Published on December 11th, 2017 | by Joshua S Hill0
Well Designed Environmental Regulations Can Deliver Positive Economic Outcomes
December 11th, 2017 by Joshua S Hill
A new report based on interviews in the waste, construction, and car industries in the UK has concluded that well designed environmental regulations are seen as a potential positive which can deliver economic benefits through increased business investment, rather than unnecessary bureaucratic red tape.
The new report launched last week by the Aldersgate Group and conducted by engineering consultancy BuroHappold, Helf or Hindrance? Environmental regulations and competitiveness, was commissioned to “explore the the connection between ambitious environmental standards on the one hand, and business competitiveness, skills, and innovation on the other.”
The report, based on interviews with senior executives from the UK waste, construction, and car industries, concluded that “the impact of environmental regulation on the competitiveness of their business was positive overall.” The cost of compliance to environmental regulations are found to be more than offset by gains in improved quality, performance, and competitiveness, or are otherwise absorbed in some other way within existing business structures. Positive economic benefits that stem from environmental regulations include increased business investment in innovation and skills, better quality products and infrastructure, greater business competitiveness, and job creation.
“There is no inherent conflict between well-crafted policy and economic gains,” said Duncan Price, Director of Sustainability, BuroHappold and author of the report. “When well designed and complemented by effective economic and industrial policies, smart regulations can deliver positive environmental and economic outcomes. Insights derived through this work hold valuable lessons for the government as it works to deliver its Industrial and Clean Growth Strategies.”
However, the report conversely found that existing environmental legislation is necessary but simultaneously insufficient to capture the full potential economic benefits, suggesting that other support mechanisms are necessary. As this was a survey of UK industry, the specific regulation types and policies are easily identifiable, as seen below:
More specifically, according to the Aldersgate Group:
- The low carbon infrastructure (heat networks and renewables) development required under the London Plan for building planning applications in 2015 is estimated to have created around 4,000 full-time equivalent jobs in the design, consultancy, construction and manufacturing parts of the supply chain.
- The Landfill Tax helped trigger significant investment by the waste industry in new infrastructure and services (such as investment in waste recovery, sorting and recycling facilities), while also cutting the amount of waste sent to landfill by 72% in 20 years.
- The EU passenger car and light vehicles CO2 regulation has provided a consistent and clear legal framework. Car manufacturers and suppliers have responded by developing an innovative, competitive and highly collaborative industry, with automotive companies now ranking third in R&D investments globally.
And while these regulations have yielded specific benefits, the report also highlights flaws in each of them, ranging from poor regulatory enforcement to a lack of focus on supply chain skills. In the end, if government is to maximize environmental and economic benefits through its regulations and avoid unintended impacts, well-designed regulations must:
- Be pitched at the right geographic scale
- Provide a clear, stable sense of direction
- Be coherent with existing policies
- Be implemented in a way that works with business timescales
- Be accompanied by complementary policies (such as on skills and regulatory enforcement)
“With clean growth positioned as one of the four Grand Challenges of the Industrial Strategy and the recent Clean Growth Strategy promising to drive growth of the UK’s low carbon industries, the report comes at a crucial time to show how environmental regulations can act as a help rather than a hindrance to innovation and growth, whilst also delivering positive environmental outcomes,” explained Nick Molho, Executive Director, Aldersgate Group.
“The government recognised in the Industrial Strategy White Paper that regulations shouldn’t just be seen as red tape; on the contrary, they can also act as an important tool to support business innovation and competitiveness. The challenge ahead will be to ensure that regulations to deliver the UK’s environmental and industrial objectives are sufficiently ambitious, stable, practical and compatible with other policy objectives.”