Eco-innovation.
Date: 2009-07-29
Institutions: Directorate-General for Environment
Subjects: environmental policy, environmental protection, exploitation of resources, new technology

9
0
0
2
e
n
u
J

EN

ECO-INNOVATION

Eco-innovation

Eco-innovation – the key to Europe’s future competitiveness

Eco-innovation is any innovation (new technology, product, process 
or service) that can contribute to environmental protection or a 
more effi  cient use of resources.

Environmental technologies are a central element of the European 
Union’s approach to major environmental challenges such as climate 
change, natural resource scarcity and dwindling biodiversity.

Viable technological solutions are already available to remedy many 
of the environmental challenges we face, but their commercial take-
up can be hampered by numerous obstacles.

If environmental technologies are to be adopted widely, economic 
and regulatory barriers must be removed and research, investments 
and awareness must be promoted.

Opportunities for environmental technologies are greater in the 
European single market than in smaller national markets.

Research is crucial to realising the full potential of the fast-growing 
eco-industries sector and to triggering a wave of innovation and job 
creation.

o
t
o
h
p
k
c
o
t
S

i

©

 
 
What are environmental 
technologies?
Environmental technologies are technologies 
that are less environmentally harmful than 
the alternatives. They include technologies 
and processes to manage pollution, products 
which are less resource-intensive, and services 
and processes that manage resources more 
effi  ciently. Environmental technologies can 
be found in nearly all economic sectors, 
including pollution control, water and waste 
management, and energy generation. These 
technologies also produce fewer emissions, 
generate less waste, have a limited impact on 
health and biodiversity and generally help 
reduce costs and improve competitiveness.

What is eco-innovation?
Eco-innovation refers to all forms of innovation 
– technological and non-technological, new 
products and services and new business 
practices – that create business opportunities 
and benefi t the environment by preventing 
or reducing their impact, or by optimising 
the use of resources (including energy use). 
Eco-innovation is closely related to the 
development and use of environmental 
technologies and also to the concepts of eco-
effi  ciency and eco-industries. The common aim 
is to contribute to more sustainable production 
and consumption patterns. Practical examples 
of eco-innovation include processes to recover 
valuable substances from waste water, more 
effi  cient food packaging, the production of 
construction materials from recycled waste, 
eco-products and new management methods. 
For examples visit the ETAP website (see back 
page) and the EU’s European Business Awards 
for the Environment website at: 
http://ec.europa.eu/ environment/awards/
index_en.htm.

o
t
o
h
p
k
c
o
t
S

i

©

.

g
n
h
c
x
k
c
o
t
s
©

New challenges call for new solutions
The world is facing serious environmental problems such as climate change, 
the  depletion  of  natural  resources,  air  pollution  and  biodiversity  loss.  All 
of  these  issues  have  potentially  disastrous  implications  for  life  on  earth. 
Novel  solutions  and  more  environmentally-friendly  technology  must  be 
developed if such problems are to be avoided or minimised. 

Europe needs to do more with less. Maximising eﬃ  ciency at all stages of 
production is crucial. Eco-innovation is the innovation process to develop 
and bring to the markets new environmental technologies, products and 
services that reduce the overall impact on the environment. Business and 
innovation can together create sustainable solutions that make better use 
of precious resources and reduce the negative side-eﬀ ects of our economy 
on the environment. 

Environmental  technologies  can  help  reduce  energy  and  resource 
consumption and produce less waste and fewer greenhouse gas emissions. 
For  example,  emissions  avoided  as  a  result  of  energy  saved  during 
production or by driving more environmentally-friendly cars, contribute to 
ﬁ ghting climate change.

Boosting competitiveness 
and environmental protection
A clean and healthy environment is essential for maintaining prosperity and 
a high quality of life in Europe. But the strength and competitiveness of the 
economy is also essential if this quality of life is to be maintained.

Developing  and  promoting  new  solutions  is  fundamental  to  triggering 
the  potential  for  economic  beneﬁ ts  through  cost  savings,  innovation  and 
international trade.

Eco-technologies  can  unlock  potential  markets,  foster  innovation,  increase 
European competitiveness and create new high-skilled jobs.

The  European  Union  recently  launched  the  Lead  Market  Initiative  and 
identiﬁ ed  several  market  sectors  which  are  future  high-growth  areas  in 
Europe.  Most  of  the  sectors  identiﬁ ed  as  lead  markets,  such  as  sustainable 
construction, recycling, bio-based products and renewable energy, are prime 
markets for eco-innovation.

A growing business sector
It  is  not  just  the  environment  which  stands  to  gain  from  eco-innovation. 
The world market for environmental products and services is growing every 
year. Europe is in a strong position to lead the way in using the power of 
innovation to meet today’s environmental challenges and also has a great 
opportunity to step up its investment in this relatively new sector.

 
 
In recent years, the eco-industries have emerged as an important 
segment of the European economy. This sector has an estimated 
turnover  of  around  €227  billion,  corresponding  to  2.2%  of  EU 
GDP  –  greater  than  the  European  aerospace  or  pharmaceutical 
industries – and employs 3.4 million people directly. 

The  market  for  environmental  technologies  grows  as  their 
potential  continues  to  improve.  Certain  sectors  are  expanding 
at  a  remarkable  rate  in  Europe  and  around  the  globe  –  over 
20% annually for some renewable energy sources such as wind 
power. Europe has roughly one third of the world market of eco-
technologies, which is projected to double from its current level 
to €1000 billion by 2020.

Obstacles to getting 
from research to market
While Europe has a reputation for being a leader in new technology 
development, it isn’t always easy getting a product or service from 
the research stage to the market. There are many barriers to the 
development and wider use of environmental technologies.  

Market demand for environmental technologies in the public and 
private sectors is low for a number of reasons. These include the 
lock-in to existing technologies, price signals that favour less eco-
eﬃ  cient  solutions,  diﬃ  cult  access  to  ﬁ nance  and  low  consumer 
awareness.

Switching  from  traditional  to  environmental  technologies  is  a 
complex process. It may involve economic barriers such as higher 
investment  costs  resulting  from  perceived  risks  and  signiﬁ cant 
start-up costs. A lack of available risk capital in this area also hinders 
the move from drawing board to production line.

Support  systems  for  innovative  enterprises  are  inadequate  and 
private  investment  into  research  across  Europe  needs  a  boost. 
Applied  research,  and  cooperation  between  the  science  and 
industry sectors in particular, need greater support. 

Encouraging market take-up
The  challenge  is  to  improve  the  overall  environmental  perfor-
mance  of  products  throughout  their  life-cycle,  to  boost  the 
demand for better products and production technologies and to 
help consumers make informed choices.

Sustainable consumption and production maximises the potential 
into 
for  businesses  to  transform  environmental  challenges 
economic opportunities and provides a better deal for consumers. 

The Sustainable Consumption and 
Production and Sustainable Industrial 
Policy Action Plan
 The European Commission launched an Action Plan on Sustainable 
Consumption and Production and on Sustainable Industrial 
Policy in July 2008. It aims to improve the overall environmental 
performance of products throughout their life-cycle, promoting 
and stimulating demand for better products and production 
technologies, and helping consumers to make better choices

To  encourage  greater 
take-up  of  environmentally-friendly 
technologies  the  European  Union  is  using  tools  such  as  green 
public procurement (the process by which public authorities seek 
to reduce the environmental impact of good and services they buy), 
eco-labelling, ﬁ nancial incentives, voluntary agreements, industry 
standards  and  market  mechanisms  like  tradable  permits.  Eco-
labels, for example, enable consumers to easily identify and select 
environmentally-friendly goods and services, while environmental 
technology  veriﬁ cation,  which  provides  reliable  information  on 
the environmental performance, will help producers to convince 
markets of the merit of new technology. 

The  EU  has  also  designed  speciﬁ c  ﬁ nancial  measures  to  share 
the  risks  of  investing  in  eco-innovation.  The  rules  on  state  aid 
for  environmental  protection  have  been  adapted  to  allow  more 
eﬀ ective support for innovative technologies. 

Evidence  shows  that  well  designed  environmental  legislation  in 
areas such as waste electronics, eco-design, soil remediation and 
industrial pollution control acts as a driver for innovation. Results 
from companies that comply with such legislation show that their 
overall costs have decreased signiﬁ cantly. 

Staying ahead of the pack
In  a  sector  highly  dependent  on  new  technology  development, 
maintaining  levels  of  investment  in  research  and  development 
is  paramount  if  Europe  is  to  keep  its  leading  market  position. 
The  EU’s  Environmental  Technologies  Action  Plan  (ETAP)  was 
instrumental in channelling resources into environmental research 
projects and bridging the gap between research and market. This 
funding  is  being  increased  in  the  EU’s  7th  research  programme. 
The programme is the EU’s main mechanism for funding research 
and  up  to  30%  of  its  €32  billion  budget  on  applied  research  for 

The EU Environmental Technologies Action Plan (ETAP)
The European Commission set up the Environmental Technologies Action Plan in 2004 to 
speed up the removal of fi nancial, economic and institutional barriers to the development of 
environmentally friendly technologies and to increase market take-up.

The plan includes nine priority measures in three broad areas: getting from research to market; improving market conditions; and 
acting globally. The measures are undertaken by the European Commission, national and regional authorities, industries and research 
organisations. EU countries have developed and are implementing national roadmaps for environmental technologies under the plan.

Current key priorities are mobilising fi nance and other actions to promote market opportunities for businesses involved in 
environmental technologies, this includes establishing credible verifi cation of environmental performance to boost confi dence in eco-
technologies. Tools will be also developed to monitor, benchmark and boost the uptake of eco-innovation. For example, a networked 
observatory on eco-innovation will provide relevant statistics and analysis on emerging trends and global business opportunities.

o
t
o
h
p
k
c
o
t
S

i

©

2007 - 2013  will  go  towards  environmental  technologies.  Research  areas  include 
hydrogen  and  fuel  cells,  clean  production  processes,  alternative  energy  sources, 
carbon  storage,  biofuels,  energy  eﬃ  ciency,  waste  management  and  water 
technologies. 

Investors  such  as  banks,  venture  capitalists,  investment  funds,  and  insurance 
companies  are  becoming  increasingly  aware  of  the  opportunities  presented  by 
environmental  technologies.  Investment  in  clean  technologies,  for  example,  now 
represents  around  10%  of  all  venture  capital  in  Europe.  Such  investments  are 
attracting small and large investors alike. Socially responsible ﬁ nancial products with 
an emphasis on the environment have also increased in recent years.

Working together
EU  Member  States  have  an  important  role  to  play  in  supporting  and  promoting 
new  technologies.  The  majority  of  them  have  established  national  roadmaps  to 
implement  the  Environmental  Technologies  Action  Plan  (see  box),  highlighting 
national programmes that support innovation and environmental technologies. 

The European Union is also working with other countries and regions to promote 
sustainable development on a global scale. It is especially important for developing 
countries,  where  addressing  the  detrimental  environmental  impact  of  production 
activities and lessening the impact of a growing population on scarce resources is 
becoming increasingly urgent. In international discussions, the European Commission 
actively  advocates  the  reduction  or  removal  of  trade  tariﬀ s  on  environmental 
products, technologies and services.

Changing the way we consume and produce
There are many areas where technology is helping us to solve the major environmental 
challenges facing us. But technology alone is not the answer. Big changes are needed 
to the way we consume and produce goods and services. The market price of many 
conventional  products  and  services  often  does  not  reﬂ ect  their  true  costs.  The 
manufacture of products often involves emissions but these are not included in the 
price. The healthcare costs arising from illnesses relating to correspondingly higher 
pollution levels are similarly not included. European consumers and producers need 
to play their part in a low carbon, highly energy-eﬃ  cient economy in order to protect 
and preserve the planet.

Further information
European Commission ETAP website: 
http://ec.europa.eu/environment/etap/index_en.htm

European Commission Sustainable Consumption and Production and Sustainable 
Industrial Policies Action Plan
 http://ec.europa.eu/environment/eussd/escp_en.htm 
http://ec.europa.eu/enterprise/environment/sip_new_pages/sip_a1_en.htm

European Commission Competitiveness and Innovation Framework Programme webpage 
http://ec.europa.eu/cip/index_en.htm

Executive Agency for Competitiveness and Innovation webpage 
http://ec.europa.eu/eaci/

LIFE+- Financial Instrument for Environment
http://ec.europa.eu/environment/life/funding/lifeplus.htm

Seventh Framework Programme for Research and Technological Development
http://ec.europa.eu/research/fp7/

© European Commission, 2009
Reproduction is authorised provided 
the source is acknowledged.

Funding 
for eco-innovation
To encourage investment in 
environmental processes and 
technologies, the EU has developed 
a range of instruments that focus 
on environmental innovation and 
entrepreneurship. Under the EU’s 
new Competitiveness and Innovation 
Framework Programme (CIP), a total 
of €430 million is available for the 
promotion of eco-innovation through 
diff erent forms of assistance, like 
risk capital fi nancing or networking 
activities. €195 million has been 
earmarked to support fi rst application 
and market replication projects on eco-
innovation, reaching out to the business 
sector. For more information, visit: 
http://ec.europa.eu/ecoinnovation/

Under CIP Intelligent Energy Europe 
Programme €730 million is available to 
foster energy effi  ciency and renewable 
energies. The programme aims to 
improve market conditions for untapped 
opportunities to save energy and 
encourage the use of renewable energy 
sources. For more information, visit: 

http://ec.europa.eu/
intelligentenergy/

There are also fi nancing opportunities 
for environmental services and 
technologies under the EU’s funding 
programme LIFE+. It will co-fi nance 
projects that contribute to the 
development and demonstration 
of innovative policy approaches, 
technologies, methods and 
instruments, mainly targeted at the 
public sector.

For more information, visit: 
http://ec.europa.eu/
environment/life/
funding/lifeplus.htm

K
H
-
7
8
-
0
9
-
7
2
7
-
E
N
-
C

)

u
e

.
l

l

e
b
a
o
c
e
w
w
w

.

(

i

r
e
p
a
p
c
h
p
a
r
g
r
o

f

l

l

e
b
a
o
c
E
U
E
e
h
t
d
e
d
r
a
w
a
n
e
e
b
s
a
h
t
a
h
t

l

r
e
p
a
p
d
e
c
y
c
e
r
n
o
d
e
t
n
i
r
P