Abstract: This paper examines the effects of environmental innovation on carbon dioxide emissions in the EU-27 countries between 1992 and 2014. We utilize the Generalized Method of Moments in a dynamic panel setting. Patent counts of environmental patent applications are used as indicator for environmental innovation. We find that environmental innovation did contribute to reductions of carbon dioxide emissions, while general innovative activity does not cause decreases in emissions. However, this effect is found to be comparatively small to the effects of increased economic activity. Further, we find the effect of innovation to differ across countries, with less developed economies showing a higher level of heterogeneity.