Comparative study of linkage between environmental policy instruments and technological innovation: Case study on end-of-life vehicles technologies in Japan and EU

A growing population and urbanization is a challenge for finite natural resources. Without strict regulation to recycle, recover and reuse resources, waste is discarded with no value. Every year throughout the world, more than twenty-five million vehicles turn into end-of-life vehicles (ELV) and most of their valuable resources end up in landfill sites. This research analyses the effect of regulation on ELV innovation for additional recovery of resources in Japan and EU nations using patent data as a proxy. The analysis determines the statistical difference in patent activity before and after regulations were enacted in the case studies. The relevant data on ELV technologies was gathered for the period 1985-2013. The study suggests that in general environmental regulation in Japan drove innovation and reveals that environmental policy in Japan was more effective in enabling innovation compared to EU nations. Specifically, the results from these developed countries can be used by the rapidly growing developing countries in automobile manufacturing like China for amendment of their ELV regulation accordingly.