Environmental innovations in the Italian industry: policy and sector effects

This paper examines the main factors underlying the adoption of environmental innovations (EI) in the Italian industry during the period 2006-2008. For this purpose, we analyse the fifth wave of Community Innovation Survey (CIS) data that for the first time covered EI adoptions. In particular, using a very large sample of Italian manufacturing firms, we investigate the impact that the first phase of the European Emission Trading Scheme (EU ETS) has had on EI. Estimation results suggest that the adoption of relatively new and radical technologies is mainly driven by external forces and complementarity with other management practices. On the contrary, the effect of the EU ETS on EI turns out to be rather weak: it seems to drive EI if we compare ETS and non ETS firms, but the stringency of the policy itself does not promote more innovation within ETS firms, mainly because of sector idiosincratic factors.