Environmental innovation, which field is larger than the innovation of eco-industries, enjoys recently an impressive development, which is due for a great part to environmental tax and subsidies. Different channels are available to promote environmental innovation, through technological innovation but also through use and attitudes changes, which will be self-enforcing. Many Policy tools are available to promote environmental innovation, regulation, tax and subsidies, cap and trade systems. Their combination leads to disparities in the carbon avoided price while economic theory requires a unique carbon price in order to guide environmental technique choice. The main challenge for economic policy in the coming years will be to promote a sustainable 'green' fiscal policy, which has to be both coherent and sustainable with the budget balance. In this condition it should be possible to change the habits and techniques through taxes and subsidies without depressing economic growth.