The impact of “Green Regulation” on firms’ innovation

Juan S. Mora-Sanguinetti, Cristina Peñasco and Rok Spruk
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Juan S. Mora-Sanguinetti: BANQUE DE FRANCE AND BANCO DE ESPAÑA
Cristina Peñasco: BANQUE DE FRANCE AND UNIVERSITY OF CAMBRIDGE
Rok Spruk: UNIVERSITY OF LJUBLJANA

No 2611, Working Papers from Banco de España

Abstract: This paper analyses the impact of “green regulations” - i.e. those aimed at mitigating the effects of climate change and environmental externalities - on innovation, using a novel regulatory database covering the period 008-2022 for Spain. The database identifies regulations at both the national and regional levels through textual analysis. Employing a panel data approach, we assess how different types of environmental regulations - particularly those related to renewable energy - affect firm-level innovation activities. Our findings indicate that national-level green regulations have a positive effect on innovation, whereas regional-level regulations show mixed or negligible impacts. Importantly, the interaction between national and regional regulations, measuring the simultaneous production of legal texts at both levels, can foster innovation but at a reduced pace with respect to the sole production of regulation at the national level. Given the results for regional-level regulation, our findings provide evidence in favour of the hypothesis that regulatory fragmentation due to unequal, overlapping, inconsistent or conflicting procedure across jurisdictions may diminish these benefits.

Keywords: green regulation; innovation; Porter hypothesis; renewable energy; business (search for similar items in EconPapers)
JEL-codes: K32 O13 O44 Q5 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2026-03
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Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:2611

DOI: 10.53479/42665

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