Phase 2 Exploring the relationship between environmental regulation and competitiveness: A case study on the Renewable Obligations. A report to the Department for Environment, Food and Rural affairs. SQW Consulting.

Abstract:

<p>SQW was commissioned by DEFRA in 2006 to conduct a literature review of the available evidence on the relationship between environmental regulation and competitiveness to establish the robustness of the conclusions from the available evidence and their relevance to the UK. This study highlighted the need to conduct further research on the impact of regulatory design & implementation and regulatory form on competitiveness</p> <p>As a result, SQW were commissioned to conduct Phase Two of the research, which sought to 'gather and analyse evidence on the impact of the design of environmental regulation on competitiveness' through the undertaking of a set of case studies. The research examined the following policy issues: <bl> <li>The impact of business design and implementation of regulation on SMEs as compared to larger businesses;</li> <li>The forms of regulation most likely to induce innovation;</li> <li>The importance of context in determining the extent of inducement effects of regulation on innovation.</li> </bl></p> <p>This case study discusses 'the relationship between the Renewables Obligation Order (RO) in the UK and the influence is has played on stimulating innovation and the competitiveness/productivity of the renewables energy sector. Comparison is also made to an alternative instrument used to reach similar environmental goals - The Renewable Energy Feed- in Tariff, with a particular focus on the German experience'. This case study was selected as the RO acts as one of the key instruments currently used by the UK to tackle climate change, with a particular focus on the commercialisation of renewable technology and energy policy, a topic which is of interest to a wide range of policy makers. The study also allowed us to compare two different instruments with similar environmental aims.</p> This report is divided into the following sections: <ol> <li>Introduction</li> <li>The Renewables Obligation</li> <li>Effectiveness of policy</li> <li>Evidence on the influence of regulatory form on innovation, productivity and competitiveness</li> <li>Concluding statements</li> </ol> <ul> <li>Annex A: List of Consultees</li> </ul>

Author(s):

Prabhakar, M. and Hills, K.