Leaving behind the EU’s deadly addiction to deregulation

Better regulation is benevolent and participatory, cognisant of complexity and future-oriented. Deregulation it is not.

In mid-March, the European Union’s 27 commissioners will debate the ‘Better Regulation’ agenda, taking stock of its record and discussing its future. This is a critical moment, because the previous European Commission interpreted better regulation to mean less regulation. The emerging challenges facing Europe have proved this deregulatory agenda misguided—especially when it comes to protecting the environment and taking effective climate action.

A new approach is needed, fit for the future, coherent with the ambitions of the European Green Deal and able to help ensure future generations inherit a planet on which they can prosper.

Ideological project

Inspired by the United Kingdom and the United States, the EU and a number of member states embraced the ‘Better Regulation’ agenda, which was about better regulation in name but deregulation in nature.

Deregulation has been a central plank of an ideological project to put the short-term interests of (some) businesses above those of society and nature. It was a central demand of the oil and tobacco industries for much of the 20th century, aided by market-fundamentalist think tanks.

Unfortunately, this ideology imported into mainland Europe has led to protections being weakened, a regulatory ‘chill’ slowing progress on new measures and existing legislation protecting human health and the environment being torn up. 

Inspections and enforcement have proved woefully inadequate to give confidence that products on the market are safe. Too often laws have been bent or even broken—a third of chemicals were judged to break EU safety laws and banned substances were found in toys—and too little is done about it, eroding confidence in our governing institutions.

Destruction and degradation

Our planet is our life-support system and the only home we have, yet constant destruction and degradation of its ecosystems is creating ever-greater risks to humanity, from climate disasters to Covid-19. We ignore the risks of air and chemical pollution at our peril, as reflected in the deafening cacophony of scientific research highlighting the detrimental impacts: premature deaths, dementia, low birthweights, declining academic performance, infertility and other reproductive problems, respiratory diseases and more.

The European Green Deal (EGD) aspires to accelerate systemic, transformative change to enable Europe to live within the natural boundaries of the planet. Commitment to a carbon-neutral future and embrace of zero pollution are laudable, as are plans to move away from the make-take-use-dispose, extractive economic model to a circular one, where resources and their value are kept in the economy and out of landfills and oceans. The ambition to regenerate the environment, putting more back into the planet than we take out, is a positive sign of a shift of mindset.

It is however easier to talk the talk than walk the walk and progress over the first year of the EGD has been mixed, with proof of conviction lying in what will be decided in this, its second year. The commission’s Better Regulation communication will be an important test of whether the EU will truly chart a new way forward.

Yesterday’s thinking remains prevalent today. The Better Regulation agenda is still about reducing economic ‘burdens’ on businesses, though not necessarily those borne by society. The policy of ‘one-in-one-out’—initially interpreted as meaning one piece of legislation would have to be withdrawn for each new one tabled, later clarified as no net increase—was not withdrawn from the mission letters issued to commissioners after Ursula von der Leyen was elected president in 2019. This creates a significant tension with the ambitions of the EGD, her commission’s flagship project, and its stated green oath of ‘do no harm’.

Unhelpful and misleading

Of course, no one wants to create unnecessary burdens but that is a smokescreen for privileging short-term profit incentives—which often work against the long-term interest of the industries involved, not to mention society at large. But this framing is unhelpful and misleading.

Is requiring a company to treat waste water flowing into a river, or to pay for its waste to be safely disposed in a sanitary landfill or to replace harmful substances with clean chemicals a ‘burden’ upon industry—or a ‘responsibility’ as part of its licence to operate? The true burden of failing to regulate businesses falls on the damaged environment and on society, which must bear the costs—mere ‘externalities’ to the firm involved—of such destruction and its eventual repair.

Under a transformative Green Deal we should speak of responsibilities, not burdens. It should focus on genuinely better regulations, founded on the polluter-pays and precautionary principles.

So far, the EU remains committed to ‘one-in-one-out’. This means that, despite the EGD and its green oath, it could end up passing less and weaker legislation than necessary to honour its commitments and meet its objectives.

Benevolent regulation

This is not the way to develop legislation. Each law and regulation should be drafted and passed on its merits. All impacts, positive and negative—on the economy, society and the planet—need to be considered.

To make the transition to a sustainable economy, even the ‘do no harm’ principle does not go far enough. We need not only to avoid harm, which is passive, but to do active good. Regulations need not only to be better but benevolent in their real-world effects.

The EU and member states need to ensure that, during the legislative process, they adhere to all environmental and democratic principles and embrace public participation. A transparent decision-making process is vital.

At a more technical level, transparency about which chemicals are used in materials and products is essential. Without this information, Europe risks creating a toxic version of a circular economy, which still harms public health and devastates nature.

Upgrade needed

The better-regulation toolkit needs an upgrade. Too often the tools do not give decision-makers the whole picture, so it is hardly a surprise legislation is often weaker than needed.

There is also too much focus on assessments amenable to monetary capture. A mix of monetary, other quantitative and qualitative indicators is needed to evaluate the costs to society and nature, not to mention future costs to a planet on course for ecological destruction.

The natural world is a complex web of interactions, yet interconnections and feedback loops are often overlooked. Chemicals can weaken immune systems, which makes resisting the coronavirus more difficult. Global warming releases methane from permafrost, which in turn drives up warming. Ice melts to expose land which absorbs more sunlight, melting ice more quickly. More effort and resources are needed to integrate these interconnections into otherwise linear analyses.

Generally, future benefits are given less weight or ignored—the future should not be discounted in this way. The potential benefit of regulation to emergent industries specifically is often undervalued. Progressive regulation leads to innovation but by protecting the polluting industries of today we slow the emergence of tomorrow’s sustainable successors. These future benefits need to be accounted for now.

We also often forget to look at the cost of inaction: what would be the future impact of business as usual? Often the present costs of action are far lower—and the benefits far greater than even those costs.

Fitness test

To ensure that the EGD survives and helps Europe thrive in a healthier world, all EU policies and legislation should be subjected to a fitness test to see if they contribute to the sustainability objectives. Those found to be wanting must be ditched or reformed to ensure they serve the objectives of the sustainable transition. New legislation must be accordingly coherent—we need an ‘EGD-coherence check’. 

It is said politics is the art of the possible. But if the ‘possible’ does too little to avoid dramatic climate change, biodiversity loss and major health risks, then the future challenges will be impossible for society to manage. Far better to attempt the improbably difficult today, to avoid being burdened with the impossible tomorrow.

This requires an unfamiliar courage and ambition. But it is the only way to safeguard the future we want—and dodge the future we need to avoid.