Environmental Regulation Of Green Innovation Incentive

With the increasingly grim situations of the tight resource constraint, environmental pollution and ecological degradation, the appeal of ecologicalization transformation is fastly growing. However, the current global economic crisis and environmental issues, such as climate change, may also bring a significant transition possibility from traditional economy to green economy. The sustainable growth could be realized only by enhancing industrial restructuring and revolutionary innovation. In recent years, China has viewed the ecological development and technical innovation as two major themes of national competitiveness. The Eighteenth National Congress and its Third Plenary Session of the CPC further emphasized the strategic status of the ecological civilization construction and innovation‐driven growth. Therefore, in order to thoroughly implement the basic requirements of the Scientific Outlook on Development, it is necessary to establish a mechanism of mutual benefit between innovation and environment efficiently connected by the regulations, and thus to promote the multiple sustainable development among economy, society and ecology.Based on the existing research, we firstly summarized the content of eco‐innovation‐oriented environmental regulation according to Neo‐classical environmental economics and evolution economics. Through the discussion of Porter Hypothesis and its controversies, we distinguished whether the environmental regulation could bring the competitive advantages to a firm under strong or weak green innovation incentives from the perspective of cost‐offset effect. Then we compared the applicability and necessity of major regulatory tools with the help of cost‐benefit analysis and optimization analysis. Besides, by reviewing the evolution and characteristics of China’s environmental regulations, we established two DEA‐SBM models, and evaluated the national and regional eco‐regulation efficiency respectively. Finally, political suggestions were presented in three respects.Eco‐innovation‐oriented environmental regulation is a set of environmental polices and regulations related to promote green innovation activicies of firms or even the whole society. It may not only create a circumstance of increasing the creative capability and accelerating achievement transformation, but also reduce the uncertainy of eco‐innovation in the institutional arrangements. The validity of Porter Hypothesis directly relies on the existence of cost‐offset effect, which is corresponding to strong or weak green innovation incentives, thus two types of intervention policy are derived. While there is no good or bad difference between the regulatory tools, which effectivenesses mainly depend on the temporal background and promising techniques. It is suggested that the eco‐innovation effects of environmental regulation could be better revealed under the combination of multiple tools. With the increasing emphasis on the environmental problems in China, significant efforts have been made by government on policies, investments and workforces in recent years, which led to the vigorously deveiopment of environmental administration and green innovation. However, it is impossible for the environmental regulation to gain the optimal I/O scale at some time, and for the output benefits to reach the ideal level, when the problems of surplus&waste and the weaknesses of the lower resource conversion rate as well as the deficient resources allocation do exist. The paper aims to provide an acdamic basis and reference for the China’s environmental policy making, meanwhile, for the realization of particular regulatory targets by authorities using related policy tools.