Do carbon emission trading scheme policies induce green technology innovation? New evidence from provincial green patents in China

Carbon emission trading scheme (ETS) policy is a quota-based market-motivated environmental regulation policy that by transforming environmental responsibility of enterprises into self-consciousness behavior induces green innovation behavior in enterprises and influences the level of regional green innovation. Based on panel data on green patents in 30 Chinese provinces from 2010 to 2019, the paper uses six Chinese pilot provinces for ETS as the treatment group to investigate the induced effects of Chinese ETS policy on the quantity and quality of green technology innovation using difference in difference model and analyzes the effects of Chinese ETS policy on green technology innovation in different pilot regions using a synthetic control method. The findings indicate that (1) compared with non-pilot areas, the carbon emission trading policies in pilot areas can induce green technology innovation activities. (2) In all pilot regions, ETS policies significantly promoted the quantity and quality of green technology innovation, but the quantity promotion effect was significantly better than the quality promotion effect, and the low-quality promotion effect was better than the high-quality promotion effect. (3) In terms of individual pilot region, ETS policies in Guangdong, Hubei and Tianjin significantly promoted the quantity of green technology innovation and low-quality green technology innovation, but significantly inhibited or suppressed high-quality green technology innovation in a short term. This paper not only enriches the research on environmental equity trading policies and green technology innovation theoretically, but also provides empirical evidence for the effectiveness of carbon emission trading schemes pilots program in China.