To face the challenges posed by climate change, environmental RD yet, investment in environmental RD however, data constraints hamper the use of this variable when examining the drivers of eco-innovation. The literature reports that demand factors in general and collaboration with stakeholders play a crucial role in generating such investment. In addition, this paper similarly examines the relationship between environmental innovation R&D expenditure and a range of policy instruments, including environmental regulation and other policy measures including R&D subsidies and environmental taxes. The empirical analysis is carried out for 22 manufacturing sectors in Spain for the period 2008–2013. To overcome problems of data availability, we construct a comprehensive database from different surveys.