There is virtually no evidence that EU air pollution legislation has significantly damaged the competitiveness of European industry, according to a consultancy study released by the European Commission’s enterprise directorate. The study was ordered following an EU conference on industry’s environmental performance last November, at which competitiveness concerns were a prominent theme.
Focusing just on air pollution legislation, the Commission’s study picks apart the various ways in which it has been claimed EU controls could be damaging industry and demolishes them.
Air pollution standards in the EU and major trading partners the USA and Japan are broadly similar, despite detailed differences. European legislation tends towards “command and control” regulation more than America’s, but in both regions there is a trend towards greater use of economic instruments, which tend to have lower costs to industry.
The costs to industry of all these laws is similar: industrial environmental expenditure as a percentage of gross value-added is 0.1% in Japan and 0.4% in both the EU and USA, the study says. More important than the four-fold difference is the fact that all the costs are so small as to be unlikely to have competitiveness effects.
EU air pollution controls are indeed stricter – and more strictly enforced – than in non-OECD trading partners such as China, the study concedes. However, China does have a substantial body of legislation, in some cases comparable with OECD countries, and there is growing pressure for air quality improvements.
Even allowing for lower air pollution standards in developing countries, there is no real evidence of industry relocation in response. In any case, it is clear that labour costs and access to market are much more important than environmental legislation, the study concludes.
In general, air pollution legislation costs less in practice than is predicted before it is passed. And though there is some evidence of increased costs, these are usually small in relation to wider price effects or other factors. One example given is that whereas it was predicted that EU vehicle emission controls introduced since 1993 would boost new car prices by up to 20%, in practice prices fell by 7% in real terms.
While attempting to set the historical record straight, the study suggests that the same arguments will have to be fought again over future air pollution changes. Specifically, it notes that the EU is continuing to tighten its legislation, whereas there are no such plans in Japan, and draft US policy would actually weaken controls in some respects.
Important EU laws affecting industrial emissions are not yet fully implemented, namely the integrated pollution prevention and control (IPPC) directive, the national emission ceilings directive, daughter laws to the air quality framework directive, the amended large combustion plant directive and, most recently, the EU’s greenhouse gas emission trading scheme.
Next year, the European Commission is due to propose a new EU strategy on air pollution growing out of
the Clean air for Europe programme. Taken together, these initiatives “are likely to have very large effects on future air pollution policy and EU industrial performance,”the study notes.
Follow-up: European Commission DG enterprise europa.eu.int/comm/enterprise/ – tel: +32 2 299 1111, and the study europa.eu.int/comm/enterprise/environment/reports_studies/reports/study1.pdf.
Environment Daily By Kerstin MEYER – EU Policy Unit Air, Noise and Urban Environment EEB – European Environmental Bureau Bvd de Waterloo, 34 – 1000 Brussels – Belgium Tel. +32 (0)2 289 13 07 Fax. +32 (0)2 289 10 99 email@example.com – www.eeb.org.