Europe Revision: Environmental Policies

Aspects of environmental policies for the EU

The European Commission is setting tougher limits on CO2 emissions to tackle climate change. This action by the EC appears to signal a belief in using the market mechanism to encourage industry to confront the costs of environmental damage.

Environment as a public good

• Environmental assets are quasi public goods which are not usually exchanged on markets. Thus no price emerges to signal relative scarcity.
• The destruction of these endowments is inevitable and inexorable without effective intervention
• Evaluation: The key question is which combination of interventions is most effective?

Europe faces a huge environmental challenge:

• Growing municipal and industrial waste
• Contribution of EU countries to global warming / climate change
• Protecting nature and biodiversity
• Congestion, noise and air pollution
• Water shortages and water quality
• Natural resource depletion – preventing the tragedy of the commons
EU Targets:
• 20% cut in greenhouse gas emissions by 2020, compared with 1990 levels
• 20% increase in use of renewable energy by 2020
• 20% cut in energy consumption through improved eefficiency by 2020

Main environmental strategies
1. “Making the polluter pay” taxes to change relative prices ? change incentives ? change consumer and producer behaviour
2. Raft of directives / regulations on environmental issues including end of life directives for durables such as cars, washing machines and televisions
a. Max C02 emissions per km for new cars
b. Water quality and safety, minimum waste recycling targets
3. Promoting renewable energy sources
4. Promoting investment in carbon capture and carbon neutralisation schemes
5. Development of carbon trading as a market based mechanism
6. Application of the precautionary principle i.e. the principle that action should be taken to prevent harm to the environment before full evidence is available.
7. Fiscal harmonisation within Europe to achieve some environmental goals
8. Improving the flow of information to consumers about the carbon impact of their purchases and use of different products