Designing Environmental Policy to be Innovation Friendly

Funded by: DG Environment, European Commission


January 2008 to July 2008

PSI researchers:

Ben Shaw

Background, summary and aims

Background and Aims

Environmental policy has an impact on innovation and thus it constitutes an indispensable element in the achievement of the Lisbon agenda (2000) which set the objective of “[making] the European Union the most competitive and dynamic knowledge-based economy in the world by 2010”. Acknowledging not only the central role innovation was to play in the realisation of these ambitious goals but also the direct impact environmental policy has upon underlying innovation dynamics, the Lisbon agenda called for regulatory frameworks that were both cost effective and innovation conducive.

The objective of the project is to analyse critically ways of making environmental policy and regulation as innovation conducive as possible and to propose new environmental policy approaches that are not only sensitive to the different stages in the innovation process but also to the importance of complementary accompanying measures needed for their eventual success.

Project Design

The project will thus result in a number of methodological tools which will help DG Environment to design environmental policy conducive of innovation:

  • A conceptual framework elaborated on the basis of an extensive literature review (theory);
  • An analysis of the impact of environmental policy on innovation on the basis of recent policy proposals and other areas of current concern (practice);
  • A highly operational set of guidelines for policy makers aiming at rendering environmental policy as innovation friendly as possible (conclusion).

Importance of Research

The project can be seen as a continuation of a number of previous initiatives, notably the European co-funded project on “Policy Pathways for the Development and Adoption of Clean Technologies” (POPA-CTDA) and the study sponsored by DG Environment on the “Assessment of Innovation Dynamics Induced by Environment Policy”. While the project will build on the findings of these as well as other initiatives, it will attempt to improve their relative usefulness by notably:

  • providing a clear conceptual framework on the basis of which a system approach will be elaborated, thereby addressing the somewhat myopic tendency of earlier, more descriptive initiatives that were primarily based on case studies;
  • adopting a very broad and inclusive definition of the innovation process, including technological product as well as process and system innovation, and analyzing the optimal design of appropriate policy instruments as well as the ideal time of their deployment;
  • taking into account long term sustainability objectives and therefore assessing the relative effectiveness of holistic packages of complementary environmental, research oriented, educational and regional policies.


Designing environmental policy to be innovation friendly - Final project report

Policy guidelines

Impact Assessment Guidelines

Please note that the Final Report contains both the Impact Assessment Guidelines and Policy Guidelines. For ease of use they are available as separate files.