Environmental policy

Key questions Impact of green policy and initiatives on business: –cost and bureaucratic burden –stimulus to innovation and greater competitiveness? EU role? Current trends and issues

Business and the Environment Question of corporate social responsibility Question of reputation Need to comply with regulations –Specific – e.g. Chemicals, end-of-life vehicles –General – environmental liability, etc Need to secure flexible regulations Impact on competitiveness – see below

Early attitudes to the environment 1950s - little environmental awareness Early 70s changing but ‘Limits to Growth’ –i.e. - growth and environmental protection incompatible Environmental policy seen as cost burden to business

Emergence of ecological modernisation Early 1980s: ideas from Netherlands and Germany Environmental policy not a cost burden but → commercial gains –Reconciles environment and growth encourages innovation (Porter hypothesis) & boosts competitiveness –shift to policies that use market mechanism –growth of eco-industries/ 2mn jobs in EU –‘first mover’ advantages

E.M. ideas permeate EU policy ‘ Environmental action can generate benefits in the form of economic growth, employment and competitiveness’ European Commission, Global assessment: Europe’s environment, 1999 ‘ High environmental standards are an engine for innovation and business opportunity’ 6th Environmental Action Programme, Exec. Summary

Why EU environmental role? Pollution knows no boundaries Trade reasons - –different regulations as protectionism? –Environmental dumping and ‘race to the bottom’

Environment – a ‘core’ EU objective directives/regulations Understanding of national policy needs reference to EU Policy tension - leaders and laggards –leaders pull others along –laggards - environmental policy unlikely or much less developed without EU rules –new member states

Evolution of EU policy No direct environmental reference in Rome Treaty 1972 Paris Summit decision to establish EC environmental policy → First Environmental Action Programme –Subsequent action programmes build on each other – now on 6 th ( )

1987 Single European Act 1 st explicit environmental legal base Establishes key principles: –preventive –damage rectified at source –polluter pays –policy integration Member states allowed to take stronger measures provided compatible with Treaty

Maastricht Treaty –High level of protection –Precautionary principle Amsterdam Treaty –Sustainable development - a core EU objective –Extension of co-decision procedure → greater role for European Parliament but –NO extension of qualified majority voting No significant change – Nice or constitution

Environmental policy problems Early EU policy inflexible –command and control Impact of national measures Inadequate information Implementation, interpretation, enforcement - legal, technical complexity, lack of inspectors

Number of open infringements, – over one third of cases before ECJ

Current themes and approaches Legislation - to be implemented - use of ECJ, monitoring, ‘name and shame’ Integration – environment at the heart of policy making - a continuing theme –Some successes (shift from producer to income subsidies in CAP) but little change in some trends that damage environment – e.g. transport and energy growth

Working with the market -e.g. –continuing market based instruments –green purchasing by public sector –Work with financial sector to develop criteria for ‘green’ lending and investment –Business incentives for ‘green’ behaviour –Help with environmental management Help consumers re environmentally sustainable choices Better land use

The 6th EAP ( ): Priority Areas Climate change - meet 8% Kyoto emissions reduction target for (and more) –Energy savings/efficiency, renewables, technology, etc –Policy integration –Cross-sectoral approaches – emissions trading –R&D –information nature/biodiversity environment and health sustainable use of natural resources - waste reduction, recyclability, waste prevention - Integrated Product Policy

Policy examples: voluntary Own initiative – e.g. ‘Responsible Care’ chemical industry Co-operation and shared responsibility – e.g. AutoOil Eco-labelling – national and EU (‘The Flower’) schemes Environmental management schemes – EMAS – review, audit, statement and verification

Policy examples: compulsory Command-and-control to market-based –i.. Use market forces/price mechanism to change behaviour – Environmental liability (Polluter pays principle) – from 2007 –operators responsible for damage pay for it rather than society –Incentive for precaution and prevention

Taxation – more common in member states Emissions trading (from January 2005) –To help meet Kyoto Protocol –Applies to power stations, oil refineries, coke ovens, iron and steel, pulp and paper, building materials, ceramics (aluminium and chemicals excluded) –Effective scheme ensures cheapest emission reductions made first

Continuing enlargement and international challenges Environmental compliance – €50-80 bn for 2004 ‘10’ –need to spend 2-3% of GDP incoming years International dimension - push forward –International response to international problems –Pollution havens/race to the bottom