Innovation and Emissions in Europe

Ronald B. Davies

No 202523, Working Papers from School of Economics, University College Dublin

Abstract: Innovation is widely believed to play an important role in addressing climate change. Nevertheless, estimating such effects is difficult due to the endogeneity of innovation measures. I use a novel shift-share instrument building from cross-border patent citations to deal with this endogeneity. Using data for 27 European countries across 20 manufacturing industries from 1995-2019, I find evidence of significant endogeneity bias that overstates the causal effect of patents on emissions. Further, if anything, it seems that new non-green patents may increase emissions. This then suggests that relying on new technologies alone to solve the climate crisis is potentially ineffective.

Keywords: Emissions; Patents; Shift-share.; Shift-share (search for similar items in EconPapers)
JEL-codes: O31 O33 Q54 Q55 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2025-09
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