Drivers of environmental innovation - Vinnova

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There are several aspects to bear in mind when designing regulations. The most important factor influencing the effects on technological innovation is the stringency of regulation, which is specified as the regulation requiring significant environmental improvements, being costly or requiring significant technological change (Ashford et al, 1985). Technology-forcing standards appear to be a necessary condition for bringing about innovative compliance responses, but they may impose high costs on industry. Kemp recommends that they are used only when technological opportunities are available that can be developed at low enough costs. Strict standards should be used when the environmental risks are large and acute, and when there is a consensus about the most viable technological solution or trajectory (Kemp, Forthcoming). Regulations should at the same time be flexible, with regard to the means of compliance, penalties for non-compliance and compliance time periods. Otherwise firms may judge that the compliance strategy of developing new technology is too risky. In designing standards it is important to give the industry enough time to develop solutions that are environmentally benign and meet the requirements of important users. Time may also be needed for finding out whether a solution is environmentally benign and does not impose hazards (Kemp, Forthcoming). Regulations should be adapted to different sectors, and this may contribute to the development of superior technological responses (Kemp, Forthcoming). 32
Table 1 Summary of innovation effects of regulations Effects on innovations • diffusion, incremental innovations • innovation outside regulated sector • affect small firms less than big • search process also before implementation Theoretical pros & cons + certainty of the policy result + authorities have much experience - inefficiency due to increasing marginal costs - much work for government may cause lagging standards - no effect after compliance is achieved - inefficiency due to that compliance cost varies between firms - lock-in effects Recommendations • stringency • flexible response to failure of compliance • sectoral adaptation • continuous review of technical standards Liability law Liability law should also be included among the regulatory instruments as it provides the judicial basis for law suits against firms that inflict ecological harm. Liability law provides a large degree of freedom for the firms to choose measures and the risk level of their strategies. There are two types of liability principles: liability based on fault and liability regardless of fault. The former tend to give static innovation incentives as firms can restrict themselves to comply with standards of due care. Liability regardless of fault gives raise to a general and dynamic interest in innovations on the part of firms. There are also various types of limited liabilities. Limitations require third parties to pay the bill of caused damages and are unlikely to lead to full internalisation of costs. Problematic may be that the injured third party may be in a weaker position with regard to the information needed for proving the causality between action and damage. Firms and authorities are likely to be in stronger positions (Hemmelskamp, 1997) 33
Page 1 and 2: Drivers of environmental innovation
Page 3 and 4: Drivers of environmental innovation
Page 5 and 6: Preface Innovations such as new pro
Page 7 and 8: Sammanfattning Denna rapport är en
Page 9 and 10: Övergången mot ett mer marknadsdr
Page 11 and 12: Summary This study aims to provide
Page 13 and 14: 1 Introduction ”7KH# RQO\# SDWK#
Page 15 and 16: But there are also problems with a
Page 17 and 18: 2 Environmental innovations in firm
Page 19 and 20: ”sustainable development is a key
Page 21 and 22: was in general no larger change in
Page 23 and 24: positive environmental effects alth
Page 25 and 26: That location also plays an importa
Page 27 and 28: adapted, with the latter indicating
Page 29 and 30: 4 Environmental policy instruments
Page 31: oth in the regulated industry and o
Page 35 and 36: marginal cost of abatement is lower
Page 37 and 38: according to Hemmelskamp (Forthcomi
Page 39 and 40: The Dutch studies looked for the pr
Page 41 and 42: Kemp claims that the effectiveness
Page 43 and 44: Table 5 Summary of innovation effec
Page 45 and 46: There is clearly a need for more em
Page 47 and 48: conditions. These perspectives are
Page 49 and 50: This study shows that the way envir
Page 51 and 52: Hemmelskamp, J. (Forthcoming) “En
Page 54 and 55: Appendix 1 Theoretical approaches t
Page 56: and their interaction. It opens up
Page 59 and 60: efficiency nor on optimising within
Page 61 and 62: on the theory of terms of trade. A
Page 63 and 64: egulation may lead to increases in
Page 65 and 66: average productivity increases. Thi
Page 68: VINNOVA, SE-101 58 Stockholm, Swede

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