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This paper focuses on the drivers of green technology adoption. We distinguish between end-of-pipe and cleaner production technologies aimed at either pollution mitigation or energy efficiency, respectively. We provide empirical evidence of the relations between existing policy instruments, organizational capabilities of firms and the adoption of different types of green technologies. We use a unique firm level panel dataset of 2562 Spanish manufacturing firms from 2008 to 2014 to carry out the empirical analysis. Our results show, first, that policy instruments drive adoption of green innovation more than organizational capabilities. Second, environmental taxation seems to be ineffective at stimulating the adoption of eco-innovation. Third, both investment subsidies and tax credits do imply higher levels of investments in green technologies. Tax incentives seem to mostly foster cleaner production technologies, while subsidies are used to finance all types of eco-innovations. Fourth, human resources as green employees are positively related with environmental investments. Finally, dynamic capabilities as the introduction of environmental management systems are correlated particularly with cleaner production investments oriented to reduce energy consumption.

This paper analyses the effectiveness of environmental taxation in stimulating the adoption of end-of-pipe and cleaner production technologies across manufacturing and mining firms between 2008 and 2014. We perform simple and categorical treatment matching of firms to study the heterogeneous effects of different taxation levels. We assess the effects between firms forced to pay environmental taxation (treated) and those that did not have to pay such taxes (controls), as well as between different levels of environmental taxation (small, medium, large). We find that low levels of environmental taxation are ineffective at stimulating green technology adoption. As the taxation level increases, so does the associated effect on green technology investment. Additionally, we find that even low levels of environmental taxation can be effective when combined with public financing. In this case, the effect is stronger than that of providing public financing alone.