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EU-policies Regulatory Regimes and Policy Instruments for Environment and Energy

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Title: EU-policies Regulatory Regimes and Policy Instruments for Environment and Energy


1
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

2
Aim of the course
  1. To provide an understanding of the most common
    forms of the international conventions and
    organisations dealing with energy and
    environmental issues, with focus on the EU
  1. A theoretical discussion of different approaches
    to policy design. A lot of examples on specific
    use of different policy instruments within the
    field of energy and the environment

3
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)

4
Policy regimes and the use of different
instruments on regulatory styles and policy
regimes
  • Carla K. Smink
  • Environmental Management, 8th semester Spring 2005

5
Outline
  • How to regulate society?
  • Public environmental regulations (March 14)
  • Market regulation (April 4)
  • Self-regulation (April 11)
  • What is environmental regulation?
  • Policy instruments

6
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)

7
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)

8
Promotion of environmental friendly behaviour
  • Changes in technologies, aspirations and
    life-styles 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

9
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)

10
Making the environmental option seem more
rewarding
  • Carrot (economic incentives)
  • Sermon (information)
  • Stick (legal instruments)

11
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)

12
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

13
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
    (consumer-phase) how can we regulate this?
  • Product can be disposed of without significant
    environmental problems how can we regulate this?

14
Pure forms of environmental regulation
Self-regulation
Public environmental regulation
Market regulation
15
Pure forms of environmental regulation
Self-regulation
11 April
14 March
4 April
Public environmental regulation
Market regulation
16
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

17
Mixes of environmental regulation
Self-regulation
Public environmental regulation
Market regulation
18
Mixes of environmental regulation
  • Strengths
  • Focus on role of different actors in society
  • Negotiating government
  • Focus on industrys environmental performance
  • Weaknesses
  • Imprecise
  • Linguistic problem

19
Pure forms of environmental regulation
Self-regulation
Policy instrument C
Policy instrument A
Policy instrument B
Public environmental regulation
Market regulation
20
Mixes of environmental regulation
Self-regulation
Policy instrument A1
Policy instrument C1
Policy instrument ABC
Policy instrument B1
Public environmental regulation
Market regulation
21
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

22
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

23
What is environmental regulation?
  • Forms of environmental regulation
  • public environmental regulations
  • self-regulation
  • market regulation

24
How to implement environmental regulation?
25
How to implement environmental regulation?
  • POLICY INSTRUMENTS

26
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)

27
Objectives of EUs environmental policy
  • to preserve, protect and improve the quality of
    the environment, protect human health and utilise
    natural resources prudently and rationally

28
Policy instruments
  • Different types of policy instruments
  • Different styles of enforcement
  • Educative

29
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

30
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

31
Policy instruments
  • Different types of policy instruments
  • Different styles of enforcement
  • differences between countries
  • differences between governments
  • Educative

32
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)

33
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)

34
Policy instruments differences between countries
  • Example voluntary agreements
  • EU agreements between industry and public
    authorities on the achievement of environmental
    objectives

35
Voluntary agreement
Self-regulation
Voluntary agreement
Public environmental regulation
Market regulation
36
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

37
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

38
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

39
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

40
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?

41
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

42
Mixes of environmental regulation
Self-regulation
Extended producer responsibility
Public environmental regulation
Market regulation
43
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

44
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)

45
Policy instruments
  • Different types of policy instruments
  • Different styles of enforcement
  • differences between countries
  • differences between governments
  • Educative

46
Policy instruments
  • Differences between governments (within one
    country)

Advisor
Process guide
A lot
Attention to the relationship with the company
Intermediary
Expert instructor
Inspector
A little
A little
A lot
Attention to the environmental effectiveness
47
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

48
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?

49
Choice of policy instruments
  • 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

50
Choice of policy instruments
  • 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

51
CO2 allowances
  • Draft bill on CO2 allowances (February 2004)
  • The objective of the law is to bring about a
    cost-effective reduction of the greenhouse-gas
    CO2 by means of a system of negotiable allowances
  • legal authorisation to emit a ton of CO2 in a
    given period

52
Choice of policy instruments
  • 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)
  • All policy instruments have strengths and
    weaknesses
  • Policy instruments have their intended main
    effect and have positive and negative side
    effects

53
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

54
Developments in environmental regulations (1970
2000) in industrialised countries
Self-regulation
Self-regulation
Self-regulation
Public environmental regulations
Market regulations
Public environmental regulations
Public environmental regulations
Market regulations
Market regulations
1970s
1980s
1990s
55
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

56
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

57
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

58
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 co-operate with other
    countries

59
Which policy instruments can solve these
problems?
  • Domestic policy instruments?
  • (Flexible mechanisms?)
  • Bubbles
  • Joint Implementation (JI)
  • Clean Development Mechanism (CDM)
  • International Emission Trading (IEM)

60
Kyoto protocol Denmarks 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)

61
Energy consumption in Denmark (1988-2001)
62
Energy consumption by sector (DK)
  • Two examples
  • Households
  • Transport sector

63
Energy consumption households
Source http//www.energioplysningen.dk/English/En
Co.htm
64
Electric devices in households
(Source ENS, 200117)
65
Energy consumption in households
  • Which policy instruments can be used to influence
    the environmental behaviour of households?

66
Energy consumption in households
  • Which policy instruments can be used to influence
    the environmental behaviour of households?
  • ? Policy instruments that provide information

67
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

68
Energy consumption in the transport sector (DK)
Source http//www.energioplysningen.dk/English/En
Co.htm
69
Energy consumption in the transport sector (EU)
Source EEA, 2002
70
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

71
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)

72
Changes in total energy consumption (1990-2000)
Source IEA, 2003
73
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

74
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)

75
Policy relevance
  • Increasing the share of alternative sources of
    energy
  • ex. biofuels, wind and solar energy

76
Policy relevance
  • ? But by means of which policy instruments?
  • the stick, the carrot or the sermon?
  • National initiatives?
  • International initiatives?

77
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
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