Sectoral Costs of Environmental Policy (SCEP)

Funded by: DG Environment


February 2007 to November 2007

PSI researchers:

Ben Shaw

Background, summary and aims

Background and Aims

Recent years have seen a growing tension between the “Lisbon Agenda”, with its focus on increased competitiveness, economic growth and job creation, and the “Gothenburg Agenda”, which aims to establish sustainable development as the central organising principle of European policies. In particular, there is a perception that environmental regulation places an excessive burden on European industries, stifling growth and damaging the competitiveness of European companies in increasingly globalized markets.

Against this background, the overall aim of this project is to assess the impacts of major EU environmental policy interventions on four specific sectors: oil supply; electricity generation; iron and steel production; textiles and leather production. The specific objectives of the project are to:

  • Provide a clearer picture of the environmental protection expenditures undertaken by these industries, and assess the extent to which these can be attributed to specific environmental policy interventions.
  • Assess the extent to which the costs of the environmental policy interventions have varied between companies, sectors, and countries; and identify the main drivers for any differences.
  • Assess the types of technological responses (i.e. innovation) that have been induced by the environmental policy interventions; and identify the main drivers for any differences between companies, sectors and countries.
  • Assess the magnitude of any private benefits arising from the environmental policy initiatives (e.g. due to improved resource efficiency) and the social benefits arising from any improvements in environmental quality.
  • Assess the extent to which there have been any synergies between the individual environmental policy interventions.

PSI is one of four European institutions collaborating on this consultancy project for DG Environment, which is being coordinated by VITO, Belgium.  

Project Design

The project comprises five complementary tasks.

  • Production of sector reviews for the selected sectors, based on desk-studies of secondary data and other relevant material, supplemented by interviews with industry experts.
  • Development and design of a web-based questionnaire to collect primary company-level data on environmental expenditures and the motivations for expenditures.
  • Collection of primary data via the questionnaires and the processing of this data in preparation for analysis.
  • Analysis of the primary and secondary data to assess the impacts of specific environmental policy initiatives in terms of: a) the costs that they have imposed; b) the impacts that they have had on technological innovation; c) the magnitude of the resultant private and social benefits; d) the main drivers for differences between companies, sectors and countries.
  • Synthesis of the sector reviews and data analysis results to identify recommendations for future policy design and additional information requirements.

Importance of Research

The project should provide some important insights regarding: a) the magnitudes of costs of past environmental policy initiatives; and b) the extent to which the costs and impacts are affected by the type of implementation mechanism (e.g. regulation versus market-based). As such its findings should make a major contribution to the reconciliation of the Lisbon and Gothenburg Agendas.