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Voluntary Approaches in Climate Policy. Magali Delmas & Janice Mazurek. OUTLINE. The possible role of voluntary approaches (VAs) in climate policy Definitions Why do firms and the regulator participate? Effectiveness and efficiency of VAs Applications, case studies

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Voluntary approaches in climate policy

Voluntary Approaches in Climate Policy

Magali Delmas & Janice Mazurek


Outline
OUTLINE

  • The possible role of voluntary approaches (VAs) in climate policy

  • Definitions

  • Why do firms and the regulator participate?

  • Effectiveness and efficiency of VAs

  • Applications, case studies

  • Conclusions on the actual role of VAs


1 the possible role of vas
1. The possible role of VAs

  • VAs are not new (John Muir’s Sierra Club 1892)

  • We all make voluntary efforts to reduce our environmental impacts, with little effect

  • Better results if firms participate in efforts

  • Better results if authorities promote and encourage voluntary efforts

  • VAs are the fastest growing type of environmental instrument in recent years (OECD 2003)

  • In some cases, they are the only instrument for climate protection (USA)


2 1 definition
2.1 Definition

  • VA = any effort to reduce environmental impacts that go beyond what is imposed by regulation or what is cost-minimizing in the face of economic instruments

  • Types:

    • Self regulation

    • Negotiated agreements (NAs)

    • Public voluntary programs (PVPs)



2 3 further distinctions
2.3 Further distinctions

  • Do firms undertake voluntary abatement alone or jointly?

  • What type of compensation or incentive is offered by the regulator?

  • Is abatement costly in the net or not (‘no regret actions’)?

  • What are the motives for participation?


2 4 distinctive features of vas
2.4 Distinctive features of VAs

  • Co-operation with the regulator

  • There must be an interest, material or ideal,for polluters to make an effort

  • VAs are flexible

  • Co-ordination among polluters


3 1 why do firms participate
3.1 Why do firms participate ?

  • Direct financial gain, win-win, no regrets action (chaps 3 & 10)

  • Subsidies or tax rebates (chaps 3, 6, 13, 14 & 15)

  • Exemption from regulation, regulatory relief (chap. 11)

  • To prevent restrictive regulation or tax (chaps. 3-8 &14)

  • Collective learning (chaps 5, 10 &12)

  • To improve environmental reputation (chaps 4, 5 & 10)

  • Strategic move (chaps 4 & 5)

  • Stewardship (chap. 2)


3 2 why does the regulator participate
3.2 Why does the regulator participate ?

  • VAs are less efficient than other instruments, but those other instruments are not available: Lyon & Maxwell (chap. 6)

  • Regulator is not sure Parliament would accept constraining regulation: Langpap & Wu (chap. 7)

  • Parliament or citizens may prefer VAs, which they consider more participative and less costly: Grepperud & Pedersen (chap. 8)


4 1 effectiveness and efficiency of vas
4.1 Effectiveness and efficiency of VAs

  • Effectiveness = impact on emissions. Survey of literature and experiences by Khanna & Ramirez (chap. 2). Difficulty: what is the baseline?

  • Efficiency = (1) total cost minimizing amount of abatement, (2) least cost abatement. Survey by Segerson & Roti Jones (chap. 3)


4 2 specific problems
4.2 Specific problems

  • Trade-off between effectiveness of VAs and market competition: Brau & Carraro (chap. 4)

  • Same problem with imperfect information and incomplete contracts; e.g. VAs are signals of abatement costs to regulator or of environmental quality to customers: Cavaliere (chap. 5)


5 1 applications case studies
5.1 Applications, case studies

  • Long term agreements in the Netherlands: Glasbergen (chap. 9)

  • Green Lights and Energy Star Office in the USA: Howarth, Haddad & Paton (chap. 10)

  • Programme XL in the USA: Delmas & Mazurek (chap. 11)


5 2 applications case studies
5.2 Applications, case studies

  • Production and product regulation in the EU: Albrecht (chap. 12)

  • Climate Change Levy Agreements in the UK: de Muizon & Glachant (chap. 13)

  • CO2 law in Switzerland: Baranzini, Thalmann & Gonseth (chap. 14)

  • Energy agreements in Denmark: Bjørner (chap. 15)


6 conclusions on the role of vas
6. Conclusions on the role of VAs

  • What is special about climate change ?

  • Do not expect too much of VAs

  • VAs are useful in early stage

  • They should be part of policy mix


6 1 what is special about climate change
6.1 What is special about climate change?

  • The uncertainty about abatement costs and consequences of warming is so great, that constraining measures are hardly acceptable

  • Global and long term effects; no direct victims who could sue polluters

  • Many polluters, many non-point sources


6 2 do not expect too much of vas
6.2 Do not expect too much of VAs

  • Participation is greater when targets are energy or emissions intensities

  • They work fine as long as they are costless (no regret)

  • In general VAs reach their targets, but those targets are not very demanding

  • They are costly to negotiate and implement (NAs with large polluters, PVP with small ones)


6 3 vas are useful in early stage
6.3 VAs are useful in early stage

  • In early stage of environmental policy, VAs are often the only possible choice because they are the most politically acceptable instrument

  • VAs can facilitate the preparation and implementation of more constraining instruments

  • They can create support for those instruments

  • VAs can also delay the implementation of more constraining instruments


6 4 vas should be part of policy mix
6.4 VAs should be part of policy mix

  • Modern environmental policy combines diverse instruments in order to address the conflicting goals of efficiency and equity

  • VAs do not particularly increase the effectiveness or efficiency of policy mixes, but they can increase their acceptance and influence burden sharing

  • VAs are rather transitory measures that prepare the ground for more constraining instruments


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