« Since the last decades, Europe and Northern America have applied various biofuel mandates with the indirect aim of promoting innovations in the biofuel sector. The economic literature generally assumes green innovations diminish the production cost of an environmentally friendly product (cost-based innovations, henceforth CBI). We extend this paradigm to green innovations that do not affect cost but still reduce a product emission factor (emission-based innovations, henceforth EBI). We assume an innovator tries to monetize one of the two types of innovation to a competitive fuel industry. We find that if a regulator specifies a minimum biofuel mandate, it only promotes a CBI. In contrast, if the regulator sets an emission carbon standard, it additively promotes the EBI on some conditions. Besides, even though the innovator prefers to sell a CBI, the EBI offers a profitable and welfare-enhancing option when the CBI is not feasible.«