Consequences of the IPPC-directive’s BAT requirements for abatement costs and emissions

Abstract:\nThe Integration Pollution and Prevention Control (IPPC) directive from the European Union implies\nthat the regulatory emission caps should be set in accordance with each industry’s Best Available\nTechniques (BAT). The directive is under implementation in Norway, and it represents a refocus of\nthe Norwegian environmental regulations away from economic efficiency towards a BAT principle.\nWe examine the effect of this implementation with respect to expected emission reductions and\nincreases in costs. Data Envelopment Analyses (DEA) is used to construct a frontier of all efficient\nplants. This provides us with two alternative interpretations of BAT. First, we assume that all the\nplants emit in accordance with the best practice technology, represented by the frontier, by reducing\nall inputs proportionally. Second, we assume that all plants emit in accordance with the best practice\ntechnology by reducing emissions only. Both interpretations reveal substantial potential for emission\nreductions. Further, abatement cost estimates indicate that considerable emission reductions can be\nachieved with low or no social costs, but that the implementation of BAT for all plants involves\nsubstantial costs.\nKeywords: IPPC, BAT, Emissions, Energy intensive industries, DEA, Technical efficiency, Frontier\ntechnology.