The Role of Innovation in the Nordic Green Rush
The Role of Innovation in the Nordic Green Rush
Introduction
The green transition represents a defining paradigm shift in the 21st century. It encompasses political, economic and societal transformations designed to achieve climate neutrality, resource efficiency and sustainable economic growth (European Commission, 2019; OECD, 2023). At its core, it involves a structural reorientation of production and consumption systems, including the deployment of renewable energy, electrification of transport, circular economy practices and the decarbonisation of heavy industries (Geels et al., 2017). Beyond environmental imperatives, the transition entails profound socio-economic implications for competitiveness, labour markets and territorial cohesion (Flam & Sánchez Gassen, 2024).
Globally, the green transition is framed by international agreements such as the 2015 Paris Agreement (UNFCCC, n.d.) and the United Nations Sustainable Development Goals (UN, 2015), which provide both targets and normative legitimacy for action. Yet the transition is uneven across regions due to differences in resource endowments, governance capacities and political priorities (Aiginger & Rodrik, 2020).
The Nordic Region has long positioned itself as a global leader in sustainability, innovation and welfare governance. Nordic countries consistently rank among the top performers in global environmental indices and have committed to achieving net-zero greenhouse gas emissions by or before 2050 (Sánchez Gassen et al., 2025). However, the transition is far from uniform. While some regions are experiencing rapid industrial growth, others face structural challenges, including labour shortages, uneven access to infrastructure and socio-economic disparities (Dixon et al., 2023). These regional differences are shaped by territorial dynamics, including the geography of resources, industrial clustering, and the availability of critical infrastructure and institutional capacity.
The term "Green Rush" refers to accelerating green investments, rapid structural shifts and intensified competition for green technologies – a framing that underscores the urgency and complexity of the transition. The green transition is inseparable from processes of invention and innovation, which act as critical enablers of systems change. While invention refers to the creation of new technologies and solutions, often reflected through patents, innovation encompasses the broader adoption, diffusion, and integration of these solutions into economic and social systems. This is a crucial distinction, as patents signal inventive capacity, but successful green transition depends on systemic innovation, in which technological breakthroughs are aligned with supportive policies, market incentives and institutional frameworks.
This chapter investigates the evolving dynamics of the green transition across the Nordic Region, with a particular focus on the roles of invention and innovation as catalysts for systemic change and sustainable growth. It begins by outlining the economic and sectoral impacts of the transition and goes on to analyse the innovation systems and the spatial distribution of green patents and eco-innovation. The chapter then explores the challenges of moving from invention and innovation to implementation, before discussing the territorial, governance and social equity dimensions that shape the outcomes and equity of the green transition in different Nordic contexts.
Features of the green transition
Economic and sectoral impacts of the green transition
The green transition represents both a structural opportunity and a disruptive “shock” to the Nordic economies. On the one hand, it promises new sources of growth in clean energy, advanced manufacturing, sustainable services, etc. On the other hand, it entails significant adjustment costs, especially in carbon-intensive sectors such as energy, manufacturing, transportation and heavy industry, as well as major societal changes (IEA, 2021).
In the energy sector, the shift from fossil fuels towards renewables requires not only technological innovation, but also substantial investments in grid infrastructure and energy storage. Manufacturing industries face the dual challenge of reducing emissions while maintaining competitiveness, which prompts a shift towards circular economy models, the electrification of processes and the use of low-carbon materials, such as green steel. The transportation sector must undergo a comprehensive transition, not only through the electrification of vehicles, but also by prioritising sustainable fuels for aviation and shipping and by exploring other low-emission solutions to reduce dependency on fossil fuels. These changes will likely lead to mixed economic effects, as regions and workers currently dependent on traditional industries will be at risk of being left behind unless they are supported by proactive policies for reskilling, innovation and regional development (Dixon et al., 2023).
The geography of the green transition, particularly where new green industries will emerge, will be shaped by a mix of supply-and-demand-driven factors that will attract investment to specific regions. For example, access to renewable energy and critical materials, combined with infrastructure, institutional capacity, and supportive policies, determines how appealing a location is for investment (Kilinc-Ata & Dolmatov, 2022). However, the locations where green industries develop do not necessarily coincide with those where green innovation is generated.
Innovation landscape
As shown by the European Innovation Scoreboard (EIS), innovation patterns differ across the Nordic countries, which consistently rank at the top of the EIS, outperforming the EU average by a significant margin, as illustrated in Figure 10.1. This indicates that the Nordic countries are strong in research and development, advanced infrastructure and robust innovation ecosystems.
The EIS is a tool used by the European Commission to benchmark innovation performance across Europe on an annual basis. It uses 32 indicators grouped into four key areas: framework conditions (education, research systems), investments (R&D and venture capital), innovation activities (business innovations, patents), and impacts (economic and environmental outcomes). It classifies countries into performance groups, with an increasing emphasis on green and digital transitions. In the 2025 edition, Sweden reclaimed its top spot as the EU’s most innovative country, ahead of Denmark and Finland, both of which also ranked as Innovation Leaders. Although not EU members, Norway was classified as a Strong Innovator and Iceland performed above the EU average.
Figure 10.1: Nordic innovation scoreboard index. Source: European Commission (2025a). This figure presents the innovation performance of the Nordic countries relative to the EU average, based on the European Commission’s European Innovation Scoreboard (EIS). This dataset, which includes all of the Nordic countries, provides a comparative assessment of national innovation systems across Europe. The Nordic countries consistently outperform the EU average, with Sweden and Denmark remaining among Europe’s top performers, and Finland showing a strong upward trend. Norway and Iceland also demonstrate steady improvement, although at lower overall index levels compared to their Nordic neighbours. |
Regional innovation systems
Regional innovation systems play a central role in advancing the green transition by fostering collaboration between companies, research institutions and policymakers. The 2025 Regional Innovation Scoreboard (RIS) highlights the Nordic Region’s exceptional performance, as shown in Map 10.1. Among all represented regions, only one falls into the Moderate category, while nearly all other regions are classified as Strong or Leading Innovators, both of which are well above the EU average (European Commission, 2025b). The widespread capacity indicates the presence of an innovation culture that reaches beyond metropolitan centres into smaller and remote areas, with support from strong national research infrastructure and policy frameworks.
Compared to the broader European landscape – in which regional disparities remain pronounced, particularly in Southern and Eastern Europe – the Nordic countries stand out not only for their high scores, but for the consistency of innovation performance across regions. This distinguishes them from most other parts of Europe, where many regions still fall below the EU average (European Commission, 2025b). The results indicate a broadly distributed innovation capacity, suggesting that even the smaller and more remote Nordic regions maintain strong links to national research systems, higher education institutions, and innovation-oriented enterprises.
Much of Northern and Western Europe falls into the Strong Innovator and Innovation Leader categories, which reflect high R&D intensity, strong institutional frameworks, and mature innovation ecosystems. The Nordic regions’ alignment with top-performing regions such as Baden-Württemberg, Île-de-France, and Randstad in the Netherlands underscores their strategic positioning within Europe’s innovation ecosystem (European Commission, 2025b). This cohesion is particularly significant for the green transition, as it enables coordinated efforts across borders and sectors, and facilitates the scaling of sustainable technologies and practices (Kwilinski et al., 2025).
Map 10.1: Regional innovation scoreboard by NUTS2 region, 2025. Source: European Commission (2025b) and Eurostat. The map illustrates the results of the Regional Innovation Scoreboard (RIS) 2025 and shows how EU and Nordic regions perform relative to the EU average (set at 100). The index categorises regions into Emerging Innovators (< 70%), Moderate Innovators (70–100), Strong Innovators (100–125) and Leading Innovators (>125), based on a composite of indicators spanning research, business innovation, digitalisation and sustainability. |
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Green patents and green innovation
The number of green patents is a key marker of green technological progress. Such patents primarily reflect inventions – new technical solutions aimed at reducing environmental impact – rather than fully deployed innovations. They include technologies for renewable energy, energy efficiency, waste reduction and carbon capture. Patent activity signals concentrations of investment and R&D and indicates industries and regions in which there are high levels of invention relevant to the green transition. Countries with strong patent portfolios often gain an edge in emerging green markets (Kim & Cho, 2025), while regions with abundant renewable energy and strategic minerals are not only positioned to decarbonise industrial processes, but also to power digital and AI-driven transformation (UN, 2025).
Map 10.2 presents a three-year rolling average of patent applications (absolute numbers) in environment-related technologies across the Nordic regions, based on data from the OECD REGPAT database. The three-year rolling average was chosen to smooth out the inherent volatility in annual patent filings, which can fluctuate significantly due to economic cycles, policy changes or large one-off applications. By aggregating data over three years, this method mitigates the impact of these potential distortions and outlier years and provides a clearer view of trends in green innovation activity. It also improves comparability across regions and highlights underlying patterns of green patent activity.
Map 10.2: Green patent applications, 2021-2023. Source: OECD (REGPAT database) and Eurostat, aggregated at the regional level. This map illustrates the three-year rolling average of patent applications in environment-related technologies across the Nordic countries, serving as an indicator of green innovation activity. Nordic average: 74 |
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The spatial distribution of patenting activity shown in Map 10.2 reveals a clear concentration around major urban and industrial hubs, particularly in Southern Finland and Western Norway, where knowledge-intensive industries and research institutions are clustered. Regions such as Helsinki-Uusimaa, Stockholm and Oslo-Viken emerge as leading centres of green patents, averaging between 320 and 1,250 patents each. This underscores their role as engines of technological development in the green transition. Regions like North Ostrobothnia in Finland – which is home to the University of Oulu and major information and communication technology clusters – and Midtjylland in Denmark also rank highly. A secondary belt of medium-high activity is visible in Southern and Western Sweden (e.g., Västra Götaland and Skåne), Southern Jutland, and Denmark’s Capital Region, where strong linkages between manufacturing, cleantech, and university research sustain innovation output. By contrast, lower levels of patenting activity are seen in northern and peripheral regions, including Iceland, Northern Finland and Northern Norway. This pattern reflects an urban–rural divide in patent capacity, which is shaped by differences in industrial density, research infrastructure and access to skilled labour.
However, population size can also influence absolute patent counts, potentially obscuring the innovation intensity of less populous regions. To address this, Map 10.3 presents the three-year rolling average of green patent applications per 10,000 inhabitants, offering a population-adjusted perspective on green patents across the Nordic countries. This per capita measure reveals that, while urban regions like Helsinki-Uusimaa, Stockholm, and Oslo-Viken remain leaders in total patent counts, several less populous regions, particularly in Northern Sweden, Norway, and Finland, demonstrate high innovation intensity relative to their populations. These findings suggest that innovation capacity is not solely a function of urban scale, but also reflects regional specialisation, research focus and the presence of knowledge-intensive industries (Tanner et al., 2019; Østergaard et al., 2024).
Map 10.3: Green patent applications per 10,000 inhabitants, 2021-2023. Source: OECD (REGPAT database) and Eurostat, aggregated at the regional level. This map illustrates the three-year rolling average of patent applications in environmental-related technologies per 10,000 inhabitants across the Nordic countries. This provides a measure of green innovation intensity relative to population size. Nordic average: 0.36 |
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It is also important to note that urban regions often host the headquarters of knowledge-intensive firms and research institutions, and as such serve as the legal points of origin for patent applications. For example, the patent data from the OECD REGPAT database, as visualised in Map 10.2 and Map 10.3, offers valuable insights into inventive activity, but should be interpreted with caution. REGPAT assigns patents to regions based on the addresses of the inventor and applicant, which often correspond to corporate headquarters rather than actual R&D locations, potentially leading to overrepresentation of urban areas (Maraut et al., 2008). Actual innovation activities, such as manufacturing, testing, or resource extraction, may take place in more rural or peripheral areas. For instance, companies may register patents through urban offices while conducting operations in northern regions. This means that while patent data reflects institutional and administrative concentration, it can also underrepresent the geographic spread of innovation-related activities.
In summary, the combination of absolute and per capita patent measures highlights both the concentration of green innovation in urban hubs and the significant contributions of less populous regions. Moreover, patents are an imperfect proxy for innovation: they exclude non-patented innovations, vary by sector in terms of the propensity to submit applications, and do not indicate the economic or technological significance of the inventions (OECD, 2010). Our data do not allow us to test whether these attribution biases or sectoral differences significantly affect the observed patterns and therefore should be interpreted with caution (Cozza & Schettino, 2013).
Regional comparisons should therefore be complemented with other indicators and understood as indicative rather than exhaustive measures of innovation performance. One practical way to do this is to employ multi-dimensional innovation metrics, such as the EU’s Eco-Innovation Scoreboard. This framework focuses specifically on innovations that reduce environmental impact and support the green transition across the EU. It measures performance across five dimensions: inputs, activities, outputs, resource efficiency and socio-economic outcomes.
Compared with the EU, the Nordic countries are at the forefront in terms of both green patents and green innovations. Between 2014 and 2024, the EU’s eco-innovation index rose by 27.5%, primarily driven by gains in resource efficiency, especially increases in greenhouse gas emission productivity (meaning more economic output generated per unit of emissions). As shown in Figure 10.2, the EU’s Eco-Innovation Scoreboard ranks the Nordic countries well above the EU average, putting them at the forefront of Europe’s green energy transition.
Figure 10.2: Development of eco-innovation performance in the Nordic countries benchmarked against the EU average. Source: European Commission (2024). The European Commission produces the Eco-Innovation Index (EII) as part of a broader pan-European dataset. For the purposes of this chart, the values have been filtered to display only Nordic countries. The EII is part of the EU’s Eco-Innovation Action Plan (EcoAP) and has been developed specifically to monitor eco-innovation performance within EU Member States. As non-EU members, Norway and Iceland fall outside of the scope of the policy framework the index is designed to evaluate. |
From innovation to implementation
The Nordic Region’s strong innovation ecosystem, with high levels of activity in green patents and sustainable technologies, means that it is well positioned to drive the green industrial transition (European Commission, 2025a). However, innovation alone does not guarantee impact. The shift from innovation to implementation in the Nordic green transition also requires governance, investment strategies and institutional capacity. While policy tools such as regulatory testbeds and incentives can support the scaling of new technologies, their effectiveness varies across regions and is influenced by both local conditions and external factors, such as local governance, market maturity and institutional capacity (Clark, 2019). The process remains subject to uncertainties, and the outcomes depend not only on technological advances, but also on the ability of regions to adapt to changing policy and market environments (Breaugh et al., 2021).
Significant differences in regional capacities and resources create uneven conditions for implementation across the Nordic landscape. For instance, resource endowment plays a central role as access to renewable energy sources and critical raw materials is a fundamental determinant of industrial attractiveness (Mertens et al., 2024). The Nordic energy mix (e.g., hydropower, wind and geothermal) provides a strong foundation but also raises complex questions regarding land use, biodiversity and cultural heritage (Nilsson et al., 2019; Xylia et al., 2024).
Infrastructure readiness is equally critical, as the scaling of green industries depends on energy grids, transport corridors and digital networks. Persistent bottlenecks and logistical vulnerabilities can slow deployment and lead to uneven growth patterns (Gonzalez, 2025). Similarly, institutional and governance capacity influence outcomes – for example, regions with robust administrative systems and strategic investment frameworks are better positioned to mobilise resources and adapt to policy shifts, while fragmented governance can stall implementation even when innovation is present (Aguiar Borges et al., 2025).
Market and financial dynamics add another layer of complexity. High upfront costs, uncertain returns and fluctuating demand for green products all shape adoption trajectories, while access to capital and risk-sharing mechanisms often determine whether projects progress beyond pilot stages (Andersson et al., 2025; OECD/The World Bank, 2024). Finally, social and territorial dimensions cannot be overlooked. The effects of the green transition on employment, migration, and regional development vary. While some regions enjoy economic revitalisation, others face challenges such as marginalisation or increased pressure on local communities and ecosystems (Sánchez Gassen et al., 2024; Bogason et al., 2025).
In short, green innovation is necessary but not sufficient for a successful green transition. Implementation depends on the interplay of technological readiness with systemic enablers, in the form of policy coherence, infrastructure, institutional strength and societal acceptance. Without this alignment, the Nordic green transition risks fragmentation, resulting in islands of progress rather than a cohesive transformation across the Nordic Region.
Conclusions
The ongoing green transition of the Nordic Region is characterised by regional variation, in which the interplay of resources, industrial structures and policy frameworks influences outcomes. While some areas benefit from abundant renewable resources and strong innovation capacity, others encounter adjustment challenges linked to legacy industries and infrastructure limitations (ESPON, 2025). This unevenness shapes both the opportunities and the pressures associated with the green transition.
Nordic countries consistently rank among the leaders in sustainability and innovation at the European level. Green patent activity and innovation outputs are notably concentrated in urban and industrial hubs, yet smaller and more remote regions also demonstrate considerable capacity, particularly when compared to the broader EU context. These patterns suggest a relatively cohesive innovation environment, although some spatial disparities remain.
Moving from innovation to implementation requires more than technological breakthroughs – it demands alignment across governance, infrastructure and market conditions. Effective policy frameworks, investment strategies, and institutional capacity are critical for scaling solutions beyond pilot projects. Equally important are social acceptance and workforce readiness, which influence how quickly and equitably new technologies are adopted. These enabling conditions – governance, infrastructure and social readiness – are unevenly distributed across the Nordic Region, reinforcing spatial disparities and determining which areas can effectively translate innovation into implementation.
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