IMF Working Papers

The Impact of Environmental Policy on Innovation in Clean Technologies

By Johannes Eugster

August 6, 2021

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Format: Chicago

Johannes Eugster. The Impact of Environmental Policy on Innovation in Clean Technologies, (USA: International Monetary Fund, 2021) accessed November 8, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

This paper studies the effect of climate change mitigating policies on innovation in clean energy technologies. Results suggest that the tightening of environmental policies since the early 1990s have made a statistically and economically significant contribution to the increase in clean innovation. These effects generally materialized quickly, within 2 to 3 years of the policy change, and were driven by individually significant marginal effects of both market-based policies – such as feed-in tariffs and trading schemes – as well as non-market policies, such as R&D subsidies or emission limits. Looking at electricity innovation in particular, the paper finds that the estimated effect on total innovation is positive on net, meaning that increased innovation in clean and grey technologies is not offset by a decrease in innovation in dirty technologies. From a policy point of view, the paper’s results call for strong policy efforts to decisively shift innovation towards clean technologies.

Subject: Climate policy, Commodities, Electricity, Environment, Environmental policy, Renewable energy, Technology

Keywords: Climate change mitigation, Climate change mitigation, Climate policy, Effect of climate change, Electricity, Environmental policies, Environmental policy, Global, Innovation, Policy effort, Policy point of view, Policy tool, Renewable energy

Publication Details

  • Pages:

    32

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2021/213

  • Stock No:

    WPIEA2021213

  • ISBN:

    9781513589930

  • ISSN:

    1018-5941

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