Transparency urgently needed in impact assessments

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Industry and green campaigners distrust the Commission and the data it uses to evaluate the impact of policy options. They request full access to the data in future impact assessments, according to consultation documents seen by EURACTIV.

The Commission is currently reviewing its guidelines on impact assessments (IAs), that is, its methodology to assess the economic, sustainable and social impacts of policy options.

IAs can have far-reaching consequences – they can lead the Commission to make substantial modifications to a law proposal, scale it down or even drop it. As part of the review, stakeholders had to share their positions in a consultation that ended 30 September.

Adrian Harris, director general of the European Engineering Industries Association (Orgalime), made one key recommendation: the Commission must be more transparent and fully communicate about the data it uses in its assessments.

“IAs include quantitative analysis and modelling, for example on longterm projections on GDP, but the Commission provides little feedback on the input data used in its models, which therefore become unverifiable,” he told EURACTIV.

This has implications for the quantifying of the “real cost of policy to businesses – IAs have generally worked well when it comes to assessing administrative costs, but not so well to evaluate the business costs of adaptation to new laws and the overall economic impact of policy”.

Representing private and public energy efficiency (EE) interests, the Coalition for Energy Savings (CES) condemns for example the “absence of involvement of stakeholders and an usually high level of secrecy” surrounding the Commission’s 2014 communication on energy efficiency and related IA.

Modelling of lower discount rates, a method used to quantify costs of energy efficiency policies, was reportedly censored from the final IA, but included in an earlier draft. Results from another calculation method which showed higher EE costs were published instead, stated CES in its consultation contribution.

A possible solution would be the creation of public register/database where the IA and all related studies would be published during the drafting process instead of presenting final law proposals and IAs as a fait accompli, said activist lawyers group ClientEarth in its contribution.

Biased questionnaires

Stakeholders also perceive a number of biases in IAs’ evaluation methods. NGOs Transport & Environment (T&E) and European Environmental Bureau (EEB) emphasize that the business impact of environmental proposals tends to be deeply scrutinized, while other types of proposals are hardly assessed on their environmental impacts.

Also, trade agreements such as TTIP are usually not the subject of an IA – an “important reason for the increasing public skepticism towards these deals” says T&E.

In addition, IAs tend to focus on the monetizing of costs and benefits of policy options, while benefits to health or the environment cannot always be easily quantified.

Translating emissions of pollutants “into monetary values is fraught with complexities” states EEB. Alternative evaluation indicators such as carbon emissions or materials and freshwater use could be used instead.  

But Orgalime counters that “while IAs must be balanced, we have had 15 years of environmental policy. Job creation is a more immediate priority now.”

Biases can appear in IA multiple choice questions asked to stakeholders, “For example, when asked what would be your preferred course of action, the option ‘no action’ is not always available,” said Harris.

But EEB believes that “the questions reveal an anti-regulatory bias, for example when they propose better enforcement of existing rules as an alternative to new action , or to ‘do less’ in response to non-compliance.”

“The logic would be the same as saying that if people do not respect rules of the road, the possible option would be to repeal the rules. We agree that compliance could be done by stronger implementation and enforcement, but it could also be addressed by adoption of stronger EU requirements,” explains ClientEarth.

Similarly, the NGO opposes the idea of introducing “political feasibility” among questionnaire options stakeholders may choose from, when expressing their views on whether new policy is appropriate.

This gives the impression that the Commission may be acting in the interest of particular member states. Political feasibility should be debated at the legislative stage with the EP and Council, and then the proposal may be adapted accordingly, but it should not be up for discussion at the IA stage.

More disagreement…

The group also draws attention to the fact that in the past, unnecessary IAs were conducted on the implementation of international agreements that the EU had ratified, and had to apply anyway.

As an example, ClientEarth cites the Aarhus Convention on access to justice in environmental matters. IAs were completed with a focus on the law’s investment implications. This shows that “economic and financial considerations may prevent or postpone the adoption of legislation even when it is required. This constitutes a misuse of Commission resources”.

There is disagreement as well between some industry groups and NGOs on the need to appoint an external advisory board to replace the EU’s Impact Assessment Board.

T&E opposes such a change, saying that “IAs are a fundamental part of the policymaking process and it is good if the Commission is held accountable for the quality of its IAs”.

But Orgalime is open to the idea: “The current board tends to verify process rather than quality of contents. An independent body could eliminate concerns that – let’s say it is a DG Environment proposal – the IA study would be skewed in order to validate the need for that policy, instead of showing equal concern about economic, social and green impacts.”

The importance of IAs must be put into perspective, however. “In the end, it is up to policymakers how or if to use them. Sometimes, IAs are just dropped by the wayside” concludes Harris.

The new impact assessment guidelines will be finalized by the new Commission under the responsibility of Frans Timmermans, the Vice-President for Better Regulation-designate.

Since the turn of the century, the European Union has striven to improve its decision-making by requesting a detailed impact analysis before taking new major policy initiatives.

Impact assessments (IAs) are now routinely conducted to predict the likely consequence of EU legislation on citizens and the wider economy, in a detailed cost-benefit analysis.

The European Commission is currently reviewing the guidelines on how it carries out IAs and has committed to publish new ones by the end of 2014.

The debate may sound technical but could have far-reaching consequences: an IA may lead the Commission to make substantial amendments to a legislative proposal, scale it down or even drop it altogether. Products and technologies may be approved or rejected as a result, leading to new growth opportunities or job losses depending on the outcome.

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