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EU-policies Regulatory Regimes and Policy Instruments for Environment and Energy Lecturers: Anders N. Andersen Søren Løkke Trine Pipi Kræmer Dorte Kardel.

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Presentation on theme: "EU-policies Regulatory Regimes and Policy Instruments for Environment and Energy Lecturers: Anders N. Andersen Søren Løkke Trine Pipi Kræmer Dorte Kardel."— Presentation transcript:

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 2.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 Public environmental regulation Market regulation Self-regulation

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

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 Public environmental regulation Market regulation Self-regulation

18 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

19 ’Pure’ forms of environmental regulation Public environmental regulation Market regulation Self-regulation Policy instrument A Policy instrument C Policy instrument B

20 Mixes of environmental regulation Public environmental regulation Market regulation Self-regulation Policy instrument ABC Policy instrument A 1 Policy instrument B 1 Policy instrument C 1

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 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 EU’s 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: )

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 Public environmental regulation Market regulation Self-regulation Voluntary agreement

36 Policy instruments: differences between countries 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’ Example: voluntary agreements (VA)

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 Public environmental regulation Market regulation Self-regulation Extended producer responsibility

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) Intermediary Inspector Expert instructor AdvisorProcess guide Attention to the relationship with the company Attention to the environmental effectiveness A little A lot

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 1Dependent 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 2Costs and benefits of the options –the ‘best’ instrument will have the highest environmental benefits for the lowest cost of implementation and compliance For example CO 2 allowances

51 CO 2 allowances Draft bill on CO 2 allowances* (February 2004): The objective of the law is to bring about a cost-effective reduction of the greenhouse- gas CO 2 by means of a system of negotiable allowances * legal authorisation to emit a ton of CO 2 in a given period

52 Choice of policy instruments 2Costs and benefits of the options –the ‘best’ instrument will have the highest environmental benefits for the lowest cost of implementation and compliance (CO 2 allowances) 3All policy instruments have strengths and weaknesses 4Policy 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 Public environmental regulations Self-regulation Market regulations Self-regulation Public environmental regulations Public environmental regulations Market regulations Market regulations 1970s1980s1990s Developments in environmental regulations (1970 – 2000) in industrialised countries

55 Example: Kyoto protocol An international environmental agreement, accepted by a large number of countries who have committed themselves to reduce their CO 2 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: Denmark’s commitment Reduction of CO 2 emissions with 21% by 2012 (1990 basis year) Reduction of SO 2 (sulphur dioxide) emissions with 30% by 2010 (1998 basis year) Reduction of NO x (nitric oxides) with 45% by 2010 (basis year 1998)

61 Energy consumption in Denmark ( )

62 Energy consumption by sector (DK) Two examples: Households Transport sector

63 Energy consumption households Source:

64 Electric devices in households (Source: ENS, 2001:17)

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:

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 ( ) 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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