How does green tax impact on eco-innovation in the United States?

This note aims at analysing the relationship between environmental taxation (at national level) and innovation performance in the biofuel industry in the United States. Green innovation is currently perceived as a critical field for policy makers to enhance the necessary shift to a resource-efficient, low-carbon economy, but it is seldom investigated or specifically targeted in the innovation literature, and many of its specific attributes fail to be taken into account. Moreover, it is important to understand the mechanisms linking public policies and innovation incentives in order to inform policy makers on the possible consequences of adopting alternative policy mixes (Del Rio González, 2009). Governments, indeed, can either support technology development (supply push) or create new markets (demand pull) for environmental technologies (Horbach et al., 2012; Peters et al., 2012; Norberg-Bohm, 2000) e.g. by imposing a carbon tax. The main goal of this study is precisely to understand the strength of the relationship between this demand-pull policy-instrument and the innovation performance in a specific field of research, the biofuel, which is highly dependent on environmental regulations.