Essays on environmental policy and green technological innovation

Abstract

The dissertation studies the relationship between environmental policy and green technological innovation. It is a case study of California Global Warming Solutions–AB 32. In Chapter 1, I discuss the literature background and show graphical analyses of my data regarding green patent applications and energy prices in California. ☐ Chapter 2 examines the causal relationship between AB 32 and green technological innovation. The outcome measuring innovation output is successful patent applications with respect to International Patent Classification (IPC) Environmentally Sound Technologies (ESTs), and Cooperative Patent Classification (CPC) Climate Change Mitigation Technologies. My data is at the public firm level from 2000 to 2016. As a result, I can take advantage of the variation of stringency of the policies across companies, whether or not headquartered in California; I employ difference-in-differences and triple differences identification strategies. The estimates indicate that AB 32 positively affects the development of ESTs and climate change mitigation technologies for a California public company. The rise of green innovation in California can be attributed to companies' outstanding performance in the manufacturing and service sectors. ☐ Chapter 3 investigates the same case but uses a different approach—the synthetic control method (SCM). Using the SCM approach based on aggregate state-level data, I find that AB 32 positively affects the innovation of green technologies at the state level and leads to California filing approximately 0.00025 more green patent applications per million of real GDP produced. As a comprehensive state law, there is no causal evidence that AB 32 reduces per-capita energy-related carbon dioxide emissions. However, one standard of AB 32–Low Carbon Fuel Standard (LCFS) leads to a 17.25% reduction in per-capita carbon dioxide in California’s transportation sector.