The Impact of Carbon Emission Trading on Corporate Green Innovation: Evidence from High-Carbon Listed Companies in China

The carbon emission trading system is a crucial mechanism for China to participate in global climate governance and achieve its carbon peak and carbon neutrality goals. Using a sample of A-share high-carbon industry listed companies from 2011 to 2020, this study employs a difference-in-differences (DID) model to examine whether the establishment of pilot carbon emission trading markets effectively incentivizes corporate green innovation. The findings provide insights for the further implementation of a national carbon emission trading market in China. Empirical results reveal that: (1) The implementation of the carbon emission trading policy significantly increases corporate green innovation, promoting both high-quality and low-quality innovation; (2) The policy fosters green innovation by increasing firms' expected returns; (3) Further analysis indicates heterogeneous effects, with the impact being more pronounced in state-owned enterprises, firms receiving higher government subsidies, and those with greater media attention.