, which is an important issue as energy use in industry accounts for one fourth of global carbon emission. This study investigates factors affecting energy productivity such as technology innovation, environmental policy and energy price based on firm-level data from the Korean Emission Trading Scheme (KETS). The total factor energy productivity is estimated by industry based on stochastic frontier analysis (SFA) and panel data analysis is performed to identify determinants of firm-level energy productivity. The results show that energy productivity in Korea has been improved since 2016, and technical progress and environmental policy play an important role in promoting energy productivity. In addition, analysis identifying industry-specific characteristics is performed as their production process and energy consumptions structures vary. The result shows that innovation activity does not significantly affect energy productivity in process industries, but it does in the assembling and high technology industries. This paper implies that policy design reflecting industry-specific characteristics is important to improve energy efficiency more effectively.

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