CELEX: 51977PC0630
Language: en
Date: 1977-12-08 00:00:00
Title: Draft COUNCIL RECOMMENDATION to the Member States regarding methods of evaluating the cost of pollution control to industry (submitted to the Council by the Commission)

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COM (77) 630
Vol. 1977/0202
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 ---pagebreak---              COMMISSION OF THE EUROPEAN COMMUNITIES
                                                                 COM(77)630 final.
                                                                 Brussels . 8 Decem'be'r 1977
                                            Draft
                                      COUNCIL RECOMMENDATION
                      to the Member States regarding methods of eva­
                      luating the cost of pollution control to industry
                         ( submitted to the Council "by the Commission )
ce;.: ( 77 ) 630 final .
 ---pagebreak--- In the Programme of Action of the European Communities on the
Environment , which was approved in the declaration of the
Council of the European Communities and of the representatives
of the Governments of the Member States meeting in the Council
of 22 November 1975 j the following action is called for (l ):
"The study of methods for evaluating the cost3 of anti-pollution
measures with a view to harmonizing them - The first stage will
be an attempt to define methods for evaluating the costs of
combating water , air and industrial pollution . The work will be
carried out in collaboration with the OECD ".
It should be emphasized that the evaluation of the costs of
existing pollution control plants not only provides information
on the costs of policy measures already taken but can also be
used to facilitate the forecasting of the costs of future
policy measures . Because a very wide range of pollution control
plant n exists , embracing wide variations in the level of control
achieved , the technical process used , and the data at xvhich the
plants were bui.lt , it is possible to construct cost curves from
such data , showing the range of costs associated with different
levels of pollution control . From these cost curves a forecast
can be made , for example ., of the costs associated with the
general introduction of the most technically advanced pollution
control plants currently in existence . Olher - information will
usually also be required in order to take new policy decisions
(e.g. information on pollution control techniques with which
there is as yet no practical experience ) but knowledge cf costs
actually incurred 5aay thus be of considerable importance .
In practice , different methods are still used in different
Member States and even within a single Member State to evaluate
the actual or probable costs incurred by industry , so the data
obtained are seldom directly comparable at Community level .
It is therefore necessary to adopt a common set of rules to
which all future studies of pollution control costs in industry
conducted in the Member States should conform .
Possible methods have beentt-ried in practical sectoral studies
within the Commission , by Member States themselves , and on
behalf of the OECp Environment Committee . In the light of
these studies and of extensive discussion in the Group of
(l )  O.J. No . C112 of 20 December 1973
 ---pagebreak--- Environment sil Economic Experts* of the problems they have raised ,
it now seems opportune to propose a single methodology for
future pollution control cost studies of particular sectors •
of industry within the Community which will ensure & min5.mum '
of comparability of the resists they produce .
As regards the sampling methodology used in actually collecting
cost data , this may consist in taking a sample of the industi*y
concerned by means of a questionnaire , in collecting information
from the producers of pollution control equipment , in studying­
"representative " plants within the industry , or in a combination
of these . It is doubtful whether any one of these alternatives
is always to be preferred in all branches of industry , so that
it vould not be appropriate at this stage to decide in favour
of one of them . In this case , the maintenance of flexibility
in the methodology of evaluation is more important than the
relatively small improvement in comparability which would
result from the adoption of a single sampling methodology .
Finally , in order to ensure that as much comparable data as
possible on pollution control costs in industry is available '
at u Community level , it is appropriate that the results of
all such cost eval'iD(iticn studies available to Member States'
be communicated to the Commission .
* The Commission convened this group for the first time on
  £5 January 1972 . The group discussed problems of cost
  evaluation methodology at its meetings©? 25*1.72 , 25 - 5 - 72,
  8,9.1-73 , 10,11 - 5 - 73 and 29-1.7^- Working documents of the
  Commission on the subject were discussed by it on 11.7-7^
  and 16,17.6.75 and earlier drafts of this recommendation
  on 12.2.76 and 15 , 16.7.76 .
 ---pagebreak---        Draft Council Recommendation   to the Member States
                   Regarding Methods of Evaluating               ' .
             the Cost of Pollution €ontrol to Industry         •
TEE COUNCIL OF THE EUROPEAN COMMUNITIES     V
Having regard to the Treaty establishing the European Coal and
Steel Community ;
Having regard to the Treaty establishing the European Economic .
Community ;
Having regard to the Treaty establishing the European Atomic
Energy Community ; .
Having regard to the draft recommendation submitted by the           ■
Commission ;                       -                   '
Having regard to the Opinion of the European Parliament ;
                             ?■
Having regard to the Opinion of the Economic and Social Committee ;
Whereas if the Member States were to differ in their ecti.mates
as to the cost of anti pollution measures , particularly if these
estimates were not based on comparable legislative measures and
a uniform definition of couts , the possible repercussions of thin
on policies at the national level would sever e.lyhhamper the
implementation of a common policy : 5
Whereas this statement of principle was adopted in the Programme
of the European Communities on the Environment , which was
approved in a declaration of the Council of the European Communities
and of the representative3 of the Governments of the Member
States meeting in the Council of 22 November 1973. ( l ), y'~- '
Whereas these cost evaluations are intended to determine the size
of the burden to be borne by the economy as a v/hole or by
individual branches of industry if specific measures are taken
by the authorities to protect the environment , to provide data
on the most co^t-eff ective ways of rouc^ing pollution and , under
certain conditions , to help to determine quality objectives
and/or emission standards ;
WhereB3 the evaluation of the costs of existing pollution control
plants not only provides information on the costs of policy
measures already taken but can also be ucsed to facilitate the
forecasting of the costs of future policy measures ;
(l ) O.J. No . C112 of 20 December 1973
 ---pagebreak---                       - 2 -
                                    »»
Whereas it is of great advantage to both local and national
authorities and indispensable for decision-making at Community
level , to have access to comparative data on the costs of
existing pollution control plants in industry from various
Member States of the Community ;
Whereas for this purpose it would be beneficial that the Member
States introduce as similar methods of evaluation as possible
by adopting a common set of principles to whichjfuture . studies of
pollution control costs in industry should conform ;         . .
RECOMMENDS , within the meaning of the EEC Treaty , that in respect
of the evaluation of the cost of pollution control in particular
branches of industry , the Member States secure the use of the
principles , definitions and methods contained in the annex
to this recommendation and that whenever possible they communicate
to the Commission the results of all such studies .
Done at
                        *
                                       For the Council
                                       The Président
 ---pagebreak---                             A N N E X
                               Part I
              Principles , Dofinxtlons and Methods
1 . The pollution control costs to be evaluated in the industries
     concerned should relate to their plants contributing to the
     prevention , elimination or reduction of                 ■      '
     (a )     water pollution
     (b )     air pollution
     (c)      noise or vibrations or their effects                     .
     (d )     solid or liquid waste
     (e)      damage due to the above factors
2 . The actual collection of cost data should be preceded by a
     technical survey of the industry concerned . This descriptive
     phase should identify the different production technologies
     used in the industry , their environmentally harmful by-products ,
     and the primary and secondary pollution control processes
     ( including changes in the production process ) used to reduce
     these . Other factors or characteristics of the processes which
     are likely to give rise in practice to considerable differences
     in cost for otherwise similar pollution control processes should
     also be identified . Such factors may include , for example , the
     age of the plant or the characteristics of the ret« materials
     it uses . In such a case the since process operated by equipment
     of different age3 or using different raw materials should be
     treated as several separate processes for the collection of cost
     da-ua .                        .                             ^
     The survey will thus result in a catalogue of pollution control
     processes, with different technical characteristics and/or
     different average costs . It is for each of those processes that
     cost data should then be collected .
     For each iirccess in the final catalogue the survey should deter­
     mine the probable lifetime of the plant and equipment concerned .
     It should also determine the frequency of u^e and relative
     importance of each process within r.he industry . .
3 . 'This descriptive phase should be followed by an assessment phase ,
     in which a "pollution control relevancy factor 1 ' , i.e. that
     proportion of the overall costs of a particular pollution control
     technique which can be imputed fco the requirements of pollution
     control , is explicitly laid down for each pollution control
     technique identified in the initial phase .
 ---pagebreak---     Thin faotor will in teaat U© 2.00% In oaene when?® the costs
    relate to plf-rc/ss serving exclusively f. or pollution control .
    In other cases , where a reduction of pol3.ut-.ion is achieved
    by a change in the manufacturing process itself , the factor
    should wherever possible be determined after consultation
    with the Commission .
k . The cost data for pollution control plants should be collected
    in such, a way that an evaluation of each of the following cost
    categories is available separately for each pollution control
    technique identified in the technical survey :
    Inventaient Conta
    (i ) Expenditure on the construction or acquisition of plant
           and equipment (in accordance with the definitions in the
           European System of National Acccmts (ESA )* item P ^l ),
                                 I
    (ii ) Expenditure on the construction or acquisition of
           buildings (in accordance with the definitions of ESA "
           P. kl ),
   (iii ) Expenditure on "the acquisition of land and/or the market
           value of land already Owned ,
    (iv ) Expenditure on maintenance (in accordance with the
           definition of ESA , P 4-1 ).           '
    Running Costs
      (v)   Exnenditure on labour ( in accordance with the definitions
            of' ESA, B 10 ),
    (vi ) Expenditure on energy (in accordance with the definitions
           of ELA , P 20 ),
   (vii ) Expenditure on materials other than energy (in accordance
           with the definitions of ESA , P 20 ),
  (viii ) Expenditure on services (in accordance with the
           definitions of ESA , P 20 ),
    ( ix ) Expenditure on rents (in accordance with the
           definitions of ESA , P 20 ).
    * Published by the Offici\l for Official Publications of the
       European Communities in IS70
 ---pagebreak---                ;
                                  - 3 -
    Even where deteiled figures are not available In industry for
    each of these cost categories , they should nevertheless always
    be estimated .
    The above mentioned data should be exclusive of value~added tax
    for those categories on which it is payable and should be
    calculated as gross costs before subsidies of any kind . The years
    to which categories (i ) - (iii ) refer should be identified ,
    whereas categories ( iv ) - ( ix ) should refer to costs incurred
    in the preceding financial year .                                 ,
5 . The above cost data should be accompanied by the following
    information :
    (i )   the market value of any materials recovered as a result '
           of the operation of the pollution control plant in
           question , irrespective of whether such materials are
           sold or used internally ,
    (ii )  the exact absolute levels of each pollutant- emitted by
           the relevant production plant in a specified time period
           both before and after the installation of the pollution
           control plant to which the costs refer ,
    (iii ) the ar^ual production volume of the production process
           to wh5.oh the pollution control costs refer .
6 . If the data are collected by means of a questionnaire addressed
    to a representative sample of the industrial sector , the
    following information should also be obtained :
    - the amount of any pollution charges paid by a firm in
      addition to , or instead of , pollution control measures ,
      both before and after installation of the pollution control
      plant in question ( in accordance with the definitions of
      ESA , E72 , R66 );
    - the nature and amount of any financial aid , whether in the
       form of subsidies , tax concessions or preferential loans
      received by industry in respect of the pollution control
       installations concerned .
7 . Any data other than the above which it is deemed dec-arable to
    collect should be expressed as separate figures , without being
    incorporated into any of the categories defined above .
8 . The principles , definitions and methods concerned in this
    Part of the Annexe should be used in the light of the
    comments contained in Part II .
 ---pagebreak---                                   Part IX
      Comments on' the" irinciples * Def i nitior.c and Methods contain cd
                     _           in. Part I                      ■
Généra t.
Lack of comparability can. arise f.rr numerous reasor.c , of v?hxcu
the following are the most important : different types of
installation may be included under th.3 heading of pollution
control s different; categories of costs cay be included in the
cval\taiio:i aud tlieo© nay be defined h\ dit'f erei>.-.- ways , the txae
period to which the data refer may differ from one study to another ,
and different sampling methodologies may be employed . In addition ,
ouch! cost data remain of li taited value unless it is clear to what
extort tho pollution' control to whi'.ch they refer has in fact reduced
pollution levels .
However , pollution control cci.t studies czn be carried rut vi th
differing aims in view , requiring the collection of mere or lees
detailed figures . Thus it is possible *co obtain va^.id xn:t:or;v,ation
on the raaoroeconoaic coots to industry of existing nollucion
control legislation without eit.her carrying otn: a survey of the
pollution co.r.trol processes used or using a detailed breakdown of » -
cost categories . It would therefore rot necessarily be appropriate
for such a study to une the same methodology as one which is
cor.'iirned. with the costs of individual processes in a particrlar
branch of industry . Furthermore , since ctadier airrirg at r.^araring
the overall juacroeconcnic effects ox environments.!. policy tsy
evaluating pollution control costc, in general provide cata vhxcxi are
of limited Vcluo in the context of a dxf fez* en*. iiati .'.>.^,l economy ,
it therefore does not seem essential at present to devellop^a common
methodology for them . A common methodology is therefore pr.-.marxly
retired for tho^e cost studies .vhion pexer to partxeuj-ar ^-ranci^es
of irduatry . However , the results . cf such sectoral atuaies can also
 serve as part ox* the basis for caicTlatins the macToecoxioxnic
 effects of - pollution control nseeaurss in the sectors concerned .
 re po\nt 1
 This article defines those measures which are to be ccnx-idered as
 pollutioxi control foi* the purposes of tbi3 recouimexidation . However ,
 it is for the technical auxvey to determine 'uhoae cypos? of
 pollution which arc- relevant for the branch of industry concerned
 by o. particular st'^dj »
 ---pagebreak---      costs incurred "by a "branch of industry may depend ^viUfially
en the particular .technical processes used In it , which may
vary widely froia oue country to another . If the cost drta obtained
ar9 to be comparable , they siust therefore be broken do;;n according
to the process concerned , the number of processes involved being
determined by a technical survey of the branch of industry before
the cost evaluation itself is carried out . The presentation of
separate cost data for each technical process allows them to be
u^ed in conjunction with- knowledge of the frequency of occurrence
of these processes in the Member States in ana7-.ysJ.ng the reasons ' .
underlying the total costs incurred in a particular branch of
industry .
re Tioint 3
Where process changes are concerned , it will seldom be easy to
agree on the magnitude of the ^'pollution ccvi!:rol relevancy factor".
However , as long as the factor chosen is explicit in the cor-t
study it will always be possible , by means of a simple conversion ,
to wake the results comparable with those of another study in which
the factor has been given a different value .
re point k
It is not to be expected that cost studies on particular branches •
of industry will always be conducted in different Member States
at the csame time . The comparability o.f their results will depend
on the ability to adjust them for changes in prices ., The       _
presentation of separate data for each cost category allows the .
uae of relevsL.it price indices to adjust data from different years
to a common base year .
re point 5 (i )
Since the cost data' collected tire intended to represent the burden
carried by industry, it is necessary that any revenue accruing
as a result of pollution control should also be assessed, so that
net costs are not overeat isiatod .
re point 5 i.ii ) - ■
V/ithout the careful, assessment of the performance of bne pollution
 control process concerned , it would not be possible to construct
a curve linking the average cost of different processes to tne
amount of pollution control they accomplish .
 ---pagebreak---                                      3
re peint 5 (iii )                           1
The absolute size of an industrial installation is one of the most
important det enn3.na.it s of the average cost of its pollution control .
Knowledge of it. is therefore of great importance in the analysis
of the cost fignrea obtained .
re -point 6
When cbvba is collected by way of a questionnaire from a
representative sample of industry , extra information should be
obtained on transfer payments between industry and the public
sector which are specifically rel&ted to pollution control .
In this way , the act^io.1 net financial burden carried by the
industry can be distinguished from the gross macroeconomic
'burden carried by the economy , the two differing by the amount
of any net financial transfer .
re point 7
Irs many cases those tonductinG; pollution control cost studies
may wish to collect supplementary data , e.g. concerning the
relative importas c a of pollution control costs compared to other
variables ouch as total investments or turnover , or on the invest­
ment plans of industry . While such information may often ba
useful for certain purposes* it is not essential for the proposes
of this recojmicndation , so its collection should remain optional .