Skip to main content Accessibility help
  • Print publication year: 2011
  • Online publication date: November 2011

2 - The rise of the market in EU environmental policy

from Part I - Should environmental goals play a role in EU competition law and policy?



One of the most striking developments in EU environmental policy since its beginnings has been the transformation in regulatory instruments used. From an initially almost exclusive focus on direct, command and control regulation, a radical, though gradual, shift has occurred whereby market-based instruments, which use market mechanisms to achieve environmental aims, now play a vital role in the EU's regulatory mix. At its heart, this change reflects the ideological shift that had taken place under Reagan in the US, and Thatcher in the UK, towards neo-liberalism and belief that free market values should apply throughout not only economic, but also social, political and environmental life. While traditional direct regulation remains important within the EU, the use of market-based instruments is being considered in increasingly wide areas of EU environmental policy, including areas such as habitat conservation where it was formerly thought inappropriate.

The shift towards market-based instruments has important implications for the interface between EU environmental and competition policy, bringing large areas of environmental policy within the scope of competition law for the first time. It is as a result of this shift, therefore, that competition enforcers will increasingly be forced to consider their approach to environmental considerations. Understanding the extent of this change is, in sum, crucial to an appreciation of how the EU's environmental and competition policies interact at present, and will interact in the future.

Kingston, S.‘Developments in EU Law: Environment’ 2010 59 International and Comparative Law Quarterly1129
Gunningham, N.‘Environmental Law, Regulation and Governance: Shifting Architectures’ 2009 21 Journal of Environmental Law179
Dryzek, J.The Politics of the Earth: Environmental DiscoursesOxfordOxford University Press 2005 76
Abbot, C.‘Environmental Command Regulation’Richardson, B.Wood, S.Environmental Law for SustainabilityOxfordHart Publishing 2006 63
Teubner, Gunther‘Substantive and Reflexive Elements in Modern Law’ 1983 17 Law and Society Review239
Macrory, R.Turner, S.‘Participatory Rights, Transboundary Environmental Governance and the Law’ 2002 39 Common Market Law Review489
Ryall, Effective Judicial Protection and the Environmental Impact Assessment Directive in IrelandOxfordHart Publishing 2009
Harman, J.‘Environmental Regulation in the 21st Century’ 2004 6 Environmental Law Review145
Porter, M.van der Linde, C.‘Toward a New Conception of the Environment–Competitiveness Relationship’ 1995 9 Journal of Economic Perspectives97
Lee, M.EU Environmental Law: Challenges, Change and Decision-MakingOxfordHart Publishing 2005
Farber, D.‘Taking Slippage Seriously: Noncompliance and Creative Compliance in Environmental Law’ 1999 23 Harvard Environmental Law Review297
Sullivan, LJReport of the Working Group on Access to Environmental Justice, Ensuring Access to Environmental Justice in England and WalesLondon 2008
EEAThe European Environment – State and Outlook 2010: SynthesisEuropean Environment AgencyCopenhagen 2010
Makkai, T.Braithwaite, J.‘In and Out of the Revolving Door: Making Sense of Regulatory Capture’ 1995 1 Journal of Public Policy61
Buchanan, J.Tullock, G.‘Polluters' Profits and Political Response: Direct Controls Versus Taxes’ 1975 65 American Economic Review401
Halpern, C.‘Governing Despite Its Instruments? Instrumentation in EU Environmental Policy’ 2010 33 West European Politics39
Ackerman, B.Stewart, R.‘Reforming Environmental Law’ 1985 37 Stanford Law Review1333
Stewart, R.‘The Importance of Law and Economics for European Environmental Law’ 2002 2 Yearbook of European Environmental Law1
Galizzi, P.‘Economic Instruments as Tools for the Protection of the International Environment’ 1997 European Environmental Law Review 155
Posner, R.Economic Analysis of LawNew YorkAspen Publishers 2010
Hardin, G.‘The Tragedy of the Commons’ 1968 162 Science1243
Frank, R.Microeconomics and BehaviourNew YorkMcGraw-Hill/Irwin 2006 607
Tietenberg, T.‘Economic Instruments for Environmental Regulation’ 1990 6 Oxford Review of Economic Policy17
Sands, P.Principles of International Environmental LawCambridgeCambridge University Press 2003 154
Golub, J.Golub, J.New Instruments for Environmental Policy in the EULondonRoutledge 1998 8
Rehbinder, E.‘Ecological Contracts: Agreements Between Polluters and Local Communities’Teubner, G.Farmer, L.Murphy, D.The Concept and Practice of Ecological Self-OrganisationLondonWiley 1994
Krämer, L.‘Thirty Years of EC Environmental Law: Perspectives and Prospectives’ 2000 Yearbook of European Environmental Law155
Johnson, S.‘Economics v. Equity: Do Market-Based Environmental Reforms Exacerbate Environmental Injustice?’ 1999 56 Washington and Lee Law Review111
Pigou, A.The Economics of WelfareLondonMacmillan & Co. 1932
Coase, R.The Problem of Social Cost' 1960 3 Journal of Law and Economics1
Backhaus, J.‘The Law and Economics of Environmental Taxation: When Should the Ecotax Kick in?’ 1999 19 International Review of Law and Economics117
OECD‘Integrating Environment and Economy’OECD ObserverParisOECD 1997
Ekins, P.Speck, S.‘Competitiveness and Exemptions from Environmental Taxes in Europe’ 1999 13 Environmental and Resource Economics369
Hamm, W.‘Die Ökosteuer – eine ordnungspolitische Fehlleistung’,ORDO Jahrbuch für die Ordnung von Wirtschaft und GesellschaftStuttgartLucius & Lucius 2001 1
Dobson, A.Citizenship and the EnvironmentOxfordOxford University Press 2003 3
Grepperud, S.‘Environmental Voluntary Behaviour and Crowding-Out Effects: Regulation or Laissez-Faire?’ 2007 23 European Journal of Law and Economics135
Kingston, S.‘The Boundaries of Sovereignty: The ECJ's Controversial Role Applying Internal Market Law to Direct Tax Measures’ 2006 9 Cambridge Yearbook of European Legal Studies287
OECDTaxation, Innovation and the EnvironmentParisOECD 2010 32
Toke, D.Lauber, V.‘Anglo-Saxon and German Approaches to Neoliberalism and Environmental Policy: The Case of Financing Renewable Energy’ 2007 38 Geoforum677
Tietenberg, T.Emissions Trading: Principles and PracticeWashingtonResources for the Future 2006
Tietenberg, T.Markandya, A.Richardson, J.The Earthscan Reader in Environmental EconomicsLondonEarthscan 1992
Lefevere, J.‘Greenhouse Gas Emission Allowance Trading in the EU: A Background’ 2003 Yearbook of European Environmental Law 149 159
Barth, R.Dette, B.‘The Integration of Voluntary Agreements into Existing Legal Systems’ 2001 1 Environmental Law Network International Review20
Gehring, M.Streck, C.‘Emissions Trading: Lessons from SOx and NOx Emissions Allowance and Credit Systems: Legal Nature, Title, Transfer and Taxation of Emission Allowances and Credits’ 2005 35 Environmental Law Reporter10219
Freestone, D.Streck, C.Legal Aspects of Implementing the Kyoto Protocol Mechanisms: Making Kyoto WorkOxfordOxford University Press 2005
Freestone, D.Streck, C.Legal Aspects of Carbon Trading: Kyoto, Copenhagen and BeyondOxfordOxford University Press 2009
Rajamani, L.‘Addressing the “Post-Kyoto” Stress Disorder: Reflections on the Emerging Legal Architecture of the Climate Regime’ 2009 58 International and Comparative Law Quarterly803
Dahlgreen, J.‘Emissions Trading in the United Kingdom: The Greenhouse Gas Emissions Trading Scheme (Amendment) and National Emissions Inventory Regulations 2005 and the Greenhouse Gas Emissions Trading Regulations 2005’ 2006 8 Environmental Law Review134
Torre-Schaub, M.‘La naissance d'un nouveau marché: le système britannique de commerce d'allocations d'emissions de gaz à effet de serre’ 2004 Revue internationale de droit economique 227
Ellerman, D.Buchner, B.‘The European Union Emissions Trading Scheme: Origins, Allocation, and Early Results’ 2007 1 Review of Environmental Economics and Policy66
Pâques, M.Charneux, S.‘Du quota d'emission de gaz à effet de serre’ 2004 3 Revue européenne de droit de l'environnement226
Pâques, M.‘La directive 2003/87/CE et le système d'échange de quotas d'émission de gaz à effet de serre dans la Communauté européenne’ 2004 40 Revue trimestrielle de droit européen250
Bazelmans, J.‘De implementatie van Europese handel in emissierechten in Nederland’ 2004 31 Milieu & Recht214
Anttonen, K.Mehling, M.Upston-Hooper, K.‘Breathing Life into the Carbon Market: Legal Frameworks of Emissions Trading in Europe’ 2007 European Environmental Law Review96
Ellerman, D.Buchner, B.Carraro, C.Allocation in the European Emissions Trading Scheme: Rights, Rents and FairnessCambridgeCambridge University Press 2007 3
Rousseaux, S.‘L'allocation des quotas d'émission de gaz à effet de serre: un aspect determinant du future marché européen’ 2005 484 Revue du Marché commun et de l'Union européenne31
Fourth Report of the Environmental Audit Committee of the UK House of CommonsThe Role of Carbon Markets in Preventing Dangerous Climate ChangeLondon 2010
Mace, M.Anderson, J.‘Transnational Aspects of a Linked Carbon Market’ 2008 2 Carbon and Climate Law Review190
Ellerman, D.Convery, Perthuis, C.Pricing Carbon: The European Union Emissions Trading SchemeCambridgeCambridge University Press 2010 1
Vironneau-Georges, M.‘Le débat sur la responsabilité sociale des enterprises (RSE) à nouveau sur l'agenda politique européen?’ 2008 Revue du Marché common et de l'Union européenne393
Lyon, T.Maxwell, J.Corporate Environmentalism and Public PolicyCambridgeCambridge University Press 2004
De Schutter, O.‘Corporate Social Responsibility European Style’ 2008 14 European Law Journal203
Decker, C.‘Corporate Environmentalism and Environmental Statutory Permitting’ 2003 46 Journal of Law and Economics103
Conrad, K.‘Voluntary Environmental Agreements Versus Emission Taxes in Strategic Trade Models’ 2003 19 Environmental and Resource Economics361
Ogus, A.‘Rethinking Self-Regulation’ 1995 15 Oxford Journal of Legal Studies97
Eickhof, N.‘Selbstverpflichtungen im Bereich des Umweltschutzes’ 2004 ORDO 269
De Clercq, M.Bracke, R.Baeke, S.Ameels, B.Seyad, A.Het gebruik van vrijwillige instrumenten bij de realisatie van duurzame ontwikkeling – Module 2: Vrijwillige milieubeleidsovereenkomstenGentUniversiteit Gent 2001 2
Thaler, R.Sunstein, C.Nudge: Improving Decisions about Health, Wealth and HappinessNew HavenYale University Press 2008
Van Calster, G.Dekeletaere, K.Orts, E.Deketelaere, K.Environmental Contracts: Comparative Approaches to Regulatory Innovation in the United States and EuropeAlphen aan den RijnKluwer 2001
Environmental Law Network InternationalEnvironmental Agreements: The Role and Effect of Environmental Agreements in Environmental PoliciesLondonCameron May 1998
Morgenstern, R.Pizer, W.‘How Well Do Voluntary Environmental Agreements Really Work?’ 2007 164 Resources23
OECDVoluntary Approaches for Environmental Policy – An AssessmentParisOECD 1999
Bressers, H.De Bruijn, T.‘Environmental Voluntary Agreements in the Dutch Context’Croci, E.The Handbook of Environmental AgreementsBerlinSpringer 2005
Bressers, Bruijn, T.Lulofs, K.‘Environmental Negotiated Agreements in the Netherlands’ 2009 18 Environmental Politics77
Liefferink, J.Mol, A.‘A Comparative Analysis of Joint Environmental Policy-Making’Mol, A.Lauber, V.Liefferink, J.The Voluntary Approach to Environmental Policy: Joined Environmental Policy-Making in EuropeOxfordOxford University Press 2000 205
Vogelaar, F.‘Verpakkingen en verpakkingsafval: de richtlijn 94/62/EEG en haar tenuitvoerlegging in Nederland’Deketelaere, K.Wiggers-Rust, L.Actualiteiten Europees MilieurechtBruggeDie Keure 1997 95
Wurzel, R.Jordan, A.Zito, A.Brückner, L.‘From High Regulatory State to Social and Ecological Market Economy: “New” Environmental Policy Instruments in Germany’ 2003 12 Environmental Politics115
Bailey, I.Rupp, S.‘Geography and Climate Policy: A Comparative Assessment of New Environmental Policy Instruments in the UK and Germany’ 2005 36 Geoforum387
Alberini, A.Segerson, K.‘Assessing Voluntary Programs to Improve Environmental Quality’ 2002 22 Environmental and Resource Economics157
Case, D.‘Corporate Environmental Reporting as Informational Regulation: A Law and Economics Perspective’ 2005 76 University of Colorado Law Review379
Parker, C.‘Meta-Regulation: Legal Accountability for Corporate Social Responsibility’McBarnet, D.Voiculescu, A.Campbell, T.The New Corporate AccountabilityCambridgeCambridge University Press 2007
Brown, Jong, M.Lessidrenska, T.‘The Rise of the Global Reporting Initiative: A Case of Institutional Entrepreneurship’ 2009 18 Environmental Politics182
Wätzold, F.‘Explaining Differences in EMAS Participation Rates Across Europe: the Importance of Institutions, Incomplete Information and Path Dependence’ 2009 28 European Journal of Law and Economics67
Bracke, R.Verbeke, T.Dejonckheere, V.‘What Determines the Decision to Implement EMAS? A European Firm Level Study’ 2008 41 Environmental and Resource Economics499
Iraldo, F.‘Is an Environmental Management System Able to Influence Environmental and Competitive Performance? The Case of the Eco-Management and Audit Scheme (EMAS) in the European Union’ 2009 17 Journal of Cleaner Production1444
Lavallée, S.Bartenstein, K.‘La régulation et l'harmonisation internationale des programmes d'écolabels sur les produits et les services’ 2004 Revue internationale de droit economique 47
Jordan, A.Wurzel, R.Zito, A.Brückner, L.‘European Governance and the Transfer of “New” Environmental Policy Instruments (NEPIs) in the European Union’ 2003 81 Public Administration555
A positive effect on environmental quality has been reported in third countries: eco-labelling has been credited by the US Environmental Protection Agency with reducing volatile organic compound (VOC) emissions in Germany, and with increasing paper recycling in Korea: US Environmental Protection AgencyEconomic Incentives for Pollution ControlWashington 1999
Mock, D.Perino, G.‘Wasting Innovation: Barriers to Entry and European Regulation on Waste Electronic Equipment’ 2008 26 European Journal of Law and Economics1
Grolleau, G.Ibanez, L.Mzoughi, N.‘Industrialists Hand in Hand with Environmentalists: How Eco-Labelling Schemes Can Help Firms to Raise Rivals' Costs’ 2007 24 European Journal of Law and Economics215
OECDCompetition Policy and the EnvironmentParisOECD 1996