Technology-Forcing Regulation: The Case of Automobile Emissions Technology

Recently there have been many calls for a new relationship between business and the environment. People worldwide are concerned about environmental degradation and about the relationship between industrial development and the health of the environment. Environmental technology is considered a growing area in which the United States could develop a competitive advantage. As Vice President Al Gore asserts in his influential book, Earth in the Balance, leadership on the environment is "in our economic interest," and "we can prosper by leading the environmental revolution and producing for the world marketplace the new products and technologies that foster economic progress without environmental destruction." There is also a call for a change in the way that government interacts with business to promote environmental protection. Some state that government should "make markets work"2 through the use of economic incentives, and others believe that government should directly promote research and development. However, government promotion of technological innovation is nothing new. "Technology-forcing" policies were used over 20 years ago-in the 1970 Clean Air Act-to force innovation within the automobile industry. This article presents a brief case study of this effort: the development of emissions technology for mobile sources that is, automobiles and light trucks, under the 1970 Act. This effort was only one part of the Act, which also regulated stationary sources such as electric utilities. An important lesson from this case study is that policies to promote technological innovation often must reflect complex interactions between the technical problem itself, industrial structure, and the political process. In the 1990 Amendments to the Clean Air Act, several new types of policy instruments have been included in both the mobile and stationary source provisions [see sidebar, page 11]. This article does not discuss these provisions, although it will be interesting to see what the response of industry is to this latest attempt to force technology