Does patent pledge reduce pollution and carbon emissions? Evidence from China

The existing literature has extensively examined the impact of green innovations, such as patents, on pollution and carbon emissions. However, there has been comparatively less emphasis on the debt financing of green innovation by using patents as collateral. This oversight may have implications for the realization of pollution and carbon emissions reduction goals. Using a natural experiment based on the patent pledge pilot policy in China, this study investigates the impact of patent pledge on pollution and carbon emissions. We find that a significant reduction in the emissions of sulfur dioxide and carbon dioxide attributable to the patent pledge pilot policy, particularly in cities with lower initial green patent rates, and these results still hold after an array of robustness checks. We show that the encouragement of green innovation and the stimulation of environmental entrepreneurship are the mechanisms underlying these emission reduction effects. Furthermore, our analysis indicates that the impact of patent pledges on emission reduction is more pronounced in cities characterized by higher levels of government-reported environmental concern, public engagement in environmentally related searches, pollution information transparency indices, and green development evaluation indices.