Re-examining the effect of carbon emission trading policy on improving the green innovation of China’s enterprises

China’s carbon emission trading (CET) policy guides enterprises to carry out green innovation and address the growing environmental challenges through market-based instruments. However, can CET policy effectively promote enterprises’ green innovation? It has become a hot issue. Whether it can play the “Porter effect” is also controversial. We have little research on the effectiveness and heterogeneity of CET policy in China. We obtained the following conclusions from the empirical results: (1) CET policy has clearly promoted green innovation in enterprises, the proportion of green innovation of enterprises increased by 13.43%, and the “weak Porter hypothesis” was tenable. And the results of the research have been tested to be robust and reliable. (2) CET policy plays an obvious role in enhancing the enterprises’ green innovation with high-stock enterprise, large-scale enterprise, and state-owned enterprises. (3) Carbon quota auction does not motivate enterprises to improve green innovation; the CET policy under the ex-post allowance allocation of government can better inspire enterprises to undertake green innovation events. (4) The pilot policy of carbon emission trading can increase the introduction of scientific research talents, increase the expenditure of scientific research and development, and improve the net profit margin of enterprise assets, thus directly or indirectly promoting the development of green innovation of enterprises. Overall, the research in this article provides theoretical policy and empirical research for implementing carbon emission trading policy in developing countries and provides theoretical support for how to realize the “double dividend” of environmental protection and enterprises’ green innovation competitiveness. Meanwhile, it also provides reference for the national CET to be officially run, and it is instructive to establish a flexible market-based instruments.