Market Environmentalism, New Environmental Policy Instruments, and Climate Policy in the United Kingdom and Germany

Abstract

The search for effective and efficient climate policy has led to a major expansion in the use of market-based instruments and voluntary agreements (New Environmental Policy Instruments [NEPIs]) at national and international levels. Yet, despite the prevalence of these instruments as an outcropping of the broader shift toward neoliberal approaches to environmental policies, tremendous diversity exists in the way signatories to the Kyoto Protocol have deployed NEPIs. Drawing on recent geographical and political science research on the neoliberalization of nature, this article reexamines reasons for geographical variations in market environmentalism and, in particular, the role of national policy styles in refracting neoliberal influence on environmental policy. In so doing, I argue that policy styles are too frequently conceptualized in terms of state processes, overlooking complex and territorialized social relations between regulators and regulated parties. To illustrate this claim, I compare the implementation of climate policy in the United Kingdom and Germany, exploring the effects of national policy styles on NEPI deployment, factors contributing to industry reactions to market-based and voluntary measures, and how national policy styles color these evaluations. This is used to argue that understanding geographical variations in market environmentalism requires greater appreciation of the role of industry groups in the creation, defense, and evolution of national policy styles. I conclude by reflecting on the study's implications for the implementation of the Kyoto Protocol.

Key Words:

• climate policy
• industry
• market environmentalism
• policy styles
• United Kingdom and Germany

Acknowledgments

This research was supported by grants from the Economic and Social Research Council (Ref: R000223774), the British Academy, and the Royal Geographical Society (with the Institute of British Geographers). My sincere thanks go to Susanne Rupp, Richard Perkins, Geoff Wilson, the editors, and the anonymous referees for their insightful comments on earlier versions of this article. All remaining errors are my own.

Notes

Source: DEFRA (2000).

Note: BDI=German Industry Federation (Bundesverband der Deutschen Industrie).

Source: BMU (2002).

Note: Highest responses are shown in bold.

Note: Highest responses are shown in bold.

Note: Highest responses are shown in bold.

1. Under the Kyoto Protocol, the European Union (EU) agreed to reduce its aggregate emissions to 8 percent below 1990 levels by 2008–2012. This was subsequently reapportioned between the member states under a Burden-Sharing Agreement (BSA), where the United Kingdom and Germany agreed reduction targets of 12.5 percent and 21 percent, respectively. However, both states adopted unilateral targets to reflect emissions savings already achieved from structural adjustments in their industrial and energy sectors. The United Kingdom aimed to reduce emissions to 20 percent below 1990 levels by 2010; Germany sought a 25 percent cut by 2005 (Bundesministerium für Umwelt, Naturschutz and Reaktorsicherheit [BMU–German Environment Ministry] 2000; DEFRA 2000).

2. Ecological tax reform advocates a shift in taxes from economic “goods,” such as employment, toward environmental “bads” to avoid an increase in overall tax burdens.

3. Exceptions include the landfill tax (1996), the fuel duty escalator, and packaging recovery notes, a tradable permit introduced to stimulate recycling of packaging waste (Bailey 2003).

4. The Treasury originally sought to raise £1.75 billion (US$3.45 billion) annually from the CCL, but this was reduced after industry protests. The government justified this by claiming that the lower rate would still achieve desired emissions cuts.

5. Eligibility for CCAs was initially restricted to installations covered by Integrated Pollution Prevention and Control (IPPC). Under this arrangement, some installations in companies qualified for CCAs while others did not (e.g., only in-store bakeries in supermarkets could sign CCAs). The eligibility criteria were broadened in 2004 to include all facilities that met a 12 percent threshold of energy intensity or fell between 3 and 12 percent, provided they had an import penetration ratio of 50 percent or an export-production ratio of 30 percent (DEFRA 2005). Targets can be either absolute or relative to production levels and can be measured as energy efficiency or emissions-reduction units.

6. The Länder retain control of water management and nature conservation; the federal government holds executive powers over waste management and air and noise pollution.

7. The automobile industry alone accounts directly or indirectly for 20 percent of employment in Germany (Cavender-Bares and Jäger 2001).

8. Sectors covered by the EU ETS are energy activities, ferrous metals, minerals, pulp production, and paper and board facilities with a production capacity exceeding 20 tonnes per day (OJEC 2003). Britain negotiated an opt-out of the scheme until 2007 to allow the full operation of the U.K. ETS.

9. The results presented here are reported rather than verified actions and may therefore include overreporting for public relations or consumer-response reasons.

10. See Wurzel (2002, 28) for a detailed discussion of the application of the BAT principle in German law.

11. Tables 4 –6 summarize the Mann-Whitney analysis of ranks but also provide mean scores of U.K. and German respondents' views on each proposition, as these give a simple indication of variance from the neutral point (zero). Implicit in this is an assumption of some linearity between points on the attitudinal scale. Though this is not mathematically precise, the assumption is helpful in assessing the strength of support for each proposition. Mean rank scores are also given for reference against the Mann-Whitney significance results.

12. This contrasts with the findings of Beuermann and Santarius (2006), who conclude on the basis of interviews with five companies that taxes were seen as an adequate instrument by German industry. Favorable evaluations came exclusively from less energy-intensive sectors.

13. One-sample t-tests were used to measure intragroup variation from the neutral viewpoint for each variable in Table 6. Results showed significant opposition to emissions trading among German firms (mean (μ)=−0.42, ρ=.000) and distrust of its ability to facilitate abatement (μ=−0.25, ρ=.000), but neutral views on its capacity to reduce abatement costs (μ=−0.13, ρ=.013). U.K. firms generally supported emissions trading (μ=0.36, ρ=.000) but were neutral about its ability to reduce costs (μ=0.01, ρ=.798) or facilitate abatement (μ=−0.05, ρ=.238).