Environmental Engineering Reference
In-Depth Information
Mol, 2003). TEI offers not only the potential to
reduce emissions and resource consumption but
also the opportunity to improve eco-efficiency
and economic competitiveness (Porter and van der
Linde, 1995a and 1995b; Gouldson and Murphy,
1998; Mol, 1995; Mol and Spaaragaren, 2000).
Industries can achieve long-term economic sus-
tainability through continuous greening of their
production and operational processes. Economists
have argued that economic, institutional and at-
titudinal barriers may hinder the adoption of TEIs
and that relevant environmental policy instruments
are needed to overcome the barriers (Klemmer,
Lehr and Lobbe, 1999; Jaffe, Newell and Stavins,
2005). This paper reviews and discusses the debate
over the effectiveness of environmental regulation
in promoting industrial TEI. With reference to the
innovation-friendly regulatory principles modi-
fied from Porter and van der Linde (1995a and
1995b), this paper argues that properly designed
and implemented environmental regulations have
played a critical role in promoting TEI in the
transport industry in California and Hong Kong.
than standard practice and therefore provide little
incentive for diffusion (Jaffe and Stavins, 1995;
Fiorino, 2006). Environmental regulations that
are based on performance standards are usually
technology-setting, which could hamper radi-
cal innovation because firms do not like taking
risks (Norberg-Bohm, 1999). In some cases, the
incentive to innovate and diffuse environmental
technologies is further constrained by bureaucracy
long embedded in the regulatory system (Fiorino,
2006). Finally, the relationship between regulators
and regulated industries are sometimes highly
adversarial (Fiorino, 2006). High uncertainty and
the lack of trust have left industries with little
incentive to move forward.
Despite these claims about the inefficiency
of environmental regulation in promoting TEIs,
Porter and van der Linde argue that “the problem
with (environmental) regulation is … the way in
which standards are written and the sheer inef-
ficiency with which regulations are administered”
(1995a:46). They contend that environmental
regulations that are properly designed and imple-
mented and aim at innovation can provide strong
pressure and incentives, and result in higher re-
source productivity and efficiency and more com-
petitive advantages. Consequently, industries can
actually be incentivized to innovate continuously.
Nevertheless, innovation-friendly environmental
regulation differs from traditional compliance-
oriented forms in a number of ways, namely,
goal-setting, outcome-oriented, stringency, flex-
ibility, certainty, consistency, incentive-based,
voluntary-based, information-coupling, partici-
patory, process-based and capability-enhancing
(Ashford, 2000 and 2002; Porter and van der
Linde, 1995a and 1995b). Among all the regulatory
characteristics, Norberg-Bohm (1999) argues that
environmental regulations that provide stronger
political or economic incentives (incentive-based),
and clearer signals about future environmental
performance requirements (certainty), are critical
for driving TEIs where pay-offs are more long-
TECHNOLOGICAL ENVIRONMENTAL
INNOVATION AND REGULATIONS
It has been argued that traditional environmental
regulation as characterized by environmental
standards or permits offers little incentive for TEI
because of its inflexible, technology-forcing, bu-
reaucratic and adversarial characteristics (Fiorino,
2006: 73-75). There are repeated claims that envi-
ronmental regulations, typically those employed
in the US, are based on existing technology and
do not provide additional incentives to innovate
once the regulatory requirements have been met
(Porter and van der Linde, 1995a and 1995b;
Jaffe and Stavins, 1995; Norberg-Bohm, 1999;
Fiorino, 2006). Environmental regulations are
often not effective in promoting TEI diffusion
because regulatory standards are usually more lax
