The effect of climate policy on innovation and economic performance along the supply chain

Abstract

The effect of climate policy on innovation and economic performance along the supply chain: a firm-and sector-level analysis Environment Working Paper No. 189 By Antoine Dechezleprêtre (1), Tobias Kruse (1)(1) OECD Environment Directorate OECD Working Papers should not be reported as representing the official views of the OECD or its member countries. The opinions expressed and arguments employed are those of the authors.

Measuring environmental policy stringency in OECD countries

“…The correlation coefficients between the two indicators are 0.33 (in 2010) and 0.54 (in 2020). A higher environmental policy stringency correlates with better environmental performance, which is in line with existing evidence that stricter environmental policies reduce emissions and improve environmental outcomes (OECD, 2021 [9]; Dechezleprêtre et al, 2019 [13]; Dechezleprêtre, Nachtigall and Venmans, 2018 [27]).…”

“…To assign the remaining scores, the difference between the 90 th and the 10 th percentile is divided into five equal bins that define the thresholds. 13 For example, in the case of renewable energy certificates, the 90 th percentile is at 17%, the 10 th percentile is at 2%. The difference between the 90 th and the 10 th percentile (equal to 15) is divided by five.…”

Driving low-carbon innovations for climate neutrality

“…By contrast, industrialised countries argue that IPRs provide innovators with incentives to disseminate their inventions through market channels, such as foreign direct investment (FDI) and the international trade of equipment goods. Empirical evidence indeed suggests that strong intellectual property laws increase international technology transfer, including specifically for climate-friendly technologies (Dechezleprêtre, Glachant and Ménière, 2012 [78]).…”

Identifying and tracking climate change mitigation strategies

“…Policy mixes reflect choices based on factors that may go well beyond the actual or perceived effectiveness of mitigation policies in reducing emissions. These choices may trade off climate-change mitigation considerations with other country specific economic and social priorities, political and social constraints, and the social acceptability of different policy measures or combinations thereof (Dechezleprêtre et al, 2022 [12]). Moreover, countries have different starting positions and face specific circumstances, such as abatement potential depending on industrial structure.…”