Exploring the role of instrument design and instrument interaction for eco-innovation: A survey-based analysis of renewable energy innovation in Germany

Empirical research on eco-innovation has produced a substantive body of literature on the relevance of regulation for stimulating such innovation. Much of this work on the role of policy for eco-innovation relies on econometric analyses of company survey data. In this regard, the eco-innovation module introduced in 2008/2009 in the Community Innovation Survey serves as an important data source that has helped improve our under-standing of the role of environmental and innovation policy for eco-innovation in the European Union (EU). However, so far, this data source has provided only limited opportunities to generate insights into the role of instrument design and instrument interaction for eco-innovation. In this chapter, we present a first attempt to measure such aspects in a company innovation survey based on the example of renewable energy innovation in Germany. In particular, we explore to what extent the design of the German Renewable Energy Sources Act (and the interaction of its feed-in tariffs with the EU emissions trading system) correlates with innovation in renewable power generation technologies. We find instrument design features but not instrument type to be related to eco-innovation. In addition, our exploratory study provides evidence for an interaction effect between climate policy and renewables support policy. Based on these findings, we discuss implications for future research on the role of policy in eco-innovation.