A Study On The Impact Of Emissions Trading On Green Innovation Of Chinese Enterprises In An Open Context

“The 2030 Agenda for Sustainable Development”that adopted at the 70th Session of the UN General Assembly in 2016 called on countries to take immediate action to achieve the 17 sustainable development goals.Currently,world economy is affected by multilateralism,financial conditions constraint and trade friction(United Nations,2019;World Bank,2019;International Monetary Fund,2019).Fundamental and rapid shift of growing pattern is needed to promote world economic growth,which require countries take actions in terms of policy,innovation and other major areas.(United Nations,UN,2019).China attaches great importance to the implementation of the 2030 Agenda for Sustainable Development.Since the 18th National Party Congress,China has proposed five development concepts of innovation,coordination,green,openness and sharing.At the same time,report of the 18th National Congress of the Communist Party of China emphasized that technological innovation must be placed at the core of overall development of the country(National Press Office,2016).In January2019,China Securities Regulatory Commission publicly solicited opinions on the“Regulations on the Registration of Initial Public Offerings of Science and Technology(Trial)”(China Securities Regulatory Commission,2019).In March of the same year,the Second Session of the 13th National People's Congress passed“The Foreign Investment Law of the People's Republic of China”,which improved the market-oriented innovation mechanism.Water rights,energy use rights,emission rights,and carbon dioxide emission rights have always been the basic environmental rights owned by individuals,regions and countries as well as the concrete manifestations of development rights and sustainable development concepts in resource utilization.China's government has successively introduced emissions trading,carbon dioxide emission trading,energy rights trading and water rights trading policies.However,in existing related research,the impact of the above environmental rights policies on green innovation is somewhat neglected from the perspective of micro-enterprises.This dissertation takes the pilot policy of emissions trading in China as a quasi-natural experiment and uses the green patent data of listed companies in China's Shanghai and Shenzhen stock markets from 1990 to 2010 to test whether the emissions trading can induce green innovation.Emissions trading originated in United States.American economist Dales(1968)first proposed the theory of emissions trading,which was first used by US Environmental Protection Agency(EPA)for management of atmospheric pollution sources and river pollution sources and achieved success.In 2002,former Ministry of Environmental Protection of China began to implement the“4+3+1”pilot policy on sulfur dioxide emissions trading in Shandong,Shanxi,Jiangsu,Henan,Shanghai,Tianjin,Liuzhou and China Huaneng Group.In 2007,the pilot scope was expanded.The Ministry of Finance,the former Ministry of Environmental Protection,and the Development and Reform Commission successively approved 11 pilot provinces and cities in Jiangsu,Tianjin,Zhejiang,Hubei,Chongqing,Hunan,Inner Mongolia,Hebei,Shaanxi,Henan,and Shanxi,in which trading variety and the transaction volume has has gradually increased.(Wang Jinnan et al.,2009).In 2010,the total amount of sulfur dioxide emissions in China decreased by 14.29%compared to 2005.At the same time,since 2001,China joined the World Trade Organization(WTO),after which China has entered a fastest-growing period(Gao Hucheng,2014).Green development of enterprises and market-oriented emissions trading policies are closely integrated,which provide basics to assess whether market-based cap and trade(CAT)policy inducing corporate green innovation in the context of China's openness.Using the difference-in-difference-in-differences(DDD)method,I take advantage of the variations across regions(i.e.,ETP versus non-ETP regions),across industries(i.e.,SO₂ pollution intensive sectors vs.non-SO₂ pollution intensive sectors),and across years(i.e.,before and after the ETP policy),and introduce policy heterogeneity,green innovation type heterogeneity,corporate ownership and governance structure heterogeneity.I obtain several novel findings.First,compared with non-pilot areas and clean industry,the pilot policy on emissions trading has induced green innovation activities in enterprises of polluting industries in the pilot areas,namely“green innovation induced effects”.Second,the green innovation-induced effects are widely presented in overall green innovation,green invention innovation,green utility innovation,overall low-carbon technology,low-carbon invention technology and low-carbon utility technology.Furthermore,the pilot policy has certain spillover effect is green for high coal consumption industry innovation activities,namely“green innovation spillover effect”.Third,the policy has changed investment preference of energy-consuming elements of high energy consumption enterprises,namely“green energy substitution effect”.Fourth,compared with non-private enterprises,the green innovation activities of private enterprises have a more pronounced response to the pilot policy,while the response of state-owned enterprises and foreign-funded enterprises is not significant,namely“private green innovation effect”.Fifth,compared with enterprises that only carry out domestic business,the green innovation activities of enterprises with overseas business have more significant responses to the pilot policy,namely,the“export-oriented trade green innovation effect”and“export-oriented investment green innovation effect”.Sixth,compared with the enterprises that only domestic shareholders,the green innovation activities of enterprises with qualified foreign institutional shareholders have more inspiring response to the pilot policy,namely,“outward-oriented financing green innovation effect”.Seventh,compared with enterprises whose board of directors,supervisors and executives have domestic background,enterprises whose board of directors,supervisors and executives have overseas study backgrounds is more pronounced to the pilot policy,namely,“extroverted leadership green innovation effect”.Finally,this dissertation conducts a series of robustness tests to ensure the stability of the main conclusions.These conclusions verify the theoretical mechanism hypothesis proposed in this dissertation.This dissertation has made certain contributions to the research policy-induced green innovation.First,most of the existing research work on green innovation in China still uses regional or industry-level measurement methods.Unlike this series of literatures,this dissertation uses the enterprises-level green patent data for the first time to identify environmentally friendly innovation activities.Second,another important difference from previous literature is that this dissertation reveals causal inferences.using the method of DDD,this dissertation sorts out the innovation direction enterprise,from general innovation to environmentally friendly innovation.Third,this dissertation explores the heterogeneous impact of the pilot policy on emissions trading,by examining the heterogeneity of policy nodes,concurrent policy issues,different types of green patents,different green patent classification standards,and different industry pollutant measurement standards,different ownership,different governance structures and different degrees of enterprises internationalization,this dissertation reveal the heterogeneous influence mechanism of enterprise green innovation.The research conclusions of dissertation have certain policy implications.First,well-designed emissions trading market is a powerful starting point for Chinese government to promote the transformation and upgrading of domestic enterprises and industries,deepen market-oriented reforms and ecological civilization construction,and promote green and high-quality development of China's economy.Second,well-designed emissions trading market and market-based environmental rights trading policies are effective way for China's further reform and opening up,strengthening international green innovation cooperation and environmentally friendly technology introduction,deep participation in the global environment and addressing climate change governance issues,while benefit the construction of beautiful China and the sustainable development of all mankind.Third,well-designed emissions trading market is a strong foundation to cultivate environmental rights awareness,rationally allocate domestic and foreign advantageous resources,actively disseminate green innovation concepts,fulfill China's ecological civilization development concep,carry forward the socialist entrepreneurship with Chinese characteristics,and actively carry out green innovation to promote China's corporate green international competitiveness improvement.