Summary of Policy Conclusions and Implications for the EU SDS

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Summary of Policy Conclusions and Implications
for the EU SDS
Simon Dresner, Policy Studies Institute 30
September 2009, Luxembourg
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Overview
Review of sustainability policy assessment
literature The most synergistic sets of
integrated policy instruments Implications for
the EU Sustainable Development Strategy
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Searching for synergies
Looking for integrated sets of policy
instruments that - best take advantages of
synergies - best mitigate trade-offs To
identify those policies that have the best chance
of achieving positive environmental, economic and
social outcomes
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Environmental policy instruments
Regulation Economic instruments - Tradable
permits - Environmental taxes -
Subsidies Voluntary agreements Information-based
instruments
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Regulation
Essential if impacts very dependent on location
or optimal output is zero Environmental
certainty, cost uncertain Not necessarily most
economically efficient No incentive to go beyond
the standard Rebound effect
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The problem with efficiency
GINFORS modelling The obvious way to find
synergies is through double wins Many
policies focus on both environmental and economic
gains through resource efficiency The problem is
the rebound effect Need to limit total resource
consumption Need for higher prices
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The importance of prices
Analysis of real-world data in found prices were
dominant influence on usage, not regulation -
Can be taxes, tradable permits, subsidies or
market prices Combination of prices and
regulation can also be effective
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Tradable permits
Must be cap and trade, not baseline and
credit Auctioned better than grandfathered Aucti
oned similar to environmental tax Environmental
certainty, cost uncertain Price uncertainty can
deter investments
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Environmental tax reform
Classically revenue-neutral Green taxes offset
by reductions in other taxes, usually
labour Double dividend boosts employment Cost
of taxes certain, environmental outcome
uncertain Price certainty encourages investment
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Modelling results
Reduction in emissions and resource
consumption Small effect on employment Costs of
achieving targets much less than costs of climate
change Reduction target achieved through ETR
with a lower carbon price and less GDP loss if
some revenue spent on low-carbon technology ETR
more effective in combination with regulation and
targets achieved at lower cost
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Combating leakage and externalisation
Externalisation of Europes environmental
impact EU policies alone have little global
impact Agreement covering all major countries
vital Stopgap solution is border tax adjustment
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Issues with ETR
Harmonisation of taxes between countries Distribu
tional impacts
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Other instruments
Voluntary agreements best seen as complementary
to regulation - Can encourage exceeding
regulatory standard - Or preparation/threat for
future regulations Eco-labels not very effective
on their own - Can be more effective in
combination with regulation or taxes
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Need to phase out harmful subsidies
Agriculture - reform needs to go
further Fisheries Roads Car industry in some
member states Coal production in some member
states
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Green New Deal
UNEP advocates a Green New Deal A combination of
policy measures described above and economic
stimulus directed towards environmental
industries South Koreas green stimulus Example
of existing German support for environmental
industries
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Support for environmental industries
Pushes forward innovation Promotes
competitiveness Increases self-sufficiency and
security Creates jobs and economic
welfare Reduces environmental footprint
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Beyond GDP
Economic growth based on increasing resource use
is unsustainable Less focus on
GDP Environmental and social indicators Recent
Commission communication
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Lessons for the EU SDS
SDS emphasises efficiency improvements Needs
more emphasis on limiting total resource
use Environmental tax reform in combination with
regulation and more support for environmental
industries Phase out harmful subsidies Green
New Deal New ways of measuring welfare
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