Determinants of Eco-innovations by Type of Environmental Impact. The Role of Regulatory Push/Pull, Technology Push and Market Pull

In recent years, several studies have identified determinants of environmental innovations. In most econometric studies, environmental innovations in general were analyzed, some distinguish between end-of-pipe-innovations and cleaner production. Due to the lack of specific data, the existing literature on the driving forces of environmental innovations neglected the analysis of different environmental innovation types such as recycling, low carbon technologies or water management. The Community Innovation Panel (CIS) 2009 included, for the first time, a special module on eco-innovation differentiating between these specific types of environmental innovations. Analysing the German part of the CIS 2009, the main purpose of our paper is to test whether different types of environmental innovations (according to their environmental impacts) are triggered by different factors. Within our analysis, we define environmental innovations as product, process, marketing and organizational innovations leading to a noticeable reduction of environmental burdens. Positive environmental effects can be explicit goals or side-effects of innovations. In the literature, the important role of regulation and cost savings as motivations triggering eco innovations is accentuated. In fact, a complex set of supply factors such as the endowment and availability of technological resources, company specific factors, organizational innovations, competition conditions or consumer demand have to be included in the analysis. Our empirical analysis shows that the innovation activities with high or medium environmental impacts concentrate on the reduction of energy use, CO2 emissions and recycling whereas "older" areas such as the reduction of SO2 or NOx emissions or water pollution that are not in the focus of present political discussions are under-represented. Except material and energy saving process innovations, regulations seem to be important for all other environmental impact areas. Especially for typically end-of-pipe oriented areas such as other air emissions (SO2 or NOx) the influence of present and future regulations is higher than for other areas. For innovations to reduce energy use cost-savings are the main motivation. Environmental Management Systems (EMS) seem to be especially important tools to trigger these cost-saving cleaner technologies because they help to overcome incomplete information within a firm. Concerning environmental product innovations, our results show that present regulations are only relevant for air, water, soil and noise emissions but not for the other two regarded areas (energy consumption and recycling) but the firms confirm a high importance of expected future regulations for all environmental product innovations.

Horbach, Jens, Christian Rammer and Klaus Rennings (2011), Determinants of Eco-innovations by Type of Environmental Impact. The Role of Regulatory Push/Pull, Technology Push and Market Pull, ZEW Discussion Paper No. 11-027, Mannheim, published in: Ecological Economics.