Calel, Raphael.  <br/><br/>
Adopt or innovate: Understanding technological responses to cap-and-trade  

 - American Economic Journal : Economic Policy   
 - 12(3), Aug, 2020: p.170-201 
<br/><br/> One important motivation for creating cap-and-trade programs for carbon emissions is the expectation that they will stimulate much-needed low-carbon innovation. I construct a new panel of British firms to investigate this hypothesis, finding that the European carbon market has encouraged greater low-carbon patenting and R&D spending among regulated firms without necessarily driving short-term reductions in carbon intensity of output. This stands in contrast to past cap-and-trade programs, which have primarily spurred adoption of existing pollution control technologies, with little effect on innovation. I discuss how to reconcile these contrasting findings and implications for the future of carbon markets. – Reproduced