The Environmental Impact of Green Innovation

We study the environmental impact of green innovations by combining detailed firm-level toxic release data with patent-level measures of environmental technologies. To address the endogeneity concerns and measurement problems, we obtain patent-level exposures to the Green Technology Pilot Program. We document robust evidence that green innovations significantly reduce the developing firm's pollution in a nine-year window after patent filing dates. The environmental benefit of these technologies positively correlates with their relevance to previous green innovations, and increases with the firm's pollution tendencies and intangible capital. However, external environmental pressures decrease these innovations' effectiveness, and non-green technologies may generate environmental costs by releasing toxic chemicals.