The economic literature has identified environmental regulation as a key driver of environmental- and sustainable technology invention and innovation. The European Community has committed itself to reduce its greenhouse gas emissions in the commitment period (2008-2012) to 92 percent of its emission in 1990. However, the mitigation goals of its member states differ, see the Kyoto Protocol. These national differences, as well as any other differences, for instance between sectors, in the stringency of environmental regulation between the European countries are expected to reflect also differences in the propensity to invent or adopt energy-efficient technologies by their firms. Thus, the central question of interest was whether these regulatory differences lead to differences in the propensity to innovate with respect to energy-efficient technology that finally will result in differences in competitiveness.