The Asymmetric Effects of Oil Price Shocks on Green Innovation

43 Pages Posted: 2 Dec 2022

See all articles by Xiaolu Hu

Xiaolu Hu

Royal Melbourne Institute of Technolog (RMIT University) - School of Economics, Finance and Marketing

Jing Yu

The University of Sydney; Financial Research Network (FIRN)

Angel Zhong

Royal Melbourne Institute of Technolog (RMIT University) - School of Economics, Finance and Marketing

Abstract

Given the global resolve to transit away from traditional energy sources toward a low carbon economy, companies are under increasing pressure to grapple with the tension between longterm business sustainability and short-term energy threat. To assess how companies react to this intertemporal choice, we investigate whether and how green innovation, measured by green patent count and value, is affected by oil price shocks when the energy threat is most acute. Over an extended sample period from 1976 to 2018, we find that oil demand (supply) shock spurs (dampens) the intensity and economic value of green patenting activity. This evidence is attributable to energy efficiency improvement and environmental control. Further, firms with access to finance and those in highly competitive industries are most sensitive to oil price shocks. Finally, distinct from companies that rely on crude oil as energy inputs, oil producers curtail green innovation in wake of oil demand shocks, despite the increased

Keywords: oil shocks, green technology, Patents, Innovation

Suggested Citation

Hu, Xiaolu and Yu, Jing and Zhong, Angel, The Asymmetric Effects of Oil Price Shocks on Green Innovation. Available at SSRN: https://ssrn.com/abstract=4291665 or http://dx.doi.org/10.2139/ssrn.4291665

Xiaolu Hu (Contact Author)

Royal Melbourne Institute of Technolog (RMIT University) - School of Economics, Finance and Marketing ( email )

Level 12, 239 Bourke Street
Melbourne, Victoria 3000
Australia

Jing Yu

The University of Sydney ( email )

University of Sydney
Sydney, NSW 2006
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Angel Zhong

Royal Melbourne Institute of Technolog (RMIT University) - School of Economics, Finance and Marketing ( email )

Level 12, 239 Bourke Street
Melbourne, Victoria 3000
Australia

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