Integrated Product Policy (IPP)

On 18 June 2003, the Commission finally adopted its long-awaited Communication on Integrated Product Policy (IPP) opting for a more voluntary approach to greener products. IPP seeks to minimise environmental degradation caused by products throughout their whole life-cycle.

Minimising the environmental damage caused by goods and services in the market economy is a key challenge facing Integrated Product Policy (IPP). IPP is an approach that begins by examining how the environmental performance of products can be improved more cost-effectively. It seeks to reduce the environmental impact of products throughout their life cycle, from the natural resources from which they come, through their use and marketing to their eventual disposal as waste. It is a relatively new approach to environmental policy. 

IPP has been named as one of the major innovative elements of the 6th Environmental Action Programme.

After its 2001 green paper on IPP, the Commission was faced with criticism that a general framework would not bring about the expected results. Following wide consultation with stakeholders and internal fights between DG Environment and DGs Enterprise and Internal Market, the Commission came up with a new IPP strategy opting for a more voluntary approach and close co-operation with stakeholders on 18 June 2003. The strategy is based on five key principles: 

  • life-cycle thinking: the environmental impact of a product must be considered thoughout its whole lifecycle from production to end-of-life ('from the cradle to the grave')
  • working with the market: incentives should be set so that the market moves to encourage the supply and demand of greener products
  • stakeholder involvement
  • continuous improvement
  • a variety of policy instruments

To implement its IPP strategy, the Commission will focus on two axes:

  • establishing 'framework conditions' : the promotion of policy measures and instruments (such as voluntary agreements, green procurement, taxes and subsidies, life-cycle analysis databases, EMAS, ecolabel) to be used on many different products; 
  • 'a product specific approach': identification of the most environmentally damaging products and development of pilot projects for these products, after consultation with industrry and other stakeholders.

The pilot projects aim to demonstrate the benefits of IPP in a practical way. It is likely that there will only be a maximum of two projects running initially. A consultation is running until October 2003 to determine the products for these projects. Each project is expected to last 12 months and involve wide stakeholder input to analyse environmental impacts and options to reduce these impacts, to identify the most feasible of these options and to agree on implementation plans. 

The use of tax differentiation for greener products and greater producer responsibility for end-of life products is not part of the IPP strategy finally adopted by the Commission. Following comments by the industry, the Commission decided not to develop initiatives to apply reduced VAT rates to products bearing the EU eco-label for the time being. However, the Commission will come forward with a discussion document in 2005 on ways to promote implementation of the IPP approach in companies. The paper could, "if appropriate", include "general obligations for specific products". 

On 27 October 2003, the Environment Council significantly amended the Commission's Communication on Integrated Product Policy, asking for concrete work plans and a wider scope. The Council wants the Commission to apply the IPP approach not only to products but also to services, and especially tourism. Ministers asked the Commission to speed up some initiatives, in particular the drafting of action plans for the integration of environmental requirements into public procurement, the establishment of a Community Environment Product Declaration (EPD) scheme or framework and the establishment of a strategy on information tools and the identification of products with the greatest potential for environmental improvement. They requested that the Commission set out a more detailed work plan and timetable.

In its conclusions on the IPP adopted on 27 October 2003, the Council acknowledges the need "for economic systems to take into account the limits of the Earth to absorb pollution and provide natural resources" and is therefore in favour of this policy.

Industry federations such as the American Chamber of Commerce  in Belgium welcome the IPP strategy but say they are concerned that only environmental aspects are considered. Industry argues that the paper is moving from (what was originally) a product policy to achieve sustainable development supported equally by the economic, environmental and social pillars towards a purely environmental policy.

Industry federations are pushing for regulation to be avoided, costs and administrative burdens not to be increased and for true incentives to be introduced. Nadine Toscani from UNICE insists that business, not government, should take the leading role, in improving product environmental performance. UEAPME, the Voice of SMEs in Europe, calls for preliminary SME-focused measures.

Environmental organisations consider that IPP should cover a broad range of instruments, including taxation, fiscal incentives and low VAT on environmentally friendly products, the promotion of criteria led eco-labels and green public procurement. Melissa Shinn from the European Environmental Bureau, considers that the IPP strategy lacks a "vital component", a legislative platform. She claims that without this framework, the IPP process will have no political drive and no ability to create major change in the near future. An IPP Framework Directive should be adopted and include clear environmental objectives and oblige producers to supply product life cycle information. 

In its Communication, the Commission presented the following timetable for action:

  • in 2005, The Commission issued a practical handbook on best practice with Life-Cycle Assessment (LCA) and a discussion document on the need for product design obligations on producers; 
  • in 2006, the Commission will develop an action programme for 'greening' its procurement;
  • in 2007, identification of a first set of products with the greatest potential for environmental improvement and the beginning of action upon them.

The effectiveness of the IPP approach will be reviewed every three years by the Commission.

LEGISLATION TRACKERS: see PRELEX  and OEIL.

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