Development of new technologies depends both on financial incentives and on the conditions companies face, research by Henri Gruhl shows.
Gruhl’s research focuses on three forces that have become increasingly important in Europe: climate policy, extreme heat, and disruptions to global supply chains. It examines whether making it more expensive for firms to emit CO2 encourages the development of technologies that help reduce emissions, whether extreme heat affects firms’ ability to innovate, and what happens when access to critical raw materials becomes uncertain.
The findings show that making CO2 emissions more expensive encouraged collaboration and the development of cleaner technologies. Extreme heat reduced firms’ revenues, but there was little evidence that it reduced patenting on average. Uncertain access to rare earth elements did reduce the amount of patents.