Policy stringency under the European Union Emission trading system and its impact on technological change in the energy sector

• Published in: Energy policy Vol. 117; pp. 434 - 444
• Main Authors: Bel, Germà, Joseph, Stephan
• Format: Journal Article
• Language: English
• Published: Kidlington Elsevier Ltd 01.06.2018; Elsevier Science Ltd; Elsevier B.V
• Subjects: Allowances; Certificates; Change agents; Climate change; Climate change mitigation; Economic factors; Emission analysis; Emission trading system; Emissions; Emissions trading; Energy; Energy consumption; Energy distribution; Energy industry; Energy policy; Energy sector; Environmental management; Environmental policy; European Union; Gestió ambiental; Innovacions tecnològiques; Interest groups; issues and policy; Mitigation; O33; O38; Patent count data; Patenting; Phase transitions; Policy making; Policy stringency; Política ambiental; Production; Q55; Q58; stakeholders; Technological change; Technological innovations; Europe; Q55; Energy sector; Policy stringency; Patent count data; Q58; O38; Environmental policy; Emission trading system; Technological change; O33
• ISSN: 0301-4215; 1873-6777
• DOI: 10.1016/j.enpol.2018.03.041

In this study, we use patent count data for overall Climate Change Mitigation Technologies, and for those related to energy production and distribution to evaluate the relationship between the sizable oversupply of European Union emissions Allowances and a policy shift marked by the transition from Phase I to Phase II under the European Union Emission Trading System, on the one hand, and on “green” patenting, on the other. According to our results, the expected negative impact of this oversupply on technological change seems to be confirmed. Thus, stakeholders take the actual supply of certificates into account when determining their innovative activity. In the same vein, they do so with respect to policy changes related to greater stringency, which generated a sizeable increase in patenting activity when controlling for other economic factors. Our results suggest that a critical evaluation of emission caps and allowances distribution must be undertaken. •We study the impact of policy stringency measures on “green” technological change.•Policy stringency is measured using the actual oversupply of certificates.•Our sample includes 28 countries subject to the policy.•Higher stringency positively influences overall patent counts.