Policy instruments for environmental protection

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Policy instruments for environmental protection
Presentation 9 Environment and Sustainable
Development course UNU-MERIT PhD programme

• René Kemp

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Environmental policy instruments
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Varieties of policy instruments
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Emission trading in operation

• US SO2 Acid Rain Trading Began in
  1995Significant emissions reduction with gt 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 2002
• Chicago Climate ExchangeVoluntary GHG trading
  system began late 2003
• EU ETSBegan January, 2005

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Carbon trading in the EU
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Acclaimed advantages of economic instruments

• Static efficiency
• Informational economy
• Government revenue possibilities
• Incentives for environment-saving technical
  change
• Self-reinforcing

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Common problems with economic instruments

• Poor monitoring
• Many companies not invoiced
• Of the invoiced, many do not pay (especially
  state companies)
• Fees set at a low level for political reasons
• Fees been given back to polluters in the form of
  subsidies to pollution control
• Often better to pay the fee that do something

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• . . . 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)

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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
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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)

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CDM projects over the world
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Conclusions

• There is no universally right choice of
  instrument
• Instruments need laws, procedures, agencies
  (staffed and funded), technology for monitoring,
  and very important an ethos of responsibility and
  compliance
• Incentive systems are often perverse