The challenge is to gear innovation systems so that they both accelerate innovation generally and directly promote green technologies and processes, through a “system innovation” approach that addresses specific market failures, but also responds to demand-side issues such as consumer and household acceptance (e.g. through information provision) and institutional resistance (OECD, forthcoming b). Flexible policy signals that address the externalities associated with environmental challenges are essential in order to generate market demand for green innovation, for example, carbon, water and waste pricing induce potential innovators to seek out the most cost-efficient way to reduce environmental impacts. Well-designed performance standards can also induce innovation. Targeted innovation-support policies can be challenging to design, due to difficulties in determining technology maturity and future commercial potential.