Policy instruments for environmental protection

René Kemp

Presentation 9Environment and Sustainable Development course

UNU-MERIT PhD programme

Environmental policy instruments

Varieties of policy instruments

US SO2 “Acid Rain” Trading Began in 1995Significant emissions reduction with > 30% savings vs non-flexible methodsUS NOx Trading ProgramsCalifornia “RECLAIM” SO2 & NOx, began 1994Northeastern states, began 1999Texas began 2002Expansion of NE states program (NOx SIP Call) to Midwest & SE, 2004 UK ETSBegan in 2002Chicago Climate ExchangeVoluntary GHG trading system; began late 2003EU ETSBegan January, 2005

Emission trading in operation

Carbon trading in the EU

Acclaimed advantages of economic instruments

Static efficiencyInformational economyGovernment revenue possibilitiesIncentives for environment-saving technical changeSelf-reinforcing

Common problems with economic instruments

Poor monitoringMany companies not invoicedOf the invoiced, many do not pay (especially state companies)Fees set at a low level for political reasonsFees been given back to polluters in the form of subsidies to pollution controlOften better to pay the fee that do something

“. . . Environmental policy implementation is often difficult given the lack of appropriate control, monitoring and start-up

mechanisms. In some cases the legal framework for environmental management is diluted in numerous legal texts

and throughout diverse institutions, and environmental matters are often delegated to several public institutions at different

political levels. The creation of new policies and institutions does not always include a revision of previous legislation”

(UNEP, 2000, referring to Latin America)

A 3-stage model for environmental policy

One possible path would begin with a technology requirement - - all sources in a certain industry would be required to install a particular technology. This is easy to monitor and can be done when technology costs are not prohibitively high.As discharge monitoring capability and general civil service morale increased, the technology requirement could be translated into a technology-based discharge standard, as in the U.S. water pollution control system permits.Finally, the permits could be made marketable when the information and record-keeping infrastructure was judged ready to support the move. For water pollution, effluent charges can be used.

Source: Russel and Vaughan, forthcoming

Clean development mechanism

Its stated objectives:Give industrialised nations flexibility to meet emission reduction obligations (by investing in projects in the South and taking climate credits in their balance sheet) and

Promote sustainable development in developing countries.

Emanated from Brazil proposal (pressure from India for equitable climate treaty)

CDM projects over the world

ConclusionsThere is no universally right choice of instrumentInstruments need laws, procedures, agencies (staffed and funded), technology for monitoring, and very important an ethos of responsibility and complianceIncentive systems are often perverse