Low-carbon innovation is up, but not because of the EU Emissions Trading Scheme

By being part of the EU’s Emission Trading Scheme, it was thought that UK firms would have increased incentives to decarbonise, spurring technological innovation. Raphael Calel and Antoine Dechezleprêtre argue that this is not the case. Their research indicates that the scheme has thus far failed to encourage companies as was intended; there is little difference in patenting rates for low carbon technologies between countries that are and are not part of the scheme. While low-carbon innovation is up, it is not because of the EU ETS.