The objective of this thesis is to investigate three economic issues related to environmental innovation: evaluating how private investments in environmental innovation react to technological policy; testing whether environmental policy harms economic performance; analyzing whether and how energy-saving process innovation impacts economic performance. This thesis provides novel empirical evidence on these issues by means of econometric analysis on firm-level data. The results from this thesis show that firms' environmental investments react positively to the highest amounts of public subsidy. Environmental policy, contrarily to the expectations, enhances economic performance of firms. Lastly, energy-saving process innovation does not play a significant role in reducing production costs of firms. These results suggest that environmental and economic goals are not in trade-off at the current state and that energy saving is not an incentive per se. Thus, strengthening both environmental policy and technological policy for environmental innovation is recommended.