Environmental law does not necessarily promote innovations that lead to drastic improvement of environmental performance (eco-innovations). The focus of EU environmental law on best available techniques is exemplary. Businesses often complain that environmental law hampers innovation, even innovations that have tremendous positive impacts on the environment. This article reports on a study we did to see whether this complaint is justified. We did a literature study into the relationship between innovation and environmental law to find out whether and how environmental law can promote innovation. Then, we did six detailed case studies into recent innovation projects in the Netherlands, to assess whether and if so how environmental law in practice was a stimulus or an obstacle to these innovations. The research shows that current environmental law does not foster eco-innovation. It also shows that environmental law indeed sometimes hampers eco-innovations, but that a transparent process, involving all stakeholders from the start, limits this risk and allows for circumnavigation of the possible legal obstacles.