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Industrial innovation plays a critical role in achieving governments's environmental objectives. Through studies of the relationships between industry and regulators in the USA, Japan, Germany, Denmark, the Netherlands and France, key examples of success and failure in harnessing innovation are identified. Case studies of acid rain controls on power stations and of automobile emission controls shed further light on critical processes on consultation during policy formulation, standard-setting and enforcement, and illustrate failures of attempts to link environmental objectives to industrial competitiveness. A strategic model of industry-regulator relationships, presented in the final chapters, is designed to assist senior industrialists and policy-makers in predicting how industry is likely to respond to national, international and environmental policy initiatives.