ABSTRACT
This chapter examines the context of current mainstream debates about environmental policy. It focuses on the continuing political debate over the effects of different types of regulatory instrument on industry, especially their effects on innovation. The chapter explains several examples of voluntary agreements. Many environmental regulations are expressed as an emission standard of one form or another. Industry expresses some serious concerns regarding the effect of taxes on innovation, arguing that innovation frequently requires capital for investment. Voluntary agreements cannot be seen simply as a further regulatory instrument, to be added to the regulator's armoury. In Japan, a similar steadfastness on the part of the metropolitan authorities has encouraged many individual firms to make voluntary agreements with these authorities. A flow of information between participants may be desirable during formulation of industry-level targets, as part of a bargaining process which results in firms making equivalent efforts, rather than equal emission reductions.
