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

DEVELOPMENT OF CP POLICY
MODULE 5: POLICY TOOLS AND INSTRUMENTS
Experience shows that the best intermediaries to stimulate an increased understanding of the benefits
of Cleaner Production are financial institutions in donor countries.
Even limited improvements in access to financing can lead to significant results in the introduction of
Cleaner Production, provided the implemented activities yield encouraging environmental and
financial improvements, serving as a model and reference for future projects.
SLIDE: Some policy responses to encourage lending for CP
• New emphasis on promoting CP;
• Demonstration programmes for the finance sector and industry to show
profitability of CP;
• Capacity-building programmes and assistance in preparing financing
proposals;
• Need for innovative financing mechanisms.
Referring to the barriers discussed in the previous slide, note that some new
policy responses have been used to help both the finance sector, CP Centres
and borrowers. Show that the issue of access to financing has been gradually
gaining importance among CP practitioners and policy makers in recent years.
Background
According to estimates of UNEP and the Asian Development Bank, between 30 and 70 per cent of
current industrial pollution results from: wastage and inefficiencies from the use of obsolete
technologies; a lack of knowledge of CP potential; a low level of environmental awareness; and poor
enterprise management. Still, the demand for CP from industry has been rather limited, especially in
those countries with lax and poorly enforced environmental regulations, subsidized resources and low
environmental awareness.
In order to stimulate interest in CP, there has been a change of emphasis in promoting the concept
towards businesses and the financial sector. This is well illustrated by the following definition of CP,
presented by UNEP during a workshop for Financial Services Initiative in Manila in 2001:
“Cleaner Production is a preventive approach applied throughout the life-cycle of a process
to reduce the unproductive costs associated with remedial action.”
Investments in CP can be economically attractive thanks to the reduction of costs for input materials,
energy and water, expenditures on waste treatment and disposal, as well as increased production and
better output quality. Their payback period may, however, be longer than is customary in a typical
new investment. On the other hand, some experts observe that, except for the low-cost housekeeping
and management improvements of Cleaner Production, there is little to separate Cleaner Production
investment from ordinary technology replacement. It can be argued, therefore, that Cleaner Production
investments should be included into the mainstream business rather than handled through a dedicated
credit line.
Regardless of the above dilemma, the issue of financing has been gaining prominence in recent years.
During the CP6 meeting in Montreal in October 2000, a special session was held on CP financing. The
meeting panel recommended that:
• Accounting practices of enterprises should be improved to reflect actual costs;
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