Induced innovation in power generation technologies: Evidence from the Tokyo–Saitama Emissions Trading System

Xiao Jia and Kenji Takeuchi

Energy Economics, 2024, vol. 129, issue C

Abstract: Innovation in energy technology plays a critical role in the transition to net zero emissions. This study investigates the effect of a regional carbon cap-and-trade program on firms’ innovations in power generation technologies using renewable sources and fossil fuels. A difference-in-differences analysis based on matched firms from 2006 to 2016 indicates that the Tokyo–Saitama Emissions Trading System boosts innovations in renewable and fossil fuel technologies, with a greater impact on the latter. Furthermore, we find that firms innovating in both technology areas are more responsive than those only innovating in renewable technology and that a stricter regulatory scheme has a greater impact on technological innovation. These findings suggest the potential impact of a regional cap-and-trade program on green innovations.

Keywords: Carbon pricing; Emissions trading system; Innovation; Renewable energy; Energy transitions (search for similar items in EconPapers)
JEL-codes: O31 Q48 Q50 Q54 Q55 Q58 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:129:y:2024:i:c:s0140988323007259

DOI: 10.1016/j.eneco.2023.107227

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