Environmental Engineering Reference
In-Depth Information
Table 1. Characteristics of Innovation-oriented Regulations
Regulatory Characteristics Regulatory Details and Impacts on
Technological Environmental Innovation
Goal-setting
Environmental regulation should focus on long-term, broad, systemic goals, so as to steer regulated firms to
seek the most innovative solutions, instead of mandating particular environmental technologies or technol-
ogy standards.
Outcome-oriented
Environmental regulation should focus on outcomes, not on technologies. Technology-setting approach fails
to encourage continuous innovation once the “best” available technology is identified.
Stringency
Environmental regulation should provide an impetus for regulated firms to strive for superior environmental
performance.
Flexibility
Environmental regulation should increase flexibility to allow firms to freely decide on their own ways of
meeting the regulatory targets.
Certainty
Environmental regulation should reduce the uncertainty of the environmental targets that the regulated firms
are to accomplish, and the uncertainty of the time-table for regulation. Phase-in periods, early announcement
and well-defined environmental targets are common ways to achieve certainty. Regulatory certainty helps
the estimation of negative consequences of non-compliance, and results in greater motivation to plan ahead
and commit to better environmental performance.
Consistency
An environmental regulation should be consistent with other related regulations as marked by a clear regula-
tory process and clear environmental standards. Regulatory consistency should be reached in at least three
ways: between industries and regulators, between regulators at different levels and places in government, and
between regulators and their international counterparts.
Incentive-based
Environmental regulation should include the use of market incentives, including pollution taxes, deposit-funded
schemes and tradeable permits. It allows flexibility, reinforces resource productivity, and creates incentives
for ongoing innovation. Incentives for innovation can also be built into the regulatory process by waiving
permits or promising an immediate permit if a company takes a zero-discharge approach.
Voluntary-based
Regulatory authorities should promote the increased use of preemptive standards. Industries are allowed to
set their own standards to avoid government standards that might be stricter. Such voluntary standards can go
with regulatory oversight to avoid collusion. They are not only less costly but allow faster change and leave
the initiative for innovation to industry.
Information- coupling
Regulating authorities should collect and disseminate information on innovation offsets and their consequences.
The information can be used to facilitate the measurement of the full internal costs of pollution and ways of
exchanging best practices and learning about innovative technologies and to understand the opportunities
for innovation.
Participatory
Environmental regulation should encourage industrial participation in the design of phase-in periods, the
content of regulations and the regulatory process. Stakeholder participation can facilitate trust-building and
self-regulatory behaviours. It promotes smoother cooperation among different parties.
Process-based
Environmental regulation should allow continuous update of the regulatory requirements so that the regula-
tion is responsive to and reflective of the feedback from stakeholders about market maturity or commercial
availability of particular technology options
Capability-enhancing*
Sound technological and non-technological capabilities are pre-requisites for firms to innovate. Environmental
regulation should enhance the competence of both the regulators and industries, by better information ex-
change, technical assistance, demonstration projects, education/training programmes and consulting services.
Source: Porter and van der Linde (1995a, 1995b); *adapted from Ashford (2000)
CASE STUDIES
promoted the development and adoption of en-
vironmental transport technologies in California
and in Hong Kong.
The 12 characteristics above are used to evaluate
two sets of environmental regulations that have
