Report: Firms regularly inflate industry costs of green policy

That’s according to a report by the International Chemical Secretariat (ChemSec) – Cry Wolf – which reviews examples of past industry cost estimates of complying with proposed environmental regulations and compares them with actual costs after the laws have entered into force. (scroll down for full report)

ChemSec is a non-governmental organisation founded by four environmental groups with the vision of a world free of hazardous chemicals. According to the organisation, industry often falsely warns that the costs of complying with environmental policy would be considerable and jobs lost. However, research shows that the cost for industry to adapt to environmental policies has in fact decreased since the 1990s.

ChemSec director Anne-Sofie Andersson said: “Political decision makers need to approach cost estimates presented by industry with caution, since many times industry has cried wolf, but in fact the wolf never turned up. It’s a myth that environmental legislation is always a burden for industry.”

The report highlights three main problems with the industry’s reaction to suggested green regulations: the cost models used are too static and limited; the cost reductions when complying with numerous regulations at the same time are ignored and the benefits of adapting are underestimated.

Overestimating costs

ChemSec lays out six “lessons” through historical examples of when industry has inflated the cost of environmental policy implementation, and what the actual outcome was.

For instance, when the European community in the 1980s started a process to curb emissions through stricter fuel and emission standards for motor vehicles and the automotive industry predicted that the catalytic converter technology would cost up to £400-£600 per vehicle. However, the reality was that after changes were made, catalytic converters sold at £30-50.

The report covers other examples from environmental policy areas over recent decades, for example initiatives to save the ozone layer, reduce pesticides and detox the electronic sector.

ChemSec Policy Advisor Theresa Kjell said: “Industry overestimating the costs of complying with environmental laws is a major obstacle to implementing new laws to protect health and environment.

“This is a systematically used strategy that can also be relevant to take into account today, for example in the on-going debate about the TTIP trade agreement between the EU and US. Other current examples are the EU process to develop criteria for Endocrine Disrupting Chemicals, as well as the implementation of the authorisation part of REACH.”

REPORT: Cry Wolf: Predicted costs by industry in the fact of new environmental regulations

Lois Vallely