Environmental and Sustainability Indicators (Jun 2024)
Analysis of the relationship between carbon pricing and green innovation: A multidimensional study in 35 countries
Abstract
Increased greenhouse gas emissions are the main cause of global warming, leading to effects such as rising sea levels, extreme weather events, and unprecedented species extinction. The 2015 Paris Agreement, with the participation of 195 countries, aimed to reduce CO₂e emissions and limit the increase in global temperature to 2 °C compared to pre-industrial levels. Academia, the World Bank, and the Organization for Economic Co-operation and Development emphasize CO₂e pricing as a crucial initiative to mitigate global warming and promote a low-carbon economy. This can be achieved through taxes on fossil fuel emissions or a carbon credit auction system such as the Emissions Trading System (ETS). However, complexity arises when considering cross-border pricing limitations and the concern that companies may relocate to countries with less stringent environmental regulations. Therefore, the objective of this study is to investigate the correlations between the 35 countries that have CO₂e pricing practices. Data and methods involved statistical analysis of three exogenous variables using SPSS software: a) countries' position in the Environmental Performance Index (EPI) ranking; b) historical number of green patents registered in these countries; and c) the number of scientific articles published with decarbonization as a central topic. The results suggest a virtuous cycle in these countries, where CO₂e pricing leads to an increase in green articles and patents, contributing to their improved position in the global EPI ranking. The main implications of this study are that achieving the objectives of the Paris Agreement will require a collective effort from all countries, and therefore, good practices must be encouraged and replicated. Meeting decarbonization targets necessitates structural changes, such as those in the current energy model. This virtuous cycle should be extended to other countries that do not yet practice CO₂e pricing to advance the goal of mitigating global warming and transitioning to a low-carbon economy.
