Manual on the Development of Cleaner Production Policies ... - Unido

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DEVELOPMENT OF CP POLICY MODULE 4: POLICY TOOLS AND INSTRUMENTS EXAMPLE Environmental Funds in Latin America The creation of special environmental funds is a recent development. An initiative contained in ALIDES (Alianza Centroamericana para el Desarrollo Sostenible) seeks to establish a Central American Fund for Environment and Development that would fill the funding gap in national and regional conservation projects. A similar initiative of this kind is Colombia’s National Fund for the Environment. Brazil has a National Environmental Fund, created in 1989 to finance projects related to the sustainable use of natural resources and the management and improvement of environmental quality; government agencies and environmental NGOs can request funds for activities that meet environmental policy aims. Chile has its Environmental Protection Fund while Nicaragua is also considering the establishment of an environmental fund. The National Environmental Commission’s Technological Conversion Subsidy was set up in Chile for the conversion of refrigeration and plastic foam manufacturing equipment to non-ozone-depleting substances, with an endowment of US$ 5 million for 1997-2000. http://www.minambiente.gov.co SLIDE: Market-based instruments/2 • Marketable permits (uptake of water in Chile); • Deposits and product charges (batteries and tyres in Hungary, bottles in Trinidad); • Demand-side management (The Costa Rican Institute of Electricity); • Harmful subsidy removal (energy prices in Nicaragua); • Green procurement guidelines (Energy Star programme in the United States); • Reduction in taxes, duties and fees (follows). Marketable permits Marketable, or tradable, permits are pollution quotas based on the principle that any increase in emissions from a given source must be offset by a decrease in emissions of an equivalent, and sometimes greater, quantity. For example, when a maximum value for pollution levels is fixed for a given area (a “bubble”), a polluting firm can set up a new facility or expand its activities only if it does not increase the total pollution load. The firm must therefore buy “rights”, or permits to pollute from other firms located in the same control area, which are then required to decrease their emissions by an amount equal to the additional pollution emitted by the new activity. Tradable emission permits enable pollution reduction measures to be applied wherever reductions are most cost-effective. A company that reduces emissions below the level required by law can receive emissions credits that can pay for higher emissions elsewhere. Companies can trade emissions among sources within a company, as long as combined emissions stay within a specified limit, or trade them with other companies. In the case of electricity generation, for example, utilities can decide the most cost-effective way to use available resources to meet pollution regulations. They can introduce energy conservation measures, increase reliance on renewable energy, reduce usage, employ pollution control technologies, PAGE 98
DEVELOPMENT OF CP POLICY MODULE 4: POLICY TOOLS AND INSTRUMENTS switch to fuel with lower sulphur content or develop other strategies. Utilities that reduce emissions below the number of allowances they hold may trade allowances with other units in the system, sell them to other utilities on the open market or through auctions, or bank them to cover emissions in future years. While marketable permits are most commonly used in respect of air emissions, the mechanism can also be applied to the extraction of natural resources, such as fisheries or water. EXAMPLE Under Chile’s 1981 water law, the State grants existing water users (farmers, industrial firms, water and power utilities) property rights to water without charge. It auctions new water rights. Subject to certain regulations, these rights can then be sold to anyone for any purpose, at freely negotiated prices. They may also be used as loan collateral. In recent years, Mexico has also established property rights to water, although initially it has been placing substantial restrictions on intersectoral trading. One controversy surrounding the use of marketable permits (and any pollution permits, for that matter) is that they legitimize the emission of pollutants. This not only meets with opposition on ethical grounds (buying the right to pollute), but also there are scientific concerns: What is the permissible level of pollution? Who will determine what is permissible? How should “uncertainties” such as those with CFC, DDT, or PCBs be addressed? At the very least, the precautionary principle should be applied. Deposits and product fees Deposits and product fees are intended to offer incentives for the controlled disposal of a product, modify the relative prices of products and/or to finance collection and treatment systems. The deposit-refund system was traditionally limited to glass drink containers. In the deposit-refund system, a payment, or surcharge, is made when purchasing a product contained in a designated type of product (e.g. packaging). The payment, or deposit, is reimbursed when the product is returned to the dealer or a specialized treatment facility. This method can be applied to disposable containers such as Polyethylene Terephthalate (PET) bottles in order to reduce packaging waste and discourage its improper disposal. Deposits are sometimes also charged on car batteries. Product charges are fees applied to products that create pollution either during manufacture, consumption or disposal (e.g. lubricant oils, disposable packaging, fertilizers, pesticides, batteries, etc.). The revenue may be used for financing collection and treatment systems or directed for other purposes. The United States EPA’s Superfund, established to finance the clean-up of inactive hazardous waste sites, is fed by a charge on crude oil and chemicals, and on gross business profits exceeding a certain level. Product fees may be applied to durable (household) appliances as an advance payment for proper treatment of the obsolete product at the end of its life cycle. A number of countries place a charge on car tyres. This is generally used to meet the costs of collection, recycling and disposal. Other product charges relate to chemicals used in households and companies, particularly solvable and flammable liquids, leftover paint and paint containers and lubricants. PAGE 99
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Background and Introduction The cor
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••• MODULE 1 1 hour INTRODUC
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Manual on the Development of Cleaner Production Policies ... - Unido

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