Impact of Emissions Trading System on Renewable Energy Output

In this paper, a cross-national panel is used to assess the impact of emissions trading system (ETS) on renewable energy output with a difference-in-difference design. From 2002 to 2013, several countries adopted ETS as a primary vehicle to drive carbon pollution reduction and boost the growth of renewables. By exploiting the cross-nation and cross-time variation in the timing of ETS, we find that ETS has materially improved renewable energy output, thereby indicating that the growth of the renewables has been successfully boosted through ETS. In addition, we examine the dynamics of the relationship between ETS and renewable energy output. Estimation result shows the ETS establishment has a trend effect on renewable energy output.