Voluntary Agreement Examples: Europe

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Voluntary agreements with industry are quite popular in Europe.  In France, agreements to reduce carbon emissions have been reached with the aluminum and glass packaging industries.  However, these agreements may have been insufficiently ambitious—possibly because of the competitiveness implications of more demanding agreements—leading to less environmentally beneficial outcomes.  As in other countries, competitiveness concerns, the relative bargaining power among firms and between firms and the government, and the costs of administration are all important issues.  Since most agreements take place on a national level (in which neighbors have no particular incentive to cooperate), concerns over the potential impact on national competitiveness are acute, because governments are loathe to put national firms at a disadvantage.

The Netherlands has embraced voluntary agreements, with industry deals to improve energy efficiency going back more than two decades.  One of the main issues in these agreements has been the transparency and uniformity of monitoring, which if inadequate detracts from compliance incentives.  Voluntary agreements in Denmark have been found to yield a significant reduction in energy demand, thanks partly to the fact that the voluntary schemes are backed up by a strong threat of alternative regulation.  Germany, the UK, and Sweden have also embraced voluntary agreements.  Evidence suggests that voluntary agreements are only mildly effective in curbing carbon emissions, but that they can have an important awareness effect that might produce greater progress over time.

Cross-national agreements include a deal between the European Union and European automakers to reduce vehicle emissions.

In each case, the presence and behavior of multinational firms is a key issue, since whether multinationals will participate in voluntary agreements—and if so, whether they will do so uniformly across countries or differently depending on location—is hugely important, considering their size, bargaining leverage, and leadership role among fellow firms.