Environmental policies and the trade of energy technologies in Europe

Environmental regulation may represent a relevant mechanism through which technological change is induced. In this way, countries that are subject to more stringent environmental regulations may become net exporters of environmental technologies. This paper provides new evidence on the evolution of trade flows of specific environmental technologies for the energy sector, related to the production of renewable energies and more efficient standards of energy saving. The European Union (EU) has increasingly focused on the role of energy policies as tools for sustaining the development path, but, at the same time, as instruments for reducing Greenhouse Gas emissions. The Kyoto protocol commitments, together with growing concerns about energy security, have brought attention to the analysis of innovation processes in this specific sector. This paper uses a gravity model in order to test the determinants and the transmission channels through which environmental technologies for renewable energies and energy efficiency are exported from the EU members to advanced and developing countries. Our results are consistent with the Porter and van der Linde hypothesis where environmental regulation represents a significant source of comparative advantages.