Does the US regional greenhouse gas initiative affect green innovation?
Document Type
Article
Publication Date
2-1-2023
Abstract
This study measures the impact of the implementation of the Regional Greenhouse Gas Initiative (RGGI) on firms' green innovation initiatives. We used 20 years of panel data from the Fortune 500 list of the US largest companies. Based on DID, a benchmark regression, the RGGI has a significant adverse effect on the green innovation of Fortune 500 companies, and we verified these findings with multiple robustness tests. As we investigate how energy-intensive industries were affected by RGGI, we found that it slowed down green innovation, but it was not statistically significant. This study provides a novel perspective on how the RGGI influences green innovation in firms and how different types of sectors respond to the policy. The findings indicate that the ``weak'' Porter Hypothesis has not been confirmed in the present carbon trading market (particularly the RGGI) for Fortune 500 firms in the USA. In terms of policy, we believe that a well-covered and differentiated legislation that fosters green innovation while being realistic about the policy's goal and the firm's environmental attitude, like emissions reduction through green innovation, is essential.
Keywords
Market-based mechanism, Emission Trading Scheme (ETS), Regional Greenhouse Gas Initiative (RGGI), Firms' green innovation, Porter Hypothesis, Fortune 500, Difference-in-Difference, Propensity Score Matching based DID
Divisions
Faculty_of_Business_and_Accountancy
Publication Title
Environmental Science And Pollution Research
Volume
30
Issue
6
Publisher
Springer Heidelberg
Publisher Location
TIERGARTENSTRASSE 17, D-69121 HEIDELBERG, GERMANY