Researches on the Effect of Environmental Policy on Abatement Technology Adoption

Abstract

To cope with global climate change, a growing number of countries have formulated carbon neutrality schedules. In this context, it is increasingly important for governments to design and implement the policy package to achieve this goal. This paper studies on the economic incentives of environmental policy on firms’ investment in the adoption of new abatement technologies, providing policymakers with more understandings and facilitating the improvement in policy development. The main findings are as follows. First, the economic incentive of environmental policy on abatement technology adoption is ambiguous and it changes with different realistic conditions. Second, the behavior of firms’ investment decisions for different types of abatement technologies under the same environmental policy is distinct. Third, the level of privatization has a positive incentive effect on the level of the abatement technology under taxes regulation. Finally, some key research questions for the future are provided.