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Incentives for Environmental Innovation: Federal Programs that Reward Innovative Environmental Protection

Over the years, the United States Environmental Protection Agency ("USEPA") has implemented several programs that reward companies for innovation that produces environmentally preferable products or production methods. These incentives reward innovation through financing, assistance in marketing, and regulatory flexibility. Through these initiatives, companies can receive financial assistance, technical assistance, and/or regulatory flexibility as incentives to find cost-effective ways of protecting the environment. These initiatives include:

  • Design for the Environment Program
  • Green Chemistry Program;
  • Cleaner Technology Substitutes Assessment); and the
  • Environmental Technology Verification Program.

Design for the Environment

The USEPA created the Design for the Environment ("DfE") program in 1991 to promote the incorporation of environmental considerations (such as pollution prevention) into the design of products, manufacturing processes, and technical and management systems. Under the umbrella of the DfE program, USEPA has developed several partnerships with industry, professional organizations, universities, and state and local governments. These partnerships include the Green Chemistry Program, the Cleaner Technology Substitutes Assessment, and efforts to obtain financing for pollution prevention by small and mid-sized businesses.

Green Chemistry Program

The Green Chemistry Program is designed "to promote innovative chemical technologies that reduce or eliminate the use or generation of the hazardous substances and the design, manufacture, and use of chemical products." The idea behind Green Chemistry is to not create pollution in the first place which came out of the Federal Pollution Prevention Act passed in 1990. The Green Chemistry Program promotes the development and use of green chemistry by:

  • Funding for Academic Research
  • Funding for Small Businesses; and
  • Research by the EPA

In addition, the Green Chemistry Program promotes the annual Presidential Green Chemistry Challenge Award. This award recognizes chemical technologies that incorporate green chemistry into chemical design and manufacture to prevent pollution in the manufacture, design, or use of chemicals. Information about the award categories and the selection criteria is available on the EPA website.

Cleaner Technologies Substitutes Assessments

Under the DfE program, the Office of Pollution Prevention and Toxics (OPPT) (renamed Office of Chemical Safety and Pollution Prevention) has partnered with several industrial organizations to identify cost-effective methods to incorporate pollution prevention into specific manufacturing processes. These partnerships have led to the development of several Cleaner Technology Substitutes Assessments ("CTSAs"), which identify alternate manufacturing technologies and provide detailed environmental, performance, and economic information associated with each technology. For example, in June 1998 USEPA published a CTSA for the dry cleaning industry that identified several technology alternatives to the use of perchloroethylene ("PCE") in dry-cleaning processes. Each of these alternatives would use equipment that is less expensive than traditional PCE dry cleaning equipment, thus protecting the environment while reducing capital costs for dry cleaning facilities. The OPPT has also developed a general CTSA and CTSAs for screen printing and lithography, and the OPPT is working with industrial organizations to develop CTSAs for printing wiring board manufacturers, the metal finishing industry, and the aerospace industry.

Environmental Technology Verification Program

In 1995, the USEPA Office of Research and Development ("ORD") recognized that many regulatory authorities, permit writers, and businesses are reluctant to accept the use of new environmental technologies until they have been proven in the field. However, such proof is typically unavailable until the technologies are used. To help eliminate this "catch-22" situation, ORD developed the Environmental Technology Verification ("ETV") Program. In this program, USEPA provides models that can be used to evaluate the performance of new and innovative environmental technologies.

The ETV Program does not rank technologies or label technologies as acceptable or unacceptable. Rather, the ETV program encourages acceptance and implementation of improved environmental technology through the creation of reliable, credible third-party review. The ETV Program works with stakeholders from the public and private sectors to develop and implement test protocols for various types of technologies, and companies that develop innovative technologies can contact the ETV Program and request testing of their technologies under the protocols. If the test proves that the technology works as designed, the ETV Program expects that regulatory authorities and private business will be more willing to accept the technology. This expectation is proving to be true, as several states have signed an agreement with USEPA stating that they will accept technologies that have been reviewed under the ETV Program.


The USEPA has introduced several programs that are designed to promote environmental innovation. Many of these programs can result in significant economic benefits for the participants. Through regulatory flexibility, research grants, or essentially free marketing, companies can use these programs to help ensure that environmental innovation promotes not only public health, but also the economic health of the company's business.


Reprinted from the January 1999 issue of the Environmental Corporate Counsel Report: Revised 2018.

Courtesy of William J. Walsh

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