Increased environmental awareness is a driving force for innovation in the tourist industry. New green products and services are emerging, and being combined with measures such as recycling, energy savings etc. The rationale for the tourist industry is to stay in business and to gain competitive advantages through innovative behaviour. This articles reviews public policy instruments for sustainable tourism development. An important and not always sufficiently envisaged side-effect of the policies and their implementation is the occurrence of innovations in the tourism sector. Types of innovation are identified, and the article concludes that not all policy instruments are equally efficient.