The document discusses the Porter hypothesis, which posits that environmental regulations can promote competitiveness by directing attention to resource inefficiencies and fostering innovation. It provides data on the effects of environmental tax reform in European countries from 1995-2003, showing it reduced fuel demand and greenhouse gas emissions while having little negative impact on GDP and employment. The evidence supports the idea that revenue recycling from carbon taxes can offset economic costs and that such taxes may spur innovation more than energy price increases alone.