Innovation Policy for the Transformation to Climate Neutrality

Rapid deployment and developments in green innovations are crucial for achieving climate neutrality. While market-based policy instruments are the backbone of climate policy, governmental support for research and development (R&D) complements an efficient policy mix that supports green innovations at all stages of the innovation process. Nonetheless, international R&D support has declined over the last decade. In an international comparison, Japan is at the forefront of green R&D support. Germany is also a leader in R&D support, but its market-based environmental policy stringency remains low, which undermines the importance of an adequate climate policy mix.