EU-policies Regulatory Regimes
and Policy Instruments for
Environment and Energy
Lecturers:
Anders N. Andersen
Søren Løkke
Trine Pipi Kræmer
Dorte Kardel
Carla K. Smink
Aim of the course
2. A theoretical
1. To provide an
discussion of
understanding of the
different approaches
most common forms
to policy design. + A
of the international
lot of examples on
conventions and
specific use of
organisations dealing
different policy
with energy and
instruments within
environmental issues,
the field of energy
with focus on the EU
and the environment
Timetable, parallel sequence
Mondays:
• Course 6 –10, as
written in the study
programme
Wednesdays
• Course 1-5, as
written in the study
programme
2 guest lectures:
• Niels Meyer
• Christina Grann (April 1, on Integrated Product Policies (IPP) in
EU with focus on the electronic sector and the EuP directive)
Policy regimes and the use of
different instruments – on
regulatory styles and policy
regimes
Carla K. Smink
Environmental Management, 8th semester
Spring 2005
Outline
• How to regulate society?
– Public environmental regulations (March 14)
– Market regulation (April 4)
– Self-regulation (April 11)
• What is environmental regulation?
• Policy instruments
What is environmental regulation?
‘Environmental regulation aims to promote
environmental friendly behaviour by
making the environmentally friendly option
seem more rewarding to the individual, in
spite of his or her own short-sighted
interests, and/or by facilitating the
performance of environmental friendly
behaviour’ (Thøgersen, 1999: 1)
What is environmental regulation?
‘Environmental regulation aims to
promote environmental friendly
behaviour by making the environmentally friendly
option seem more rewarding to the individual, in spite of
his or her own short-sighted interests, and/or by facilitating
the performance of environmental friendly behaviour’
(Thøgersen, 1999: 1)
Promotion of environmental
friendly behaviour
Changes in technologies, aspirations and lifestyles is needed
For example, coal, oil and gas will need to be
progressively replaced by renewable energy
sources, in order to achieve the policy objectives
as agreed upon in for example the Kyoto
protocol
What is regulation?
‘Environmental regulation aims to promote
environmental friendly behaviour by making the
environmentally friendly option seem
more rewarding to the individual, in spite of his
or her own short-sighted interests, and/or by
facilitating the performance of environmental friendly
behaviour’ (Thøgersen, 1999: 1)
Making the environmental option
seem more rewarding
• Carrot (economic incentives)
• Sermon (information)
• Stick (legal instruments)
What is environmental regulation?
‘Environmental regulation aims to promote
environmental friendly behaviour by making the
environmentally friendly option seem more rewarding
to the individual, in spite of his or her own shortsighted interests, and/or by facilitating the
performance of environmental friendly
behaviour’ (Thøgersen, 1999: 1)
Facilitating the performance of
environmental friendly behaviour
An environment-friendly product is environmentally
well throughout its life cycle:
– the raw materials used
– the manufacture of the product
– the product consumes little energy
– the product can be disposed of without significant
environmental problems
Facilitating the performance of
environmental friendly behaviour
• The raw materials used: how can we regulate this?
• The manufacture of the product: how can we
regulate this?
• The product consumes little energy (consumerphase): how can we regulate this?
• Product can be disposed of without significant
environmental problems: how can we regulate this?
’Pure’ forms of environmental
regulation
Self-regulation
Public environmental
regulation
Market regulation
’Pure’ forms of environmental
regulation
Self-regulation
11 April
14 March
Public environmental
regulation
4 April
Market regulation
’Pure’ forms of environmental
regulation
• Strengths
– Give an overview of
the theoretical
strengths and
weaknesses
• Weaknesses
– Do not exist in reality
– Do not pay attention to time
perspective
– Limited attention to
interactions between actors
in society
Mixes of environmental
regulation
Self-regulation
Public environmental
regulation
Market regulation
Mixes of environmental
regulation
• Strengths
– Focus on role of
different actors in
society
– ’Negotiating
government’
– Focus on industry’s
environmental
performance
• Weaknesses
– Imprecise
– Linguistic problem
’Pure’ forms of environmental
regulation
Self-regulation
Policy instrument C
Policy instrument A
Public environmental
regulation
Policy instrument B
Market regulation
Mixes of environmental
regulation
Self-regulation
Policy instrument ABC
Policy instrument B1
Public environmental
regulation
Market regulation
What is environmental regulation?
• Environmental regulation aims to promote
environmental friendly behaviour
• Making the environmentally friendly option seem
more rewarding
• Facilitating the performance of environmental friendly
behaviour
• Forms of environmental regulation: public
environmental regulations, self-regulation and market
regulation
What is environmental regulation?
Environmental regulation aims to:
• promote environmental friendly behaviour
• make the environmentally friendly option seem
more rewarding
• facilitate the performance of environmental
friendly behaviour
What is environmental regulation?
Forms of environmental regulation:
• public environmental regulations
• self-regulation
• market regulation
How to implement environmental
regulation?
How to implement environmental
regulation?
POLICY INSTRUMENTS
Definition of policy instruments
‘A policy instrument is a tool by which
government tries to achieve its policy
objectives’ (Neil Carter, 2001: 285)
‘The myriad techniques at the disposal of
governments to implement their policy
objectives’ (Jordan et al., 2000: 4)
Objectives of EU’s
environmental policy
‘to preserve, protect and improve the quality
of the environment, protect human health
and utilise natural resources prudently and
rationally’
Policy instruments
• Different types of policy instruments
• Different styles of enforcement
• Educative
Choice of policy instruments
• Policy instruments are often not purely
‘regulatory’, purely ‘economic’ or purely
‘voluntary’
• Often a single instrument does not operate
in isolation; combination of different types
of instruments work alongside each other to
achieve a desired environmental objective
Choice of policy instruments
• Some combinations of policy instruments
have an effect in the long run, others in the
short run
• The composition of the package may need
to change over time
Policy instruments
• Different types of policy instruments
• Different styles of enforcement
– differences between countries
– differences between governments
• Educative
Policy instruments: differences
between countries
‘The same type of policy instrument may be
implemented differently as no two governments
use the same policy tool in exactly the same
manner’ (Hood, 1986: 106)
Policy instruments
• Differences between countries
‘Americans rely heavily on formal rules, often enforced
in the face of strong opposition from the institutions
affected by them’
‘The British rely on flexible standards and voluntary
compliance. They are reluctant to adopt regulations with
which they cannot guarantee compliance. Regulations are
formulated in such a way that officials can negotiate
arrangements with firms that will not be disallowed by
their superiors or the courts’
(Carter, 2001: 290-291)
Policy instruments: differences
between countries
• Example: voluntary agreements
EU: ‘agreements between industry and
public authorities on the achievement of
environmental objectives’
Voluntary agreement
Self-regulation
Public environmental
regulation
Market regulation
Policy instruments: differences
between countries
Example: voluntary agreements (VA)
• The Netherlands:
VA are almost always
legally binding
agreements (‘covenants’)
• Germany:
VA are often negotiated
‘in the shadow of the
law’. I.e. legislation will
be drawn up otherwise
and with the intent of
pre-emting ‘the stick’
Regulatory styles differ between
countries
• The manner in which regulations are
formulated and decided upon differs
– impositional/adversarial way
– to involve the subjects concerned; a consensual
style
• Influence behaviour through command and
control regulations or self-regulation or
market regulation
Regulatory styles differ between
countries
• Global framework legislation versus
detailed standards and procedures
• Differences in the preference for specific
sanctions and incentives, such as the carrot,
the stick and the sermon
• Differences in the way countries administer
and enforce regulations
Regulatory styles differ between
countries: problems in the EU
• Harmonisation of regulation is not easy,
differences in:
– population, political, legal and administrative
cultures
– regulatory styles
• Harmonisation has been motivated by the
need to prevent a regulatory ‘race-to-the
bottom’ by Member States
Regulatory styles differ between
countries: problems in the EU
• Harmonisation of the ‘law in the books’
versus harmonisation of the ‘law in action’
• Implementation and enforcement styles may
have to become more similar:
– harmonisation of implementation and
enforcement rules and procedures: how?
– harmonisation of the institutions involved:
how?
Regulatory styles differ in EU:
harmonisation is needed
• Some policy objectives cannot be achieved
effectively by Member States acting individually
– ex. Directive 2002/96/EC on waste electrical
and electronic equipment (WEEE)
• national applications of the producer responsibility
principle may lead to substantial disparities in the
financial burden on economic operators
• different national policies hampers the effectiveness
of recycling policies
Mixes of environmental
regulation
Self-regulation
Extended producer
responsibility
Public environmental
regulation
Market regulation
Extended producer responsibility
• Mix of public environmental regulations,
self-regulation and market regulation
• Public environmental regulations:
–
–
–
–
–
mandatory take-back
minimum recycled content standards
requirements on the use of secondary materials
energy efficiency standards
disposal bans
Extended Producer Responsibility
(EPR)
• Economic instruments:
–
–
–
–
disposal fees
virgin material taxes
deposit-refund system
waste removal premium
• Self-regulation/Market regulation:
– information (different forms of labelling,
product environmental declaration)
Policy instruments
• Different types of policy instruments
• Different styles of enforcement
– differences between countries
– differences between governments
• Educative
Policy instruments
• Differences between governments (within one
country)
A lot
Attention to the
relationship with
the company
A little
Process guide
Advisor
Intermediary
Inspector
Expert
instructor
A little
A lot
Attention to the environmental effectiveness
Policy instruments
• Different types of policy instruments
• Different styles of enforcement
– differences between countries
– differences between governments
• Educative:
– Change the behaviour of target groups
– Achieve the stated policy objectives
– Help to spread environmental values
throughout society
Choice of policy instruments
• What factors are likely to influence the
choice between different types of policy
instruments?
• How is that choice likely to be affected by
its institutional and political characteristics?
Choice of policy instruments
1 Dependent on the nature of the problem
which is addressed
– mandatory EMS is useful where a general
improvement in environmental performance is
desired. For example Danish car-dismantling trade
– banning the use of a particular substance is
useful where it can be demonstrated that an
immediate cessation in use is essential for
environmental protection and alternatives are
available at reasonable costs
Choice of policy instruments
2 Costs and benefits of the options
– the ‘best’ instrument will have the highest
environmental benefits for the lowest cost of
implementation and compliance
For example CO2 allowances
CO2 allowances
• Draft bill on CO2 allowances* (February
2004):
The objective of the law is to bring about a
cost-effective reduction of the greenhousegas CO2 by means of a system of negotiable
allowances
* legal authorisation to emit a ton of CO2 in a given
period
Choice of policy instruments
2 Costs and benefits of the options
– the ‘best’ instrument will have the highest
environmental benefits for the lowest cost of
implementation and compliance (CO2 allowances)
3 All policy instruments have strengths and
weaknesses
4 Policy instruments have their intended ‘main’
effect and have positive and negative side
effects
Selection of policy instruments
• Economic criteria
e.g. economic efficiency, cost-effectiveness
• Environmental criteria
e.g. dose-response relationships, irreversibilities
• Technological criteria
e.g. feasibility, incentives for innovation
• Political criteria
e.g. equity, precaution, acceptability
Developments in environmental regulations
(1970 – 2000) in industrialised countries
Self-regulation
Public
environmental
regulations
Market
regulations
1970s
Self-regulation
Public
Market
environmental regulations
regulations
1980s
Self-regulation
Public
environmental
regulations
Market
regulations
1990s
Example: Kyoto protocol
An international environmental agreement,
accepted by a large number of countries
who have committed themselves to reduce
their CO2 emissions for the sake of the
global climate
Which policy instruments can be used to
implement the Kyoto protocol?
• Problems because sustainable reduction in global
greenhouse gas emissions requires internationally
co-ordinated policy action
Example: Denmark
• Energy consumption in Denmark
– Consumption of energy after source
– Consumption of energy after fuel
Problems
• Different interests of sovereign states
• Are reductions equitable in the burden that it
imposes on individual countries?
• Risk of ‘free-riding’
• Costs involved
• Efficiency
• Enforcement
Policy instruments: Kyoto
mechanisms
To reach their emission targets under the
Kyoto Protocol, industrialised countries can
use domestic policy instruments. They can
also use four ‘Kyoto Mechanisms’ to cooperate with other countries
Which policy instruments can ‘solve’
these problems?
• Domestic policy instruments?
• (Flexible mechanisms?)
–
–
–
–
Bubbles
Joint Implementation (JI)
Clean Development Mechanism (CDM)
International Emission Trading (IEM)
Kyoto protocol: Denmark’s
commitment
• Reduction of CO2 emissions with 21% by
2012 (1990 basis year)
• Reduction of SO2 (sulphur dioxide)
emissions with 30% by 2010 (1998 basis
year)
• Reduction of NOx (nitric oxides) with 45%
by 2010 (basis year 1998)
Energy consumption in Denmark
(1988-2001)
900
Total energy
consumption
Oil
700
Natural gas
500
Coal
300
Renewable energy
100
Import of electricity
-100 1988 1990 1996 1997 1998 1999 2000 2001
Energy consumption by sector
(DK)
Two examples:
• Households
• Transport sector
Energy consumption households
Source: http://www.energioplysningen.dk/English/EnCo.htm
Electric devices in households
(Source: ENS, 2001:17)
Energy consumption in households
• Which policy instruments can be used to
influence the environmental behaviour of
households?
Energy consumption in households
• Which policy instruments can be used to
influence the environmental behaviour of
households?
 Policy instruments that provide information
Energy consumption in households
• Which policy instruments can be used to
influence the environmental behaviour of
households?
–
–
–
–
Activities concerning use of electric devices
Energy labelling
Stand by campaign
Lightning
Energy consumption in the
transport sector (DK)
Source: http://www.energioplysningen.dk/English/EnCo.htm
Energy consumption in the
transport sector (EU)
Source: EEA, 2002
Energy consumption in the
transport sector
• Biggest energy-consuming sector (appr. 30%
of final energy consumption)
• Energy consumption in transport, close link
between:
– Transport volumes
– Economic development
Energy consumption in the
transport sector
• High growth in GDP  high growth in
energy consumption (ex. Malta, Cyprus,
Poland, Slovenia and Turkey)
• Decline in energy consumption  decline
in economic growth (ex. Lithuania, Estonia,
Bulgaria and Romania)
Changes in total energy
consumption (1990-2000)
Source: IEA, 2003
Policy relevance
• EU/Denmark committed themselves to the
greenhouse gas targets agreed upon in the
Kyoto protocol
• Transport biggest energy-consuming sector,
but no specific targets have been set to
address energy consumption
Policy relevance
• EU intends coming forward with proposals to
set a compulsory minimum rate of new and
renewable energy
– ex. biofuel consumption should increase to 6% in
the year 2010
• Reducing energy use per transport movement
– improvement energy efficiency, less energy
consuming modes of transportation such as rail,
public transport and shipping)
Policy relevance
• Increasing the share of alternative sources of
energy
– ex. biofuels, wind and solar energy
Policy relevance
 But: by means of which policy
instruments?
– the stick, the carrot or the sermon?
– National initiatives?
– International initiatives?
Policy relevance
 But: by means of which policy instruments?
– the stick, the carrot or the sermon?
• Lecture 2 (March 14): Public environmental regulations
and its appearances
• Lecture 3 (April 4): Market regulation and its
appearances
• Lecture 4 (April 11): Self-regulation and its appearances