Comparing the innovation impacts on firms: Pilot vs. National Carbon Emission Trading Schemes in China

Tianzhen Zhao, Haiqian Ke and Ning Zhang

Applied Energy, 2025, vol. 377, issue PB, No S0306261924017975

Abstract: This study compares the effects of China's Carbon Emission Trading Scheme (ETS) during its pilot and national phases on listed enterprise innovation from 2008 to 2022, marking the first such comparison for China. Utilizing a difference-in-differences (DID) method, the study finds that only the national ETS positively promotes innovation, with significant increases in both non-green and green innovation quantities and qualities. The study identifies R&D investment and ownership concentration as internal mechanisms, and financing constraints and external supervision as external mechanisms influencing this effect. The ETS also exhibits heterogeneous effects across different regions and firm types, particularly benefiting state-owned, eastern, highly digital, highly carbon regulation sensitivity, and highly carbon risk coping ability enterprises. This research offers new insights into how developing countries can mitigate climate change while fostering economic development through ETS.

Keywords: China carbon emission trading scheme; Enterprise innovation; Green innovation; Policy development (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1016/j.apenergy.2024.124414

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