On the Faces and Phases of Eco-innovation - on the Dynamics of the Greening of the Economy

Green Growth and Climate mitigation have rapidly come to present one of the main grand societal challenges expected to have pervasive impacts on the global economy. However, theoretical and empirical insights into the greening of the economy are poor. Standard neoclassical economic research has failed to realize that markets are going ”green”. But also evolutionary economics has neglected to address the role of environmental issues on economic evolution. The novel concept of “eco-innovation” is increasingly connected to green growth, but is in need of further clarification. This paper suggests that the concept of eco-innovation could represent the evolutionary economic analysis of the greening of industry and the economy. The paper seeks to contribute to the development of evolutionary eco-innovation theory starting with a fundamental discussion on defining eco-innovation. Hitherto eco-technologies or eco-innovations have been defined in technical terms. This paper suggests interpreting eco-innovation in economic terms. Eco-innovation is defined as innovations that attract green rents on the market. Hence the concept of eco-innovation reflects innovative changes in the economic system measuring the degree to which environmental issues are becoming integrated into the economic process. Following this definition the eco-innovation concept is inherently linked to green competitiveness and the greening of the economy. The greening of markets should be seen as a specific historic phase and part of a larger techno-economic paradigm change towards a “green learning economy”. The paper identifies five phases in the greening of markets and discusses the implications these have for eco-innovation dynamics