“Green Dividends” from Deep Regional Integration: The Effects of Energy Market Integration on the Quantity and Quality of Low-Carbon Innovation

Achieving carbon neutrality requires simultaneous advances in both the quantity and quality of low-carbon technology innovation (LCTI). This paper uses a country–industry–year three-dimensional panel dataset covering 25 EU member states and 39 two-digit NACE Rev. 2 industries over the period 2003–2020 to examine the effects of energy market integration (EMI) on LCTI quantity and quality. An EMI index is constructed based on cross-national energy price dispersion, and the analysis employs Poisson pseudo-maximum likelihood estimation with three-way fixed effects, complemented by a Bartik instrumental variable and double/debiased machine learning as supporting robustness evidence. Results show that: (1) EMI exerts significant positive effects on both LCTI quantity and quality; (2) Mechanism tests reveal that EMI operates through two channels: expansion of energy R&D investment and intensification of cross-border knowledge spillovers; (3) Heterogeneity analysis shows that the promoting effects are concentrated in countries with adequate R&D investment and active energy market competition, and in industries with low emission intensity and low energy intensity. These findings suggest that deepening regional energy market integration constitutes a meaningful institutional complement to conventional low-carbon innovation policy.