257 



ture. This uncertainty takes many forms, but most often involves delays. Will law- 

 suits cause the regulations or standards to be delayed or sent back to the Agency for 

 rework? Will the Congress, through subsequent amendments, change the compli- 

 ance deadlines? Thus, while the requirement for a new control technology may rep- 

 resent a profit-making opportunity in the best of all situations, it also represents 

 increased risk to the use of capital. 



Further, in the regulatory world requiring end-of-pipe treatment, the vast majori- 

 ty of environmental control technologies add incremental costs to the users' costs of 

 production. Consequently, there is little or no incentive on the part of the users to 

 participate in the development of new technologies. When there is a cost advantage 

 associated with a new control technology, a company must typically weigh that ad- 

 vantage against other risks. 



In addition, there are four other barriers to the commercialization of environmen- 

 tal control technologies, as identified in a recent EPA paper: (1) regulations based 

 on Best Available Technology (BAT) provide no incentive to do better than BAT; (2) 

 compliance deadlines favor adoption of tried-and-true techniques; (3) financial 

 double jeopardy is incurred if a company has to replace a failed innovative technolo- 

 gy with a proven one; and (4) permit writers are loath to take risks in sanctioning 

 untried technologies.^ 



To put things in perspective, technology itself is often the least important factor 

 in a commercialization effort. The successful performance of a technology is a neces- 

 sary but definitely insufficient condition. Typically management is considered the 

 most important factor, followed by capital, marketing, and financial management, 

 in no particular order. 



What I have said is not meant to denigrate the progress that has been made in 

 the past decade. Congress should be congratulated on passing the Federal Technolo- 

 gy Transfer Act. U.S. industry's access to federally-developed technologies has im- 

 proved immeasurably. EPA alone has now developed over 50 Cooperative Research 

 and Development Agreements. 



But regulatory uncertainty hovers like a black cloud over the commercialization 

 of environmental technologies. That is why I feel that the bill introduced by Senator 

 Mikulski in 1992 (S. 2632) does little to solve the problems. Creating a new agency to 

 develop environmental technologies would do nothing to overcome regulatory uncer- 

 tainty but rather it would exacerbate it by creating a bureaucratic gulf between 

 EPA and the new agency. One promising aspect of Senator Mikulski's approach is 

 the low-interest loan fund which would significantly supplement available sources of 

 private capital, especially for early-stage development. But I think that such a loan 

 fund could work much more effectively in a Department of the Environment where 

 there is greater likelihood that regulatory policy could be balanced with technology 

 development policy — all for the good of the environment. 



Finally, I would like to endorse Title III of S. 171 which would establish a commis- 

 sion on improving environmental protection. First, such a commission would be very 

 important in helping the new Department of the Environment set its goals and pri- 

 orities for the next decade. The timing would be most propitious. Second, my experi- 

 ence with the Carnegie Commission task force forcefully reminded me of the grow- 

 ing need for the United States to have an integrated, holistic view of environmental 

 quality. 



References 



1. "Environmental Research and Development: Strengthening the Federal Infra- 

 structure," Report of the Carnegie Commission on Science, Technology, and Govern- 

 ment, New York, December 1992. 



2. "E3: Organizing for Environment, Energy, and the Economy in the Executive 

 Branch of the U.S. Government," Report of the Carnegie Commission on Science, 

 Technology, and Government, New York, 1991. 



3 "Environtech 2000: The National Initiative for Environmental Technology Ad- 

 vancement for the 21st Century," Draft Report, Office of Research and Develop- 

 ment, USEPA, December 17, 1992. 



