Environmental regulations: go green or get left behind
Nearly all countries have recognized the threat a heating planet poses to future generations. An increasing number of them are taking steps already to reduce emissions and slow global warming.
These measures include rewards for positive initiatives, such as incentives for the investment in energy-efficient equipment. On the other hand stricter environmental regulations and the prohibition of inefficient products.
Environmental regulations affecting the industrial sector in the EU
Because industrial production processes can play a major role in lowering emissions and increasing energy efficiency, the EU has put in place environmental regulations.
The Industrial Emissions Directive is its main tool for regulating the emission of pollutions from industrial plants. It requires these facilities – about 50,000 across the EU – to operate in accordance with a permit that shows they are seeking to reduce emissions. For example by applying Best Available Techniques and investing in low impact equipment.
In addition, the European Union has set energy efficiency standards for various types of machinery. The EU’s labelling and ecodesign rules promote sustainable products, not just for consumers but also the industrial sector.
There are specific regulations for products. Ranging from lightbulbs and cooking appliances, to air heating and cooling equipment, industrial fans, water pumps and external power supplies.
Sticks and carrots – environmental regulations and energy saving incentives
However, governments are not just imposing new burdens on manufacturers. In some cases, they are also providing subsidies, tax breaks, and other incentives. These can improve the bottom line of forward-looking companies – in addition to the major savings they can realize by employing ecological equipment. Some examples: variable speed drive ( VSD) refrigerant air dryers, the Optimizer 4.0 central control system or variable speed drive (VSD) compressors.
In the UK, the Energy Technology Product List, or ETL, is a list of energy-efficient machinery, such as air compressors and heaters. Tis list is maintained by the government. The purpose of the ETL is to motivate companies to invest in eco-friendly equipment. How? By offering tax breaks for the investment in sustainable technologies.
France offers a similar incentive program, the Certificat d'economie d'energie.
Germany’s National Action Plan on Energy Efficiency (NAPE) also rewards investments in energy saving equipment.
Some European countries and a handful of states in the US are offering so-called “white certificates”. These are tradeable assets that show a company has achieved a certain percentage of energy savings. It is another way to encourage investments in energy efficiency.
Voters demand action
Experts warn us that many of the current laws and environmental regulations do not go far enough yet. It is likely that this trend to “go green” will accelerate rather than slow down – not just out of necessity but because the people demand it.
A 2019 European Commission survey found that 93% of EU citizens believe climate change is a serious issue. Nearly eight in ten think it is “very serious.” And they want their government to take action. The same poll found that 92% of respondents – and large majorities in each individual member state – think that greenhouse gas emissions “should be reduced to a minimum.”
In the United States, more Americans than ever want the fight against climate change to be a policy priority. Protecting the environment is nearly as important to them as the economy.
And it’s not just that people think this issue is important. They are personally feeling the effects of this impending threat. According to another recent survey, nearly half of Americans between the ages of 18 and 34 said they are so stressed about climate change that it affects their daily life.
Climate change has become an election issue. And for businesses, that means that new environmental laws and regulations are coming.
Courts can force regulations
There is another factor that has to be considered when trying to predict which new regulations will be issued and which laws passed. It’s no longer just up to a country’s leaders.
The role of the courts is important and often overlooked. In many countries, citizens are trying to sue their governments into action. So even if they wanted to, politicians would not be able to drag their feet any longer. They would have to act – and swiftly.
The Dutch Supreme Court recently decided such a case in favor of the plaintiffs. The court ruled that the government of the Netherlands must reduce greenhouse gas emissions. Emissions must be reduced by a quarter, from 1990 levels by the end of this year.
That means that, at any time, a court could spur a government into action. An action that will be much more aggressive than the gradual changes some regulation calls for.
Higher prices make energy-efficient equipment more valuable
One final thing to consider. Energy efficiency will likely become much more important in the near future because energy prices are going to go up. That, coupled with energy efficiency incentives will make premium quality products a much better investment. Energy costs will take up an even bigger share of the total cost of ownership.
All of the above make it clear that businesses hoping that they won’t be subject to more stringent regulations are playing Russian Roulette with the future of their enterprise. The question is not if additional rules will be implemented, but when and how tough they will be.
The inevitable conclusion is that forward-looking manufacturers and consumers will be rewarded. Businesses benefit when they plan ahead. Investing in developing – or purchasing – cleaner technology, such as low impact equipment, even when it is not required yet, will give you the advantage when the rules will be tightened.