Promoting Technological Environmental Innovations: The Role of Environmental Regulation

Technological Environmental Innovation And Regulations

It has been argued that traditional environmental regulation as characterized by environmental standards or permits offers little incentive for TEI because of its inflexible, technology-forcing, bureaucratic and adversarial characteristics (Fiorino, 2006). There are repeated claims that environmental regulations, typically those employed in the US, are based on existing technology and do not provide additional incentives to innovate once the regulatory requirements have been met (Porter & van der Linde, 1995a, 1995b; Jaffe & Stavins, 1995; Norberg-Bohm, 1999; Fiorino, 2006). Environmental regulations are often not effective in promoting TEI diffusion because regulatory standards are usually more lax than standard practice and therefore provide little incentive for diffusion (Jaffe & Stavins, 1995; Fiorino, 2006). Environmental regulations that are based on performance standards are usually technology-setting, which could hamper radical innovation because firms do not like taking risks (Norberg-Bohm, 1999). In some cases, the incentive to innovate and diffuse environmental technologies is further constrained by bureaucracy long embedded in the regulatory system (Fiorino, 2006). Finally, the relationship between regulators and regulated industries are sometimes highly adversarial (Fiorino, 2006). High uncertainty and the lack of trust have left industries with little incentive to move forward.