Ecological modernization and the European Union

Pergamon Geoforum. Vol. 27. No. I. pp. 11-21, IYYh

Copyright 0 1996 Elsevwr Science Ltd Printed in Great Britain. All rights reserred

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Ecological Modernization and the -

European Union

ANDREW GOULDSON,* London, U.K. and JOSEPH MURPHYt

Hull, U.K.

Abstract: This paper begins with an examination of the role of state failure in constructing and preserving inefficient and ineffective systems of pollution control. It then assesses the characteristics, goals and mechanisms associated with integrated economic development and environmental protection as proposed by the conceptual framework of ecological modernization. In seeking to assess the applicability of the policy prescriptions of ecological modernization, recent European Union (E .U .) policy developments relating both to environment and economy are analysed. It is contended that while aspects of the emerging E.U. policy framework correspond to the theoretical construct of ecological modernization, the reluctance of other key actors in the E.U. policy process, most notably certain national governments, remains a key obstacle to its implementation. The paper submits that this reluctance is associated with concerns regarding the impact of environmental policy on industrial competitiveness. Through an examination of the interrelations between environmental policy and industrial competitiveness in the U.K., the paper suggests that to date the integration of environmental and economic concerns in U.K. industry remains weak. However, it also suggests that recent positive experience relating to the impact of environmental policy on industrial competitiveness is beginning to change the way that industry perceives policies that reflect the goals of ecological modernization. The paper concludes that these altered perceptions in industry have the potential to influence the policy stances adopted by national governments and hence to overcome some of the key barriers to ecological modernization at the E.U. level. Copyright 0 1996 Elsevier Science Ltd

Introduction

The theory of ecological modernization suggests that

policies for economic development and environmen-

tal protection can be combined with synergistic

effect. Rather than perceiving the goals of environ-

mental protection to be a brake on development,

ecological modernization promotes the application of

stringent environmental policy as a positive influence

on economic efficiency and technological innovation.

Similarly, rather than perceiving economic develop-

ment to be the source of environmental decline,

*Department of Geography, London School of Economics, London WC2A 2AE, U.K. tSchoo1 of Geography and Earth Resources, University of Hull, Cottingham Rd, Hull HU6 7RX, U.K.

ecological modernization seeks to harness the forces

of entrepreneurship for environmental gain. Thus,

through policy integration, ecological modernization

seeks to provide an alternative to the antagonistic

relationship between economic development and en-

vironmental protection that has prevailed in devel-

oped economies.

This paper analyses the concept of ecological moder-

nization through an examination of its emerging

theory and of the scope for its application especially

at the level of the European Union (E.U.). In this

respect this discussion generally limits itself to an

analysis of ecological modernization as a prescription

for policy reform rather than as a framework for

social change. To provide a starting point for dis-

11

12 Andrew Gouldson and Joseph Murphy

cussion the paper begins by assessing the nature of market, government and state failure.

The Failings of Market, Government and the

State

For neo-classical economics, some form of government intervention to protect the environment has long been held to be an appropriate response to market failure. Economic theory suggests that with-

out intervention the lack of a regime of clear and enforceable property rights leads to the over-

exploitation of common property resources and the under-provision of public goods. In seeking to pres- cribe an economically efficient response to market

failure, the suitability of various policy instruments in different situations is continually assessed. However, while neo-classical economics suggests that market

failure is at the root of environmental degradation, many political theorists suggest that it is the combined inability of the market to allocate environmental resources efficiently and of the government to re- spond effectively that is to blame (see, for example Panayotou, 1992). Such government failure may

manifest itself through the lack of a policy response to market failure, through an inappropriate or inefficient policy response or through the inadvertent im-

pacts of other government policies.

Notwithstanding the importance of market and gov-

ernment failures, modern economies cannot be characterized by such an obvious division between the market economy on the one hand and the regulat- ing state bureaucracy on the other. Instead, blame for the impacts of market and government failure is more accurately ascribed to the failings of those alliances between the common interests of industry and government that direct that formulation of policy (see Janicke, 1986). Consequently, it is neither the failure of the market nor of government but the failure of the state (meaning the bureaucracy-industry complex)

that is at the root of the environmental malaise (see Andersen, 1994).

Janicke (1986) suggests that state failure occurs as a consequence of bureaucracy-industry alliances coforming policy. He suggests that this does not necessarily occur through the illegitimate use of influence but because of a convergence of interests that favours a particular approach to pollution control. For example, in seeking to further their own interests

both government departments and industrial groups tend to prefer standardized solutions that react to environmental problems when they occur. Even though economic and environmental theory may suggest that more efficient proactive solutions are available, both parties in the alliance continue to support this approach to policy. For government, standardized solutions ensure that their own costs of policy design and delivery are minimized even though the potential for broader benefit from alternative policy approaches remains unexplored. For industry,

standardized solutions provide a clear and readily understandable framework that is relatively easy to

accommodate, as its reactive nature fails to challenge

the status quo. The consequence of this approach is that policy tends toward standardized approaches for the control of the visible effects of industrial activity as they emerge. Therefore, economically efficient solutions, proactive approaches, innovative policies and invisible impacts are often ignored.

However, Janicke (1986) and Andersen (1994) go

further to suggest that state failure is self-reinforcing through a process of iatrogenesis (referring to a medical condition induced by the doctor). Initial state

failure involves a government response that commits expenditure to pollution control and paradoxically

reduces the interest in preventive action. For government, the self-preservation instincts of those institutions that have been established to administer this form of policy ensure that this approach continues. For industry, technological and cultural allegiances to

existing approaches to pollution control serve to support the future of these approaches even though they may be more expensive than proactive solutions in the long run.

Ultimately then, it is institutional, technological and cultural inertia that restricts the ability of the state to adopt proactive environmental policies. As a reactive approach to pollution is more expensive in the long

run than a proactive approach, both economically and environmentally, then the costs of this option can only continue to rise. The government must then rely on continued industrial expansion, which, although its relative impacts may decline, is associated with increases in the absolute level of stress on the environment. There is limited room for manoeuvre within this growth-oriented reaction-based trajectory and the possibilities for inter-trajectory shift become more and more limited.

Ecological modernization and the European Union 13

The theory of state failure can be drawn upon to

contextualize the evolution of environmental policy.

Broadly, its evolution can be traced through a num-

ber of stages where policy evolves in a learning

process based not on strategic thinking but on short-

term reaction to crisis or failure (Janicke and

Weidner, 1995). A popular typology sees environ-

mental policy passing through primary, secondary

and tertiary stages (see, for example, Weale, 1992;

Andersen, 1994; Verbruggen, 1995). The primary

stage saw pollution issues avoided by moving either

the source or the receptor so that cause and effect are

separated. The secondary stage diluted and dispersed

pollution, thereby ensuring that the effects become

less apparent and/or are externalized to the region

surrounding the source. In the tertiary stage, largely

the present, the reaction is to install control technolo-

gies that allow containment at source and subsequent

treatment. At each stage the policies continue to be

reactive in nature. If higher level policies are to be

applied, a requirement of ecological modernization,

the inertia associated with state failure needs to be

addressed and new industrial and bureaucratic trajec-

tories need to be established. It is to these issues that

the paper now turns.

Ecological Modernization and Environmental

Policy Integration

Historically, economic growth and environmental

protection have been seen to be mutually antagon-

istic. In contrast, theories of ecological moderniza-

tion, as discussed by authors such as Simonis (1989),

Spaargaren and Mol (1991), Weale (1992), Janicke

(1992) and Hajer (1996), suggest that economic and

environmental goals can be integrated within a

framework of industrial modernity. In no way can it

yet be suggested that ecological modernization is .a

coherent doctrine, but four themes appear to be at its

core.

First, as mentioned, the central concept within which

all else is housed assumes that there can be synergy

between environmental protection and economic

development where in the past there has been con-

flict. An impoverished future is not envisaged be-

cause policies to address the environmental malaise

can become a source of increased efficiency and

accelerated innovation, thereby providing an engine

for further economic development. A major role is

seen for government in this process where policy

directs or redirects the economy.

Second. the integration of environmental policy goals

into other policy areas of government is central to

ecological modernization. Thus, ecological moderni-

zation recognizes that effective environmental pro-

tection can only be achieved through a realignment of

broader policy goals relating to areas such as econ-

omics, energy, transport and trade. In analysing the

mechanisms for policy integration, Baldock et 01.

(1992) differentiate between two tiers of action at

opposite ends of a continuum. At one end of the

continuum is strong integration where each separate

department within an institution undergoes a process

of internal culture change. Thus, both its strategic

and operational characteristics are modified and in

some instances the original identity of a department is

lost altogether and an effectively new department

emerges. At the opposite end of the continuum lies

weak integration, or simple coordination, where the

individual departments ‘Ye-focus their individual

activities so that they contribute to collective objec-

tives” (Baldock ef al.. 1992. p. 6). Existing bound-

aries are maintained while current activities are

adjusted to comply with formally established external

requirements. While institutional change is a dy-

namic process, institutions and departments within

them may move from the weak to the strong end of

the continuum. Nevertheless. the long-term compati-

bility of weak integration with the more holistic

concept of ecological modernization must bc ques-

tioned, as it does not promote institutional inno-

vation and policy change but rather the adjustment of

existing structures and policies. In the longer term,

ecological modernization demands strong integration

and the realignment of all departmental ohjcctives 40

that they become self-reinforcing rather than conflict-

ing. This may actually demand a reappraisal of exist-

ing institutional boundaries.

Third, within ecological modernization there is also a

theme of exploring alternative and innovative policy

measures. Spaargaren and Mol (1991) identify the

‘economizing’ of the environment by placing an econ-

omic value on nature to go alongside the values

placed upon labour and capital as the other factors of

production. Indeed, some authors go further than

this to propose a widespread realignment of fiscal

structures so that they create environmentally be-

nign, labour-intensive development paths. Authors

such as Weiszacker and Jesinghaus ( 1992). Gee


(1994) and Sterner (1994) suggest that reform of fiscal structures will allow economic rationality to enhance rather than undermine environmental quality, while also reinforcing employment opportunities.

Fourth, and finally, as seen by Spaargaren and Mol

(1991) and others, ecological modernization involves the invention, innovation and diffusion of new clean (or cleaner) technologies that demonstrate improved environmental and economic performance. There is a

technological imperative in ecological modernization, and technologies hold the key to decoupling economic development from environmental impact. At the macroeconomic scale, Janicke et al. (1989)

suggest that economic development is often associated with reductions in the environmental intensity of each unit of GDP as a consequence of structural

change and technological advance. At the micro- economic scale, authors such as Schroeter and Dau- nert (1994), Lorenzen et al. (1994) and Murphy and

Gouldson (1995) suggest that the development and

diffusion of clean technologies bring concomitant economic and environmental benefits.

Ecological modernization then can be condensed into

the following four themes:

l environment and economy can be successfully combined for further economic development with the aid of government intervention;

l environmental policy goals should be integrated

into other policy areas; l alternative and innovative policy measures should

be explored; and l the invention, innovation and diffusion of new

clean technologies is essential.

In relation to the applicability of these themes, Janicke (1992) proposes a model of ecological modernization that predicts that a country’s capacity for ecological modernization, or its ability to shift to an environmentally benign development trajectory,

depends upon its “institutional and technological problem-solving capabilities” (Andersen, 1994, p. 55). More specifically, Janicke suggests that the following factors, amongst others, are crucial:

0 problem pressure-the driver causing a wish to address environment/economy-related issues;

l innovative capacity-the capacity for innovation in both state and market institutions; and

l strategic capacity-the capacity for strongly insti-

tutionalizing environmental policy over a long period.

These factors will be used to assess progress toward ecological modernization.

While the central objective of this paper is to analyse the content of ecological modernization and its applicability to contemporary policy frameworks, in order to assess the desirability of the reforms prescribed by ecological modernization it is also necessary to recognize its limits.

The Limits to Ecological Modernization

Hajer (1996) contends that from an institutional per- spective ecological modernization can be interpreted

in at least two ways: optimistically, it represents ‘institutional learning’; pessimistically, it is a ‘technocratic project’. The central belief of the interpre-

tation of ecological modernization as ‘institutional learning’ is that rational institutions can adapt and

that this can produce meaningful change compatible with the goals of ecological modernization. Alterna-

tively, Hajer’s interpretation of ecological modernization as a ‘technocratic project’ sees it as a way of

continuing to do what has always been done and protecting established institutions and centres of power against the ‘green threat’ by absorbing that threat. To bring this about science and the social sciences are conscripted to work toward only precon-

ceived policy goals (e.g., define ‘critical loads’ for pollution, examine the barriers to the diffusion of environmental technologies). Under this interpre-

tation a considerable victory is won simply by splitting the radical green lobby from the moderate greens by

adopting the latter.

Of course, it is probable that some combination of the two interpretations put forward by Hajer (1996) would be realized should a programme of ecological modernization be followed. However, as Spaargaren and Mol (1991) point out, it is the industrial and not the capitalist nature of modernity that is the concern of ecological modernization. In this respect, ecological modernization can be viewed as very selective in just where it apportions blame for environmental degradation. Also, given its acceptance of capitalism, it is essentially silent on issues of social justice, the distribution of wealth and society-nature relations. The absence of an explicit consideration of these


issues within the concept of ecological modernization

suggests that as a framework for social change it is

flawed. Ecological modernization may thus be seen as a further attempt to legitimize and sustain the structures and systems that form the foundations of environmental decline.

However, while it may be argued that policy-makers in the developed world do not have time to engage themselves further in the modernist experiment, it is suggested here that ecological modernization can offer useful guidance on policy reform in the short to

medium term. Despite its limitations, ecological modernization succeeds in setting out an agenda for

policy reform that would promote a more rational, proactive and holistic approach to environmental protection than that which is currently in place throughout the developed world.

Thus, with the nature of ecological modernization clearly established, while acknowledging its longer-

term limitations, it is now possible to move forward to judge progress toward ecological modernization at

the E.U. level. This is done in relation to the four themes outlined above and those capacities required

to bring it about as proposed by Janicke (1992). Given the role that the concept of ecological modernization assigns to technology, particular emphasis is given to the relationship between environment and technology in the following discussion.

Ecological Modernization and the European Union

The E.U. has a long history in the formulation and implementation of policies to facilitate technological development and environmental protection. How- ever, neither policy sphere was recognized as an explicit goal of the E.U. until the Single European Act (SEA) in 1987. In relation to the development of new technologies, the SEA embedded in the found- ing treaty of the E.U. the requirement to: “. . . streng- then the scientific and technological base of European industry and to encourage it to become more competitive at an international level” (CEC,

1987, Article 130).

Similarly, in relation to environmental policy, the SEA established the competence of the E.U. to: “. . . preserve, protect and improve the quality of the environment, to contribute towards protecting

human health and to ensure a prudent and rational

utilisation of natural resources” (CEC, 1987, Article

130r).

While the SEA was certainly a milestone in the development of both technology and environmental policies, more recent E.U. developments have begun not only to translate these broad principles into specific policies but also to promote the integration of

these historically disparate policy areas.

Until the entry into force of the Maastricht Treaty in 1993 no formal connections were made between poli-

cies that were primarily designed to deliver economic growth and policies concerned with environmental protection. The Maastricht Treaty established the principle that the goals of environmental policy should be incorporated into all other policy spheres. In theory at least, the adoption of this principle of integration began to move the E.U. past the point where it saw environmental protection as a necessary

supplement to economic growth and toward a situ- ation where effective environmental protection was

recognized as an integral part of (if not a prerequisite for) economic development.

In alliance with the goal of environmental policy integration, the E.U. also sought to change the emphasis of environmental policy-making and in 1992 set out its plans to do so within the 5th Environmental Action Programme (EAP). While it is not the aim of any EAP to propose specific policies, the 5th EAP set out the broad directions that E.U. environmental policy would follow to 2000. To this end the 5th EAP set out priorities for action at all policy stages from formulation to enforcement.

The 5th EAP proposed that E.U. policy should address a broader range of actors based on the concept of shared responsibility for environmental protection between government, industry and con- sumers. As well as proposing a wider scope for policy, the 5th EAP also established target groups for policy and gave priority to policies that addressed the environmental impacts of agriculture, energy, manufac- turing industry, tourism and transport. The 5th EAP then proposed that the range of policy instruments should be extended beyond traditional regulation to incorporate market related measures, financial support mechanisms, voluntary mechanisms and the provision of information, education and training. Consequently, the 5th EAP sought not only to


control specific actions or substances but also to influence modes of production and consumption.

Many of the intentions set out within the 5th EAP have already led to specific environmental policy developments. However, notwithstanding the im-

portance of the 5th EAP and the policies that have followed it, it has been acknowledged that the effec-

tiveness of environmental policy is limited to the extent that its goals are supported or undermined by more influential policies related, for instance, to employment, trade, transport or technology. In a recent review of the implementation of the 5th EAP, it was noted that progress in the key area of integrating environmental concerns into other policy areas has been ‘disappointing’ (CEC, 1994a). While the lack of policy integration may not be surprising, a number of

recent policy documents relating to economic development, technology and the environment suggest that policy-makers within the E.U. are beginning to

recognize the potential for synergy through the integration of traditionally conflicting policy areas.

A recent study of the potential benefits of integrating environmental and economic policies prepared for the European Commission modolled economic performance under various environmental policy scenar- ios (DRI, 1994). The first scenario modelled the economic and environmental implications of a con- tinuation of recent historical trends and existing policies. Under this scenario there was a substantial

deterioration in environmental quality to 2010. The second scenario modelled the impact that would be achieved if policies currently under consideration at the E.U. level (notably the carbon/energy tax) were actually applied. Under this scenario, significant environmental benefits were realized in some areas, although these benefits were secured only with a significant negative impact on GDP. The third scenario assumed the integration of environmental ob- jectives into economic and sectoral policies through the use of cost-effective measures to protect the environment. These measures included the widespread application of fiscal instruments addressing energy and resource use and the establishment of support mechanisms for the research, development and rapid diffusion of clean technologies. Under this scenario, significant environmental benefits were achieved without hindering economic development. However, despite the Treaty obligations of the E.U., the influence of the 5th EAP and the ‘evidence’ put forward by studies such as that undertaken by DRI

(1994), the actions of the E.U. can at most be seen to reflect the description of weak integration as proposed by Baldock et al. (1992) and discussed above.

Although the 5th EAP is the major E.U. environ-

mental policy document of the 1990s two other policy documents that are not primarily environmental in outlook may eventually be seen to be more important: these are the 1993 White Paper on

Growth, Competitiveness and Employment (CEC,

1993) and the 1994 Communication on Economic

Growth and the Environment: Some Implications for Policy Making (CEC, 1994b).

The White Paper on Growth, Competitiveness and

Employment (the White Paper) called for measures to re-establish economic growth in order to reduce unemployment (CEC, 1993). Measures proposed within the White Paper aim to increase overall levels of investment, to encourage macroeconomic stability and to increase the job content of economic growth. Significantly, this traditional economic policy document was complemented by analysis of the structural

links between environment and employment. The White Paper indicated that the substitution of labour by capital has been accompanied by a continued increase in the use of energy and raw materials, leading to an over-exploitation of environmental resources and an under-exploitation of labour resources. Consequently, it suggested that policy should seek to support a new labour-intensive, environmentally benign development path. To this end a programme of eco-tax reform was put forward that would reduce tax on under-utilized labour resources while increasing tax on over-exploited environmental

resources.

The White Paper also asserted that the key to achieving a labour-intensive, environmentally benign development path would lie in the creation and promotion of a ‘clean technology’ base, which would make the relationship between economic growth and the en-

vironment positive rather than negative. It was held that the development of new integrated technologies would lead to reduced environmental impact through:

l improved ‘nature productivity’ of products (i.e., decreased energy and materials intensity);

l longer product lifetime (i.e., through labour- intensive maintenance and repair activities);

l improved reuse and recycling; and


l improved economic and environmental efficien- cies in process technology.

Similarly, the development of new integrated technologies would lead to enhanced economic performance through:

l facilitating the optimal use of resources and prevention of costly cleanup operations;

l encouraging the exploitation of first-mover advan- tage in the growing global market for environmental technologies;

l reducing the dependence of the E.U. on the rest of the world for its imports of raw materials and energy (the benefits of which could be used to facilitate the transfer of clean technologies to less

developed countries); and l demonstrating internationally how sustainable

development could be translated into practice.

The economy-environment debate within the White

Paper is significant not only because it recognizes the restrictions of current growth paths and the opportunities for new modes of development, but perhaps more importantly because it was largely written by economic policy-makers and received support from the E.U. heads of state. However, the White Paper remains a broad statement of principle that need not be

translated into actual policy. Indeed, as certain com- mentators have noted, it is debatable whether the

White Paperreally represents the first step in the move toward integrated economic and environmental policy or whether the environment retains its common posi- tion as an expedient afterthought (Fleming, 1994).

Nevertheless, it appears that the White Paper and the

principles set out within it have begun to permeate into other policy spheres. In November 1994 the European Commission published a communication

entitled Economic Growth and the Environment:

Some Implications for Policy Making (the Communi- cation) (CEC, 1994b). The Communication studies the relations between economic development and the environment and suggests that technological development and changes in the sectoral composition of the economy have steadily reduced the marginal environmental impact of economic growth. How- ever, the Communication recognizes that there are limits to the extent to which these improvements in the ‘eco-efficiency’ of the European economy can stem absolute environmental decline. In response it suggests that economic development and environ-

mental protection are only compatible if production reduces its relative energy and raw materials content

at a rate faster than its absolute rate of growth. Consequently, the Communication reiterates the importance of clean technologies in the move towards sustainability and recognizes the critical role of well- devised research and development and technology policies in their development. Indeed, the size and potential of the market for environmental goods and services has been recognized by the E.U. The 1994

European Parliament Resolution on Environmental Technologies (the Resolution) acknowledges the possible contribution that the environmental technology industry could make in generating new employment opportunities (CEC, 1994~).

Assessing Progress Toward Ecological Moderni-

zation in the E.U.

So how does the E.U., at least in its statements of principle and intent, match the four central themes of ecological modernization as outlined above?

First, regarding the belief that environment and economy can be successfully combined for further economic development, the White Paper on Growth,

Competitiveness and Employment (CEC, 1993) clearly links environment and economy and suggests that environment, economy and employment problems can be solved simultaneously within the E.U. But more than this, the 1994 European Parliament Resolution on Environmental Technologies (CEC.

1994~) acknowledges the possible contribution of the environmental technology industry to future employment and economic development in the E.U. That a significant role for government is seen in realizing the potential of linking economy and environment is also

supported. The competence of the E.U. to design and deliver environmental policy has been enhanced and expanded through both the Single European Act and the Maastricht Treaty.

Second. concerning the theme that environmental policy should be integrated into other policy areas. this is specifically addressed in the Maastricht Treaty. which formerly established that goals of environmental policy should be integrated into all other policy spheres and the 5th EAP provides further detail on how that integration is to be achieved.

Third, with respect to the need to explore alternative


and innovative policy measures, as has been shown above, the 5th EAP specifically calls for the use of a broader range of policy instruments such as voluntary measures, financial support mechanisms and information provision to address a broader range of target sectors and actors. In the same field the White Paper

proposed a programme of eco-tax reform to reduce the tax on under-utilized labour resources while in-

creasing the tax on environmental resources.

Fourth, concerning the theme that the invention,

innovation and diffusion of new clean technologies is essential in the E.U., again the White Paper stated that a key factor in achieving a labour-intensive,

environmentally benign development path was the creation and promotion of a ‘clean technology base’. Also, the Communication on Economic Growth and

the Environment reiterated the need for clean technologies and stressed the need for well-devised R&D in

this area.

In theory at least then, this review shows that the E.U. has placed itself behind the concept of ecological modernization, although the term itself may not be used. However, whatever rhetorical commitment the E.U. may assign to policies that are compatible with ecological modernization, the critical issue is whether it has the desire or the ability to actually implement the measures proposed. Using Janicke’s (1992) criteria as outlined above, we can assess its likely success in this area.

The initial problem pressure facing the E.U. arises from a coincidence between the continuing decline in environmental quality and the steadily increasing levels of unemployment, an economic and environ-

mental crisis combined. The policy documents indi- cate that the E.U. is seeking to reverse both trends

through the integration of economic and environmental policies. While the problem pressure appears to have been recognized, the impact of the response to this pressure depends upon the E.U.‘s innovative capacity. Here we are specifically concerned with innovation in the various administrative tiers associated with the formulation and implementation of E.U. policy. While there have been a number of innovative initiatives concerning both policy and its administration, actual institutional change is limited and can at best be categorized as that which Baldock et al. (1992) term ‘weak integration’.

Finally, concerning the E.U.‘s strategic capacity, it is in this area that the E.U. encounters its most serious

problem in achieving ecological modernization. Although it can initiate, formulate and support new policy developments, its ability to instigate change in the face of reluctant national governments is limited. The future of E.U. economic and environmental policy depends on the support or otherwise of each member state. While the adoption of policy through

qualified majority voting rather than unanimity is designed to accelerate decision-making, the influence of individual national governments, particularly at the implementation phase, where much of the charac- ter of policy is defined, continues to be of paramount importance. Ecological modernization capacity at the

level of the national governments of the member states therefore remains crucial. However, while some national governments such as Germany, the Netherlands, Denmark and Sweden tend to be in favour of policies that are broadly compatible with the theory of ecological modernization, others, most

notably the U.K., tend not to be. Thus, an assessment of the capacity for ecological modernization at the E.U. level reveals severe restrictions under its pres-

ent configuration.

This finding need not be conclusive, as member states

in the E.U. are positioned between the supranational interests of the E.U. on the one hand and the micro-

economic interests of industry on the other. Thus, this discussion would not be complete without an analysis of the links between industry and ecological modernization. Such a discussion is of particular relevance given the influence of industry in forming the opinions of the state. Thus, it will now be proposed that a positive experience at the micro-level transmitted through the bureaucracy-industry complex as discussed above will contribute to changes in

the policy stance of a national government. This, in turn, will influence the potential for ecological modernization at the E.U. level rectifying its major

weakness of strategic capacity.

Industry, Policy and Ecological Modernization in

the U.K.

The reluctance of national governments to pursue policies compatible with ecological modernization is often associated with concerns regarding the impact of environmental policy on industrial competitiveness. In the U.K., while government has long accepted that a legitimate role exists for environmental policy, in general it has sought to minimize the


impact of policy on the operation of the market.

While this laissez-faire philosophy has been particu-

larly dominant under recent government, current

research concerned with the implementation of Inte- grated Pollution Control (IPC) regulations reinforces the central belief of ecological modernization that environmental policy can enhance rather than inhibit

efficient market operation.’

Integrated Pollution Control regulations were

adopted in the U . K. as part of the 1990 Environmental Protection Act. The regulations oblige a range of prescribed processes or processes using prescribed

substances to apply the best available techniques (including tech 1 no ogies) not entailing excessive cost (BATNEEC) in pollution prevention and control, which is applied to simultaneously control emissions to air, water and land. Around 2100 of the most environmentally significant industrial processes in England and Wales are currently regulated under IPC.

It has been recognized that the impact of policy

depends very much upon the local context in which it is delivered (see, for example, van Muijen, 1995). In the case of IPC, policy has been implemented through a close working relationship between the regulator (at the time of writing Her Majesty’s Inspectorate of Pollution) and the regulated companies. While by nature such an intensive relationship between regulator and regulated is time- consuming and expensive, a number of benefits from this regulatory style have become apparent.

From the regulator’s point of view, a close relationship between the regulator and regulated is a prerequisite for delivering regulations that require intimate knowledge of an industrial process as well as its emissions. This intimate knowledge allows a day- to-day involvement with issues of process design, operation and management, and it is this involvement

that secures maximum reductions both in actual emissions and in the risk of major incidents by limit- ing emissions at source.

From the regulated companies’ point of view, despite initial reservations, IPC regulations have been wel- comed as an effective mechanism for environmental

management. Many companies acknowledge that while the regulatory process is often associated with costs in the short term, in the medium term it also commonly facilitates significant improvements in strategic decision-making, in operating efficiency and in the management of risk and liability.

Thus, a consensus appears to be emerging between

the regulator and the regulated that suggests that IPC

regulations represent a positive development both

economically and environmentally (see, for example, HMIP and Allied Colloids, 1995). However, despite the fact that both the regulator and the regulated have come out in favour of IPC regulations, the current

government is reluctant to extend the practice of IPC regulation either to other industrial sectors or to smaller processes again apparently due to concerns relating to the perceived impact of environmental

policy on industrial competitiveness. Similarly, it is reluctant to extend the principles applied under IPC

regulations to cover other areas such as product design. This reluctance remains despite repeated calls from industrial bodies such as the Confederation of British Industry for a more rational framework of environmental policy that would enhance rather than

restrict industrial competitiveness (CBI, 1994).

Thus, in relation to IPC it can be seen that environmental policy under certain conditions can have a

positive rather than a negative influence on industrial competitiveness. Consequently, there is some basis

for a call to replicate the principles and practice of IPC in other areas of policy. The main barrier to this happening is the reluctance and inertia of national government. It appears that a combination of legisla- tive and cultural inertia restricts the willingness and ability of government to view environmental regu-

lation as a mechanism for improving industrial competitiveness while also protecting the environment. This indicates that in the case of the U.K. the major

barrier to ecological modernization is more accurately attributed to government failure rather than state failure as previously defined.

Nonetheless, the forthcoming E.U. Integrated Pollu- tion Prevention and Control (IPPC) Directive will require existing IPC regulations to be extended and revised. In the U.K., implementing the revisions to

IPC as required by the E.U. may reduce the inertia that is currently apparent. In the meantime, the U.K. government will continue to be exposed to pressure from industry below and from the E.U. above.

Conclusions

Regardless of the best efforts of policies for pollution control, evidence suggests that in many respects the aggregate level of environmental stress continues to


increase. It is against this background that the search for new modes of environmental protection is set. Despite their political and administrative expe- dience, it is increasingly accepted that policies that address the symptoms rather than the cause of the environmental malaise are inherently flawed. Eco- logical modernization sets out an alternative view

that promises to accelerate development while also offering effective and efficient strategies for environmental protection.

This paper has defined the concept of ecological modernization while beginning to discuss some of its limitations. Despite these limitations, it is suggested here that ecological modernization succeeds in set-

ting out an agenda for policy reform that would promote a more rational, proactive and holistic approach to environmental protection than that currently in place throughout the developed world.

In relation to the E.U., the discussion has sought to

highlight the fact that while there appears to be an amount of strategic foresight associated with environmental policy, there is a definite lack of strategic

capacity. It is this weakness that limits the ability of the E.U. to implement environmental policy in the

long term. The discussion contended that a key factor underlying this weakness is the reluctance of national governments to apply environmental policies that

have, or are perceived to have, a negative impact on industrial competitiveness. However, through an analysis of experience relating to the application of environmental regulation in the U.K., it has been suggested that the combined economic and environmental logic of ecological modernization is beginning to be accepted by sections of U.K. industry. Thus, in the case of the U.K., national government is under pressure from the E.U. above it and from industry beneath it to instigate change. Its inertia in this respect indicates that the major obstacle to ecological modernization is not a failing of the state (meaning the bureaucracy-industry complex) but rather a failing of government. However, as this inertia is associ-

ated with a desire to maintain existing approaches to

policy, periodic renewal of and revisions to existing policy frameworks would help to overcome this critical weakness in order to work towards the goals of ecological modernization.

Acknowledgement-This research has been carried out with the support of the U.K. Economic and Social

Research Council and the Science Policy Support

Group under grant no. L323253015 ‘Research and Development in Environmental Technology: Assess- ing the Role of EU Regulatory Frameworks’. The views contained within this paper are those of the authors alone and cannot be taken to represent the views of any of the other parties associated with this research.

Note

1. The discussion presented is based on conclusions drawn from interviews with IPC-regulated companies, HMIP inspectors and representatives of the Department of the Environment.

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Ecological modernization and the European Union