Commission fights back on green laws

Date: 10/04/1997

By Michael Mann

ENVIRONMENTAL policy-makers are increasingly deploying a new weapon in their battle against growing resistance from highly defensive industrial lobbies.

Forced into a new approach by the EU's recent drive for deregulation, the European Commission's Directorate-General for the environment (DGXI) has pledged to back up any new proposals for legislation with a detailed economic analysis.

Officials say the new approach played a major role in easing the passage of the Commission's action plan to combat acid rain last month and will find its clearest definition yet when Environment Commissioner Ritt Bjerregaard publishes her latest air quality initiative this summer.

But they stress that comparing the cost of implementing legislation with the benefits it will bring is far from easy.

“Since the Molitor report on deregulation, there has been a move only to regulate where the financial benefits are greater than the costs. But in the environment, not all benefits can be expressed in money terms and there is a considerable lag time before the positive effects can be measured,” said an official.

He stressed the absolute need for a public regulator to ensure all operators played by the same rules.

“If there is one policy area where more regulation is needed, it is the environment. Unfortunately, as often as not, industry hardly differentiates between good and bad proposals, but simply says 'no'. The private sector also tends to analyse only the costs to a particular sector, which is far too narrow,” he added.

But whereas past policies were based on the imposition of new regulations from above, officials are aware that a more nuanced approach is a prerequisite in the era of deregulation and subsidiarity.

“In hindsight, some of the technical regulations adopted in the past may be more expensive than they needed to be,” said one official.

“With better preparation, and the use of improved economic instruments, it becomes cheaper and more attractive to legislate on the environment. For example, eco-taxes can be used to influence consumer behaviour.”

The new 'cost/benefit' approach is already paying off. Two years' work on economic analyses undoubtedly helped the controversial proposals on acidification and a framework water directive find favour in a sceptical Commission. The revamped landfill directive was only adopted after Bjerregaard agreed to undertake a more detailed economic evaluation of its effects.

But DGXI officials believe the costs of environmental legislation to EU industry are often exaggerated.

“Social legislation costs far more than environmental measures, which we calculate account for less than 2&percent; of annual gross domestic product,” said an official.

The next major project where economic arguments will play a key role is the air quality strategy. Officials claim their investigations have found that in relation to most of the major pollutants addressed in the plan, the economic benefits really are greater than the costs to industry.

DGXI is also acutely aware that a cost-effective approach will be crucial in finding acceptable ways for the EU to reach its target of a 15&percent; reduction in greenhouse gases by 2010.

But not everyone is impressed with the direction in which policy-making is moving. Tony Long, of the World Wide Fund for Nature, commented: “I understand why DGXI is having to justify itself, but if you bring everything down to crude statistics, industry can use it as a smokescreen.”

In contrast, one industrial lobbyist pointed critically to the Commission's recent energy tax proposal, claiming the “economic model used assumptions which do not reflect real life”.