Governing environmental innovations

Abstract

Green technologies display unusually strong growth and are well on the way to establishing a ‘mega-trend’ in technology development. To exploit the associated economic opportunities, many industrialised countries have started to follow an innovation-oriented approach to environmental policy. Against this background, the ways are examined in which environmental policy can effectively ‘govern’ technological change and secure environmental improvements. What is needed is a clear focus on prioritising the ecological effectiveness of environmental innovations, devising ‘smart regulation’ through instrument mixes and addressing the inherent limitations of innovation-oriented policies.

Keywords:

• environmental innovation
• green technology
• ecological modernisation
• smart regulation
• technology forcing

Notes

1. A separate study for the UK confirms the growing significance of the environmental industry (DTI and DEFRA 2006).

2. Increased energy efficiency tends to increase energy consumption by two means. Firstly, it makes the use of energy relatively cheaper, thus encouraging increased use. Secondly, it leads to increased economic growth, which pulls up energy use in the whole economy.

3. This is not to deny that in some cases even ‘strong’ environmental innovations may not necessarily lead to significant environmental improvements. First generation biofuels are an often-cited example (SRU 2007).

4. While we find this somewhat schematic ‘three-stage model’ still useful, we acknowledge that innovation is essentially a cyclical process with continuous improvements and feedback relationships.

5. For a commentary on the relative effectiveness of standards versus market-based instruments in stimulating cleaner technology development, see Reijnders (2003).

6. The EU directive on Energy-using Products (EUP) is potentially even more innovative in that it follows a more holistic approach. Instead of focusing on energy conservation alone, it strives to reduce the total environmental impact of each energy-using product during its entire lifecycle, from concept to disposal (or recycling).