Greening subsidies in Germany – Interlinkages to selected policies

Content Provider	Semantic Scholar
Author	Rave, Tilmann
Copyright Year	2005
Abstract	In Germany and in many other countries the environment has traditionally been treated as a separate and discrete area of policy-making. Due to changing problem structures and an increasing knowledge and awareness about these changing problem structures (e.g. the temporal, spatial and structural implications of climate change) this approach has for some time been characterised as only ad-hoc, piecemeal and reactive. By now and along with the concept of Sustainable Development a shift in perspective can be observed which is well captured in the principle of Environmental Policy Integration (EPI). It is not only discussed in academia but has also been given a prominent place in the EU treaties: “Environmental protection requirements must be integrated into the definition and implementation of the Community policies [...] in particular with a view to promoting sustainable development” (Art. 6 EU Treaty). Basically this principle emphasises the potential discrepancies between policy-making in highly specialised and fragmented policy (sub-)fields and the requirements of environmental protection. Often these policy fields have a long tradition and were institutionalised at a time when environmental concerns played only a minor role in the political agenda. At the same time, however, these nonenvironmental policy sectors have created incentive structures and mechanisms and used policy instruments which do not only (partly) conflict with environmental concerns and the changing environmental problem structures but turn out to be quite resistant to change. A typical policy instrument that comes to mind is subsidies. Massive support schemes in favour of intensive farming, the construction of single occupancy houses in the countryside or CO2intensive coal mining, and the distortions and loop-holes in the “historically grown” tax system, with its strong focus on taxing labour rather than natural resources, are just among the most striking examples to demonstrate the environmentally harmful or at least problematic effects of subsidies. The term “environmentally harmful subsidies” (sometimes “perverse” subsidies) therefore results from the increasing recognition and awareness that activities induced by subsidies may not only harm the economy, distort the level playing field and exacerbate the public sector deficit and debt problem but have undesirable (and sometimes unexpected) consequences on the environment (OECD, 2003). As a result, these incentive mechanisms gain in importance when conceptualising environmental policy as part of a broader concept of policy-making aiming at sustainability, coherence and consistency. Yet, with regard to environmental policy subsidies have traditionally been dealt with from a rather narrow instrumental perspective. According to this perspective the public administration as well as politicians, when faced with a political problem, have a “tool-box” of instruments at their disposal from which they choose the most suitable (“the best”) instrument (Böcher and Töller, 2003). This approach can be found both among practitioners as well as scholars (especially jurists and economists) with the implications being different depending on the underlying notion of rationality (political, economic, legal). Policy-makers typically used subsidies along with the traditional (but confined) “command-and-control” policies to alleviate pressing envi-
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