Industrial Innovation and Environmental Regulation: Developing Workable Solutions

By Saeed Parto; Brent Herbert-Copley | Go to book overview

4
To the limits … and beyond?
Environmental regulation and
innovation in the Canadian pulp
and paper industry

Brent Herbert-Copley

In the mid-1990s, new regulations entered into force in Canada that significantly tightened limits on effluents from pulp and paper mills. Whereas earlier regulations had been relatively weak and ineffective, the new federal regulations on traditional pollutants (combined with provincial standards dealing with chlorine use) resulted in a situation where Canadian firms faced regulatory limits at least as stringent as competitor countries - and in some respects more stringent.

In the wake of the new regulations, environment-related investment by the industry expanded rapidly, and average effluent levels fell in equally dramatic fashion. By 1996 (the deadline for compliance with new regulations) only one Canadian pulp mill was consistently out of compliance with the new federal regulations.

Based on a survey of pulp and paper firms carried out in 1997, this paper examines in detail the nature of industry's response to the new regulations. In particular, it discusses the way in which regulations interacted with other structural features of the Canadian pulp and paper industry to promote innovation and diffusion of environmental technologies. The paper argues that we can “read” the story of industry's adaptation to regulatory pressures in at least two different ways. A first narrative emphasizes the compliance-oriented nature of most investment by Canadian pulp and paper firms, which focused on the adoption of proven control technologies rather than actively searching for innovative solutions to environmental challenges. A second narrative, however, takes a slightly more nuanced view of industry's response to new regulations. While

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