Cap-and-Trade and innovation: Has EU ETS increased low-carbon patenting and green R&D spending in Norway?
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Mastergrad i samfunnsøkonomi
This master thesis estimates the causal effects of EU Emissions Trading System (ETS) on green innovative performance of Norwegian firms. EU ETS is the first and greatest carbon market in the world, but the effects of EU ETS remain debated, due to a generous compensation scheme, low effective quota prices and the high number of free allowances provided to regulated firms. This master thesis contributes some evidence to this debate, with a dataset on innovation activity, EU ETS regulation and firms’ characteristics. The main results suggest that regulated firms have increased green intramural R&D spending, where the estimated effects suggest an annual increase of 2,000,000-13,000,000 NOK. Moreover, the estimates suggest that there has been a weak positive effect low-carbon patenting as well, however not at any significant level. Other results suggest the same pattern, where regulated firms have a minor increase in green innovative activity, thus these results are neither statistically significant, nor of substantial degree. The reason for this could be caused by a low effective carbon price for regulated manufacturing industries, due to a generous carbon compensation scheme and low quota prices.
EU ETS, cap-and-trade, green innovation, manufacturing industries
Prosjekt info:Oppdragsgiver: NFR via CICERO
Oppdragsgivers prosjektnr.: 295789
Frisch prosjekt: 3186 - PLATON