Op-€d

 

October 30, 2002

Science Matters

Meeting regulations costs less than expected

   

David STAT

Here's a prediction. After the federal government ratifies
the Kyoto Protocol—and Prime Minister Chrétien has
promised a vote on it by Christmas—there will be a lot
of noise. Alberta will try to find a way out and some of
the less-innovative oil companies will stir up a tremen-
dous fuss.

But over time the noise will fade into the background
as companies and provinces quietly meet and exceed their
Kyoto targets at far lower costs than anticipated. Then
they will quit their anti-Kyoto public relations campaigns
and start new campaigns about how they are leading the
way to a cleaner planet or otherwise saving the world.

This scenario has happened before, many times. In
fact, the history of environmental regulations tells us that
the true costs of protecting the environment are never as
high as industries claim they will be. From asbestos, to

benzene to CFCs and sulphur dioxide, industry claims of
economic disaster have not come true.

A study a few years back by the Economic Policy
Institute of Washington DC found that in almost every
single case they looked at, the costs of complying with
environmental regulations were far lower than industry
—and even governments—claimed they would be. For
example, electric utilities in the U.S. claimed that it
would cost $4-5 billion per year to meet the 1990 Clean
Air Act. But by 1996, utilities were actually saving $150
million per year.

CFCs are another example. When a phase-out of these
substances that damage the ozone layer was announced,
many industries claimed that alternatives did not exist or
were too expensive. In 1993, car manufacturers said the
CFC regulation would increase the price of all new cars
by up to $1,200. Just four years later, the industry admit-
ted that costs were already down to as little as $40.

In perhaps the best-known Canadian case, Inco vehe-
mently opposed reducing emissions from its stacks, but
once forced to by government regulations, discovered
money could be made from the material captured in
scrubbers and now boasts of its environmental awards
and civic leadership.

There are several reasons why complying with environ-
mental regulations is almost always cheaper than
claimed. First, much of the touted costs are for capital
equipment that is usually much more efficient and clean-
er than old, dirty equipment. These costs more appropri-
ately should be considered capital investments, which
end up reducing overall operating costs. Second, tech-
nologies change and improve, and once adopted on a
mass basis, these technologies benefit from economies of
scale that result in lower costs. Finally, in complying with

 

 

 

 

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regulations, industries are forced to rethink standard
business practices that may have been wasteful or unpro-
ductive.

The oil industry flap about Kyoto will prove to be just
another example of a situation where the costs of meet-
ing a regulation are blown all out of proportion. Later,
when it comes time to meeting the goals, Alberta and the
fossil fuel industry will find ways to make it happen that
may well prove to be profitable. As Alberta Senator and
forward-thinking oil industry businessman Nick Taylor
said in an interview, “It is so transparently obvious that
Kyoto is going to make Alberta money that Alberta is
bound to come around.”

Unfortunately, that hasn't happened yet and the
Alberta government is using public money to campaign
against Kyoto, despite numerous studies indicating many
economic benefits and opportunities resulting from the
treaty. Mr. Taylor is right, they will come around. But we
must hope that they do so sooner, rather than later.

Traditionally, we have viewed air, water and soil as lim-
itless resources for industrial use with little regard to
long-term effects on ecosystems, health or esthetics.
Indeed, economists generally consider air, water and soil
as “externalities,” factors outside the economy. In recent
decades, we've become aware of how much the massive
use of fossil fuels is altering the atmosphere, affectin
both climate through greenhouse gas accumulation and
human health through air pollution. We cannot afford tol
ignore these problems any more. Fortunately, we have
history on our side. We can change, and it won't cost us
the earth.

To discuss this topic with others, visit the discussion,
forum at <www.davidsuzuki.org.>

 

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