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This paper examines the single and the joint influence of environmental policy stringency and oil prices on green innovation, admitting the possibility of different magnitudes of the response of innovation depending upon whether oil prices are increasing or decreasing, and accounting for endogeneity of policies. A panel data set of OECD countries is used over the period 1990–2016. Results suggest that increasing the stringency of environmental regulation can, beyond inducing green innovation, shield the effect of oil prices on innovation. In addition, a more stringent environmental policy reduces the asymmetric response of innovation when oil price increases or decreases. Thus, environmental policy and oil prices can be complements when inducing green innovation. Exploiting these complementarities requires an interdependent use of environmental and energy policies, through dynamic adjustments of subsidies and taxes on oil prices alongside reasonable levels of stringency in environmental policy. [ABSTRACT FROM AUTHOR]

• Environmental policy has a negative and efficient impact on Portuguese GHG emissions. • Technology transfer may cause an increase in GHG emissions evolution. • A form of a Green Paradox caused by technological progress may occur. • Policymakers should facilitate technology transfer accounting for its adverse effect. This paper analyses the impact of feed-in tariffs, fossil fuel support, technology transfer, and other relevant socio-economic variables on Portuguese greenhouse gas emissions. The results provide evidence that environmental policy has a negative impact on greenhouse gas emissions, which uncovers an efficient environmental outcome from regulation. Additionally, the model reveals that technology transfer may cause an increase in greenhouse gas emissions evolution, which is an undesirable effect arising from technological diffusion. By focusing on a specific economy and considering both "pro-climate" and "anti-climate" policy variables, this paper provides policy suggestions to aid Portuguese energy planners and policymakers reaching a sustainable transition. Nonetheless, the results have wider, international, implications for the design and implementation of environmental policies. [ABSTRACT FROM AUTHOR]

Greenhouse gas (GHG) emissions play a crucial role in the European Union's (EU) action plan for decarbonizing the economy and can serve as an indicator of transition towards a sustainable path. Results (Online Supplemental Appendix Table 2) show a negative impact of FIT policy on GHG change (more renewables implementation decreases emissions), uncovering an efficient environmental outcome. The estimated fixed-effects linear model assumed that GHG emissions, the dependent variable, was a function of environmental policy, assessed by the average value of feed-in tariffs (FIT) and a dummy variable indicating participation in the EU Emissions Trading System (EU ETS), a policy instrument launched in 2005. [Extracted from the article]