The effects of climate policy on corporate technological upgrading in energy intensive industries: Evidence from China

The innovation effect is an important component when measuring the performance of environmental policy instruments. Based on a questionnaire survey, this research has examined corporate energy conservation and emission reduction efforts in energy intensive industries in China under the pressure of different climate policies, and in particular looked into their adoption of those technological innovation and diffusion activities. The results show a large variety of corporate adoption of energy-saving practical activities. In general, climate policies have played a greater role in promoting the adoption of managerial energy-saving activities in respondent companies, while comparatively their influences on the adoption of technology upgrading activities are relatively weak. Regulatory measures have exerted greater pressure and influence on corporate short-term behavioural change, as stated by the respondent companies. However, market based instruments show greater incentive effect in promoting adoption of energy conservation and emission reduction activities that refer to corporate long-term oriented strategic planning or adjustment. For instance they exert a significant incentive effect on increasing long-term research and development investment for technological innovation, and also play an important role in optimising corporate organisational structure. The econometric analysis further proves the influences of market-based instruments in promoting corporate adoption of technological innovation and diffusion activities.