Can Cdm Projects Trigger Host Countries’ Innovation In Renewable Energy? Evidence Of Firm-level Dataset From China

Faced with the withdrawal of the US government and its return to the Paris Agreement,how will the Chinese government cope with the uncertainties of the international environment and implement its emission reduction commitments? The Paris Agreement adopts the Nationally Determined Contributions(NDC)scheme,which provides incentives for each country to do more to reduce emissions.With the development of various green technologies,dealing with climate change translates into a sharing opportunity.The Clean Development Mechanism(CDM)in the Kyoto Protocol,a preliminary exploration stage of the Paris Agreement,promotes North-South environmental cooperation.Its goal is both greenhouse gas emission reduction and sustainable economic and social development.In the process,whether the host country’s own technological innovation can be promoted is not only be an important part of the post assessment of CDM projects,but also will add experience to the future negotiations and implementation of the climate treaty.This paper examines whether the CDM projects accumulated at the province level are positively correlated with Chinese firms’ innovation in technological fields associated with renewable energy and energy efficiency.We assemble a unique firm-level dataset with both firms’ patent innovation in renewable energy and CDM projects accounted for.We obtain some novel findings.CDM projects have contributed to the firm-level innovation in renewable energy and energy efficiency.The heterogeneity is detected.This positive enhancement effect is pronounced in invention patents,but is muted in utility patents.The induced innovation effect varies across industrial energy intensity.The more energy intensive the industry,the larger impacts the firms could absorb from the CDM projects.When inspecting CDM by specific energy type,the type-specific induced innovation effect is only documented for biofuel-related CDM projects,indicating that firm-level innovation in biofuels appears to benefit from the related CDM projects within the same province.Lastly,we do find some regional spillover effects in which the CDM projects accumulated at the province level have positive impacts on renewable energy innovation of the non-CDM firms.Most of the studies on CDM focus on its emission reduction goal or poverty reduction and other sustainable development topics.As one of the few studies to use patent data to study technological advances induced by the Clean Development Mechanism(CDM),this paper is the first to use firm-level patent data to examine the induced innovation effect of the CDM projects in China from 2005 to 2015.This paper also lays emphasis on the technology absorptive capacity brought by the CDM.By combining patent data with project data,it is possible to see if the CDM has triggered indigenous low-carbon technology innovation after the project has been implemented.This paper finds a spillover effect to non-CDM firms,which provide further evidence for the technology absorption capacity of Chinese firms in renewable energy and energy efficiency.