Climate change affectedness and innovation in German firms

Jens Horbach and Christian Rammer

No 22-008, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: Eco-innovations are crucial for the mitigation of climate change effects. It is therefore important to know if the existing climate change regulations and carbon pricing are appropriate and sufficient to trigger such innovations. Besides government measures, the demand for carbon neutral products or the impacts of climate change such as extreme weather conditions leading to higher costs for the affected firms may also promote eco-innovation activities. For the first time, the new wave of the Community Innovation Survey 2020 in Germany allows an analysis of the effects of climate change policy and costs, demand for climate friendly goods and extreme weather conditions on (eco-)innovation. The results of probit and treatment effect models show that innovative firms seem to be significantly more affected by climate change measures and consequences compared to other firms. All climate change indicators are positively correlated to eco-innovations. Interestingly, other innovation activities also profit from the extent to which a firm is affected by climate change albeit the marginal effects are lower compared to eco-innovations. Demand for climate neutral products is significantly important for all eco-product-innovations.

Keywords: Climate change; eco-innovation; Community Innovation Survey; probit regression; treatment effect models (search for similar items in EconPapers)
JEL-codes: C21 C25 O31 Q54 Q55 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-cse, nep-ene, nep-env, nep-ino, nep-sbm and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:22008

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