EPA/543/K-93/002
environmemai rrotection
Agency
EPA 543-K-93-002
January 1994
IT)
*
a*
External Discussion Draft
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Technology Innovation Strategy
of the
United States
Environmental Protection Agency
External Discussion Draft
January 1994
Recycled/Recyclable
Printed with Soy/Canola Ink on paper that
contains at toast 50% recycled liber
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For sale by the U S. Government Pnntmg Office
Superintendent of Documents, Mail Stop- SSOP, Washington, DC 20402-9328
ISBN 0-16-043089-5
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PREFACE
This draft Technology Innovation Strategy was prepared by the U.S. Environmental Protection
Agency's Innovative Technology Council, an agency-wide coordinating committee that reports to David
M. Gardiner, EPA Assistant Administrator for Policy, Planning and Evaluation. It is being circulated
widely to invite suggestions and comments from persons knowledgeable in this area and from the
general public. EPA will redraft this document on the basis of input and use it to guide the implementa-
tion of its technology innovation programs. Since this draft document is subject to change, it should not
be cited as reflecting Agency policy.
In its current version, the Technology Innovation Strategy outlines a broad range of actions
designed to foster the development and adoption of innovative technology on behalf of the nation's
environmental protection goals. Since EPA will not be able to undertake simultaneously all the identi-
fied actions, comments from readers that suggest priorities among them will be especially useful and are
encouraged.
A description of projects being undertaken by EPA in Fiscal Year 1994 under the President's
Environmental Technology Initiative is available in a companion document entitled "Environmental
Technology Initiative: Fiscal Year 1994 Program Plan" (EPA/542//K-93/003). It can be obtained, along
with additional copies of this Technology Innovation Strategy (EPA/542/K-93/002) by calling the U.S.
General Printing Office at: (202) 783-3238, or faxing a request to: (202) 512-2250. An order form is
included at the end of this document.
Comments and suggestions on this Technology Innovation Strategy should be sent to:
Strategy Committee
Innovative Technology Council
Mail Code 2111
U.S. Environmental Protection Agency
Washington, DC 20460
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TABLE OF CONTENTS
EXECUTIVE SUMMARY
Introduction 4
Summary of EPA's Four Objectives 6
Basic Operating Principles 8
EPA'S TECHNOLOGY INNOVATION STRATEGY
OBJECTIVE #1: Adapt EPA's Policy, Regulatory and Compliance Framework
to Promote Innovation 10
Statement of the Problem 11
Proposed EPA Strategy 13
OBJECTIVE #2: Strengthen the Capacity of Technology Developers and
Users to Succeed in Environmental Technology Innovation 17
Statement of the Problem 17
Proposed EPA Strategy 20
OBJECTIVE #3: Strategically Invest EPA Funds in the Development and
Commercialization of Promising New Technologies 24
Statement of the Problem 25
Proposed EPA Strategy 25
OBJECTIVE #4: Accelerate Diffusion of Innovative Technologies at Home
and Abroad 28
Statement of the Problem 29
Proposed EPA Strategy 30
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EXECUTIVE SUMMARY
INTRODUCTION
Technology innovation is indispensable to achieving our national and international environmental
goals. Available technologies are inadequate to solve many present and emerging environmental problems
or, in some cases, too costly to bear widespread adoption. Innovative technologies offer the promise that
the demand for continuing economic growth can be reconciled with the imperative of strong environmental
protection. In launching this Technology Innovation Strategy, the Environmental Protection Agency aims
to inaugurate an era of unprecedented technological ingenuity in the service of environmental protection
and public health.
The policy and regulatory framework administered by EPA and state environmental agencies
creates the primary commercial demand for environmental technologies, broadly defined to include:
traditional end-of-pipe controls, cleaner industrial technologies that prevent pollution, monitors and
instrumentation, and environmental management information technology. The breadth and stringency of
the regulatory framework have fostered a globally competitive environmental technology sector whose
advances have significantly improved environmental quality over the past several decades.
However, as this framework has evolved and technology has been installed to meet its
requirements, incentives for the creation and adoption of the next generation of innovative technologies
have often been dampened. Permitting or compliance practices, for example, have sometimes had the
unintended effect of limiting the development or adoption of more effective and economical solutions.
Technology developers have confronted a range of regulatory and market-based obstacles to acceptance
of their breakthrough products. Risk-averse financiers have typically preferred to invest their capital
elsewhere, in more predictable sectors of the economy.
Achievement of the nation's environmental goals today and into the coming century will require
more than continued reliance on existing technologies. The U.S. framework for environmental
management must be adapted to ensure that incentives for the development and use of innovative
technologies are strengthened. This strategy signals EPA's commitment to making needed changes and
reinventing the way it does its business so that the United States will have the best technological solutions
needed to protect the environment. But EPA cannot accomplish this alone. This strategy is grounded in
EPA Administrator Carol M. Browner's commitment to new public-private partnerships that will unleash
American inventiveness and fashion new tools for more aggressive and efficient environmental protection.
The Technology Innovation Strategy will also serve as an integrated part of the Clinton
Administration's broad new technology policy, enunciated on February 22,1993 in "Technology for
America's Economic Growth: A New Direction to Build Economic Strength." That government-wide
policy recognizes that industry is the primary creator of new technology and the main engine of sustained
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economic growth. It assigns the federal government a catalytic role in promoting the development of
new technologies across a range of sectors, including semiconductors, transportation, information
infrastructure, advanced manufacturing and environmental technologies, as well as converting defense
technologies to civilian applications.
EPA's Technology Innovation Strategy is a unified blueprint for the Agency's efforts to stimulate
the domestic environmental technology industry and expand export capacity, thereby multiplying the
tools available for environmental protection both at home and abroad. First, it will provide guidance to
EPA's base program in environmental technology, which constitutes over $100 million in fiscal year
1994 spending.
Second, the strategy will drive spending priorities under the new EPA-led, multi-year
Environmental Technology Initiative (ETI) that the President announced in February 1993. The ETI
program is being funded at $36 million in fiscal year 1994 with an increase projected for FY 1995.
Many of the projects will be conducted jointly with other Federal agencies, thereby bringing the exten-
sive expertise in environmental technology across the entire Federal government to bear on the problem
of stimulating innovation in the environmental technology industry.
Third, the strategy will guide EPA's efforts to implement its part of the U.S. Government's
first-ever interagency export strategy for the environmental technology sector, released in November
1993. EPA jointly produced the export strategy along with the Departments of Commerce and Energy
in response to a charge from President Clinton in his Earth Day speech in April 1993. Entitled
"Environmental Technologies Exports: Strategic Framework for U.S. Leadership", the strategy calls for
enlisting a range of traditional trade promotion activities on behalf of the environmental technology
industry. But it also recognized that these activities will not succeed in the absence of a more
disciplined effort to support the domestic industry in navigating the fragmented U.S. market and
building more innovative products.
With global demand for environmental technology projected to rise steeply over the coming
decade, a coordinated federal effort to nurture cutting-edge innovation in this field will help build a
competitive and dynamic export sector and increase high-wage jobs. The United States comprises by far
the largest single national market for environmental technology, estimated by Environmental Business
International (EBI), an industry analyst, at $134 billion in 1992, versus $161 billion in the rest of the
world. EBI projected that the global aggregate would grow from that 1992 sum of nearly $300 billion to
nearly $600 billion by 2000. A widely cited estimate by the Organization for Economic Cooperation
and Development (OECD) estimated the 1992 market at closer to $200 billion, and projected it would
reach $300 billion by 2000. America's principal trade competitors, Germany and Japan, have already
positioned themselves to support environmental technology innovation and capture a leading share of
this global market. The United States now has a limited window of opportunity either to strengthen its
own presence in this market, or be left behind.
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SUMMARY OF EPA's FOUR OBJECTIVES
OBJECTIVE #1: ADAPT EPA'S POLICY, REGULATORY AND
COMPLIANCE FRAMEWORK TO PROMOTE INNOVATION
Stimulate the development and adoption of innovative technologies by strengthening the incentives
for innovation within regulatory, permitting, compliance and enforcement programs at all levels of
government, and by identifying and reducing barriers to innovation in these programs, where this is
consistent with uncompromising environmental protection.
In producing innovative technology, the private sector responds to perceived market demand.
However, the demand for environmental products and services is generated primarily by legislation,
government policies, regulations, and practices. There is no substitute for predictable and consistent
enforcement of strong environmental regulations to create a demand for environmental technology, but
legislation and regulations can be developed and administered in ways that either dampen or accelerate
the rate of innovation and diffusion of new technologies. EPA is in a unique position to lead in adapting
the environmental management framework so that incentives for technological innovation are main-
tained and strengthened and that potential barriers to innovation are reduced.
OBJECTIVE #2: STRENGTHEN THE CAPACITY OF TECHNOLOGY
DEVELOPERS AND USERS TO SUCCEED IN ENVIRONMENTAL
TECHNOLOGY INNOVATION
Identify the non-regulatory sources of market inefficiency and failure in the environmental
technology sector, and work jointly with organizations in the public and private sectors to address
them. Develop and communicate timely information about high priority environmental technology
gaps. Catalyze the technology development and commercialization efforts of other organizations by
convening partnerships; providing testbeds, analytical tools, and technical support; and standardizing
testing protocols to enhance the credibility of performance data on innovative technologies.
In addition to its pivotal role in administering the regulations that drive technology innovation,
EPA is well positioned to conduct a range of catalytic, non-regulatory activities in concert with the
private sector and other Federal agencies that will help reduce pervasive barriers and inefficiencies in
the environmental technology market. For example, the Agency will increase the venues available for
testing the performance of new technologies, in order to augment the availability of credible and acces-
sible data that is vital to an efficient market. EPA will also communicate more effectively and promptly
about the technology needs associated with environmental and regulatory trends, so as to provide more
lead time for developers and financiers and to help close the gap between the nation's environmental
needs and the ability of available technologies to meet them.
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OBJECTIVE #3: STRATEGICALLY INVEST EPA FUNDS IN THE
DEVELOPMENT AND COMMERCIALIZATION OF PROMISING NEW
TECHNOLOGIES
Provide direct EPA funding to develop and commercialize selected technologies that are poised to
meet critical environmental needs, offer high prospects for breakthrough, and require public finan-
cial support for timely success. Technologies will be evaluated for support under two broad catego-
ries: (1) cleaner industrial technologies and practices that prevent pollution, and (2) control,
remediation, monitoring, and other technologies that comprise the traditional environmental technol-
ogy sector. Federal funding will not supplant funding available from the private sector.
EPA's direct financial contribution to the development of environmental technology has been —
and will continue to be — a small percentage of the total amount invested by both the private sector and
other Federal agencies. Yet EPA's unique vantage point allows it to identify emerging technologies
whose successful development would fill a present or anticipated regulatory and environmental need. In
cases where such a need is identified and private investment in a potential technological solution is
inadequate, targeted EPA funding can boost the chances for success. EPA funding will leverage rather
than displace private sector funding, and be injected at critical developmental stages. Under this part of
the strategy, EPA will fund or co-fund development and commercialization undertaken by private and
public sector collaborators, as well as in its own and other government laboratories. Special emphasis
will be given to funding cleaner technologies that show promise for preventing pollution, but spending
will also be directed to control, remediation, monitoring and other technologies that fill critical gaps,
including the unmet needs of small businesses.
OBJECTIVE #4: ACCELERATE THE DIFFUSION OF INNOVATIVE
TECHNOLOGIES AT HOME AND ABROAD
Enhance the capacity and efficiency of public and private networks that transfer information on
domestic and international market needs and the availability, performance and cost of innovative
technologies. Provide technical assistance, training, education, and information management to
support a more efficient marketplace in environmental technologies. Catalyze demand by promoting
federal purchases of innovative technologies at home and strengthening environmental policy and
regulatory rameworks abroad.
Once an innovative technology crosses the hurdle of its first commercial application, it must gain
widespread use if its full potential for protecting the environment is to be realized and its developer duly
rewarded. By strengthening partnerships and networks that compile and disseminate information on
innovative technologies, EPA will broaden the choices available to potential customers and help create a
more informed domestic and international market in which American technology developers can com-
pete on the basis of the quality of their products. EPA will catalyze domestic demand by encouraging
the use of voluntary programs and government purchasing programs that favor innovative technologies.
Abroad, EPA will address trans-boundary and global environmental problems affecting the United
States by providing international technical assistance, training, and other capacity-building programs
that strengthen environmental infrastructures and thereby expand the global market for more effective
environmental technologies. EPA will emphasize multi-media approaches in its diffusion efforts to
encourage the use of cleaner technologies that prevent pollution.
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BASIC OPERATING PRINCIPLES
I. Maximum Consultation with Stakeholders
EPA's draft Technology Innovation Strategy is the Agency's current blueprint for its environmental
technology program. It is an evolving document that is intended to stimulate comments and assistance
from all "stakeholders" in the environmental technology arena, including the regulated community,
technology inventors, developers and vendors, environmental advocates, investors, the academic
community, as well as federal, state and local government agencies. This continuing dialogue is intended
to improve EPA's strategy, programs and their implementation, and to link them to the efforts of other
stakeholders directed toward the same objectives.
II. Coordination with Federal, State and Local Agencies
EPA will actively establish and strengthen working partnerships with other federal, state and local
agencies in striving to meet its technology objectives. In selecting government partners to assist in
implementing this strategy, EPA will identify the respective talents, expertise, and perspectives they can
offer. In addition, EPA will offer its own expertise to other agencies in the pursuit of common technology
innovation goals. For example, EPA will work with the Commerce Department, the Export-Import Bank,
the Trade Development Agency, Overseas Private Investment Corporation, and other agencies with a trade
related-mission to assist in assuring the success of the Administration's export promotion strategy for
environmental technologies. Similarly, EPA will work closely with state environmental agencies, the
Department of Energy and the Department of Defense in pursuing improved technological solutions to air
and water pollution, toxic chemical use, and remediation problems at waste sites.
III. Partnership and Collaboration with the Private Sector and Academia
EPA and state environmental agencies need to become better partners with the private sector in
helping to bring critical new technologies to commercialization and widespread use. For example, as
proposed in this strategy, government agencies can help reduce risk for innovators in the environmental
technology market by convening public-private partnerships that target, collaborate, and co-fund research
and development of innovative technologies; by supporting their testing and demonstration so as to
provide credible documentation of their performance; and by improving governmental policies. These
efforts will be most effective if EPA and its state counterparts undertake them collaboratively. EPA will
conduct these activities in a way that benefits the nation's environmental quality and strictly preserves the
the Agency's independence and integrity as a regulatory agency.
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IV. Cleaner Technology Not Just Control Technology
Most conventional environmental technologies are designed expressly to control pollution at the
"end of the pipe." Increasingly, the best environmental solutions involve changes in production
processes, feedstocks, and product designs; many of these solutions have the intended effect of reducing
pollution before it is generated, while also producing economic advantages, for example by increasing
efficiency in energy and materials usage. On the other hand, many technological design choices are
made each day in industry that have significant consequences for the environment but are not made
expressly for environmental reasons. For instance, the design of new energy-efficient motors for use in
manufacturing may not be motivated primarily by their environmental benefits, but rather by economic
or other performance considerations. White House Science Advisor John Gibbons has used the terms
"dark green" and "light green" to distinguish, respectively, between: (1) technologies developed to
address an environmental problem (e.g., waste water treatment techniques); and (2) technologies whose
primary stimulus was not environmental protection, but whose manufacture and use may provide
environmental gains (e.g., energy-efficient motors). EPA's expertise has been primarily in the "dark
green" environmental technology arena. This strategy is based, however, on the recognition that an
effective national environmental technology policy must promote the development and use of both
shades of green technology.
V. Measuring Progress Along the Way
An integral and ongoing dimension of the Technology Innovation Strategy is the development
and use of indicators and tools to benchmark EPA's progress in bringing innovative technologies to bear
in solving our pressing environmental problems. In addition, analytic and economic tools can help
define markets at home and abroad. Data on available technologies can be compiled to up-to-date
catalogues. Monitoring, measurement, and characterization methodologies can evaluate incremental
progress. These and other techniques will be routinely employed to define successes and to calibrate
adjustments that must be made to the Agency's strategy.
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EPA's TECHNOLOGY INNOVATION STRATEGY
OBJECTIVE #1: ADAPT EPA'S POLICY, REGULATORY AND
COMPLIANCE FRAMEWORK TO PROMOTE INNOVATION
Stimulate the development and adoption of innovative technologies by strengthening the incentives
for innovation within regulatory, permitting, compliance and enforcement programs at all levels of
government, and by identifying and reducing barriers to innovation in these programs, where this is
consistent with uncompromising environmental protection.
INTRODUCTION:
In producing innovative technologies, the private sector responds above all to perceived market
opportunities. Unlike most markets, however, the environmental technology sector is not driven prima-
rily by consumer preferences, but by legislation and governmental regulations, policies, and practices.
The U.S. environmental policy, regulatory and compliance framework has, to date, delivered the stron-
gest and most comprehensive environmental protection in the world. However, as this framework has
evolved and technology has been installed to meet its requirements, incentives for the creation and
adoption of the next generation of innovative technologies have often been dampened.
Achievement of the nation's ambitious environmental goals today and in the corning century will
require more than simply continuing to implement today's existing technologies. The environmental
management framework must be adapted to ensure that incentives for the development and use of
innovative technologies are maintained and strengthened.
In the short term, this will require EPA and state and local environmental agencies to use exist-
ing administrative authority to create incentives for innovation and reduce unnecessary barriers in rule-
making, permitting, and enforcement activities. Special emphasis will be placed on promoting the
development and use of technologies that prevent pollution from being created, rather than treating and
controlling it at the end of the pipe. The longer term agenda includes a sustained legislative effort to
identify and enact statutory changes to provide stronger incentives and reduce unnecessary barriers to
technological innovation.
There is no substitute for predictable and consistent enforcement of strong environmental regula-
tions in creating the demand for environmental technology. But regulations can be developed and
administered in ways that either dampen or accelerate the rate of innovation and diffusion of new tech-
nologies. New, voluntary EPA programs that depart from the Agency's command-and-control tradition
also offer opportunities for encouraging innovation on behalf of environmental protection. EPA is in a
unique position to lead in addressing this complex set of issues. In fact, as EPA officials have consulted
with a wide representation of individuals and groups on environmental technology over the last year,
they have found strong support for the Agency to focus on making the nation's environmental manage-
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ment system more amenable to innovation, where this is consistent with maintaining and strengthening
environmental standards.
STATEMENT OF THE PROBLEM:
Barriers to technological innovation have developed, in part, as a result of the rapid expansion of
the environmental management system over recent decades and years, and the corresponding demands
on federal and state governments to bring pollution under control quickly. The following are among the
most significant barriers embodied in the current system.
Technology Lock-In
EPA typically bases pollution control standards on the achievable limits of available,
well-demonstrated technologies. Under many of its environmental statutes, EPA
examines the best technologies currently in use and promulgates standards that require
all members of the regulated group to bring their performance up to the level these best
technologies achieve. This ensures an effective and rapid upgrading of technology by
the regulated group and levels the competitive playing field for those individuals
who have already installed the better technologies.
Even though most of these standards are technically performance-based and do not
require the installation of a specific technology, the engineering community and
regulated parties are reluctant to depart from using the technology on which the stan-
dard is based and which EPA describes in the control technology guidance documents
accompanying the regulation.
An innovator with a cheaper or more effective technology, therefore, can find it difficult
to penetrate the market. Potential customers and their advisors are typically unwilling
to risk non-compliance by using a relatively unknown and unproven technology, or
anticipate inadequate economic gain to justify it. Permitting officials are similarly
reluctant to risk the potential environmental consequences of approving an innovative
technology. Enforcement personnel do not normally grant exceptions for businesses
that make bona fide attempts to comply using innovative approaches, but fall just short
of regulatory level.
The result of this technology lock-in is that the nation has fewer technologies to choose
from as it moves to the next generation of environmental protection goals.
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Fragmented Market
Environmental problems vary widely in their severity across the country. To ensure an
adequate level of protection everywhere, federal environmental programs establish
uniform national standards but leave considerable discretion to the states to decide how
best to implement them. Requirements may be more stringent, as needed, to achieve
local and regional environmental goals. Many states in turn delegate decision-making
to local environmental authorities. The result is that innovators must develop and sell
their technologies in a large number of sub-markets across the U.S., rather than benefitting
from the scale economies of a unified national market. This creates a complex market
with varying performance requirements and regulatory processes, in which innovators have
difficulty estimating the market for their product and incur high marketing expenditures.
Unpredictable Regulatory Requirements
It is not unusual for the promulgation of an environmental regulation to take several years.
Often, the level of environmental performance that will be required is not settled until the
final rule is signed. However, once the rule is promulgated, these performance requirements
typically become enforceable within a short time.
In contrast, the development cycle for technological innovations is much longer, often
ten years or more. The result is that rules are developed on the basis of a more limited
group of technologies than is desirable. Without greater predictability, technology
developers find it difficult to obtain financing, and run the risk of producing innova-
tions that either over- or under-comply with the new standard. Since it is difficult to
synchronize innovation and production with uncertain demand, the financial commu-
nity is unable to calculate the risks of investment. Users are left with little choice but to
install technologies that were already demonstrated and in use at the time the database
was being gathered early in the rule-writing process. This process introduces a serious
time-lag into the development and installation of efficient and effective technologies by
American industry.
Single-Media Regulations
Single-media regulatory programs tend to favor control and remediation technologies
that are tailored to reducing pollution from specific sources into one medium (air, water,
land), while discouraging investments in cleaner industrial technologies that efficiently
and cost-effectively reduce facility-wide pollution without transferring it across media.
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Lack of Effective Permitting of R&D and Technology Tests
Permits define the terms of operation that ensure compliance with environmental protection
requirements. However, most permits are not designed to allow developers to fully evaluate
the performance of innovative technologies. Evaluation testing involves the operation of
technologies outside optimum conditions, and may produce violations unless backup controls
are used. The near absence of permitting mechanisms that both fully protect public health and
the environment and allow technology developers to optimize the design of their products
impedes the development and commercialization of innovative technologies.
Adapting the Regulatory Framework to Spur Innovation: i
EPA's Acid Rain Control Program and Technology Innovation
The U.5L in 1990 enacted a stringent market-based control program to further reduce acid
rain causing sulfur dioxide emissions by 50 percent Under this program, coal-fired power-
plants can choose from a wide variety of control options in meeting their emission reduction
requirements, including demand-side management programs, switching to lower-sulfur fuel,
buying emissions credits and installing scrubbers. Although still in its infancy, me acid rain
program, by rewarding superior performance with tradeable credits, has already led to a variety
of innovations in pollution control, including major advancements in scrubber technology.
For example, U.S. vendors are now guaranteeing retrofit scrubbers at 98 percent control efficiency,
whereas the ability to achieve even 90 percent control at existing units was iri doubt just a few
years ago.
PROPOSED EPA STRATEGY:
In adapting its policies, regulations and practices to promote the development and use of innova-
tive technologies, EPA must guard against abuse of any new flexibility it introduces to ensure that
environmental protection is not compromised. While recognizing this fundamental constraint, EPA will
undertake the following activities:
1. EPA will improve its regulatory and voluntary programs so as to increase the development and use
of innovative technologies.
• Seek to increase regulatory predictability, so as to give technology developers
adequate lead time and to reduce investment barriers. EPA will expand the use
of regulatory development processes that broaden the participation of affected
parties, such as negotiated rule-making, in order to develop rules that permit the
use of a wider range of technologies.
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• Incorporate provisions into its new regulations and programs that widen the
range of technologies accepted for compliance. EPA will give special attention to
economic incentives, such as the use of market-based instruments, in regulations
so as to reward businesses that choose to exceed compliance and innovators who
devise technological solutions that achieve higher levels of environmental
performance.
2. EPA will streamline and expedite permit processes for R&D, testing, evaluation, and
compliance use of innovative technologies.
• Develop and implement specialized permit policies and processes for technology
R&D, testing, and evaluation. These policies will be designed to allow sufficient
flexibility for technology developers to determine the parameters of performance
while ensuring uncompromising protection of the environment and public health.
• Increase the flexibility of permitting processes. Streamline the review of permit
applications for new and innovative technologies, affording them a higher priority.
• Develop a system of incentives to encourage prospective users to select innovative
technologies. Help make innovative technologies that have been successfully
implemented more broadly available and acceptable to other users and to regulatory
agencies.
• Pilot the concept of a Permitting Reinvention Laboratory consisting of experienced
permit writers from EPA and state environmental agencies to facilitate and expedite
permits for innovative technologies. This laboratory would pilot new ways to incorporate
innovation into permitting procedures, and identify any fundamental statutory and regulatory
barriers that impede progress in this area.
• Identify mechanisms for increasing the coordination of permitting strategies for
all media across all jurisdictions and levels of government. For instance, the
Western Governors Association recently initiated an effort to allow data submitted
to one state to be recognized and accepted in other states, in order to provide a broader,
regional market for technologies.
• Provide training, technical support, and performance awards to permitting personnel
so that they will have both the means and the incentive to promote adoption of
innovative technologies.
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3. EPA will make its enforcement practices more amenable to innovative technologies.
• Strong and consistent enforcement acts as an essential impetus to investment in
environmentally sound processes and technologies. EPA's enforcement policies
and practices encourage regulated parties to prevent violations by increased
emphasis on pollution prevention. EPA currently offers flexibility in timing, for
example, in enforcement settlement agreements that use innovative pollution
prevention approaches to achieve compliance. EPA may also partially reduce
some penalties when a violator undertakes supplemental environmental projects
with environmental benefits that go beyond those required in the enforcement
settlement. Creative enforcement approaches will further encourage regulated
parties to consider innovative approaches to complying with regulatory standards
and, in some cases, going beyond them. The following are some examples of the
approaches EPA will undertake.
Through coordinated, new approaches to permit writing and enforcement, EPA
policies will better address uncertainties about the performance of innovative
technologies in the permit. This can reduce some of the more punitive
consequences of violating traditional permit conditions, while not posing an
unacceptable risk to public health and the environment. These EPA permits
will encourage facilities to take on some of the risks inherent in innovative
technologies.
EPA will strengthen its efforts to design multi-media approaches to compliance
inspections that encourage facilities to determine whether source reduction or
other innovative approaches are available to correct a potential violation or to
reduce broader environmental impacts.
EPA policies for settling an enforcement action are now more receptive to
innovation through special conditions in the final consent order or decree.
These special conditions continue to compel compliance with environmental
laws and punish failure, but also may allow "soft landings" if innovative
technologies narrowly fail. EPA will identify pilot opportunities to use the
settlement process in a way that provides defendants an incentive to correct
violations through an innovative approach (e.g., by allowing more time to install
an innovative technology), while also ensuring protection of public health (e.g.,
by requiring a "fall-back" method to correct the violation if the new approach is
not successful). Another pilot approach may be to offer penalty reductions for
corrective use of an innovative technology if it results in over-compliance.
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4. EPA mil strengthen its collaborative efforts with state environmental agencies to support techno-
logical innovation.
• Provide technical support, grant and contract assistance, financial support through the state
grants programs, and performance recognition for state leadership in encouraging the
development and use of innovative technologies.
• Continue to work with state agencies to promote multi-media permit and enforcement
processes so as to provide more flexibility for innovation.
5. EPA will consult with stakeholders in order to solicit feedback on the success of the initiatives
listed above; to identify additional opportunities to adapt the current policy and regulatory framework
to promote innovation; and, where appropriate, to improve that framework through new legislation.
Each of EPA's program and regional offices will sponsor focus groups to identify opportunities
for, and barriers to, innovative technology. These groups will be drawn from EPA, state and
local environmental agency staff, the regulated community, technology developers and suppliers,
the financial community, universities, as well as the environmental advocate community.
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OBJECTIVE #2: STRENGTHEN THE CAPACITY OF TECHNOLOGY
DEVELOPERS AND USERS TO SUCCEED IN ENVIRONMENTAL
TECHNOLOGY INNOVATION
Identify the non-regulatory sources of market inefficiency and failure in the environmental technol-
ogy sector, and work jointly with organizations in the public and private sectors to address them.
Develop and communicate timely information about high priority environmental technology gaps.
Catalyze the technology development and commercialization efforts of other organizations by conven-
ing partnerships; providing testbeds, analytical tools, and technical support; and standardizing testing
protocols to enhance the credibility of performance data on innovative technologies.
INTRODUCTION:
In addition to its pivotal role in administering the regulations that drive technology innovation,
EPA is well positioned to conduct a range of catalytic, non-regulatory activities in concert with the
private sector and other Federal agencies that will help reduce pervasive barriers and inefficiencies in
the environmental technology market. For example, the Agency will increase the venues available for
testing the performance of new technologies, in order to augment the availability of credible and acces-
sible data that is vital to an efficient market. EPA will also seek to communicate more effectively and
promptly about the technology needs associated with environmental and regulatory trends, so as to
provide more lead time for developers and financiers and to help close the gap between the nation's
environmental needs and the ability of available technologies to meet them.
STATEMENT OF THE PROBLEM:
Objective #2 of the strategy is premised on the fundamental recognition that the environmental
technology market is complex and that innovators of new environmental technologies often lack the
information, skills, tools, and facilities required to move their technology from the garage to the global
marketplace. On the other side of the equation, regulated parties that need to purchase new technologies
may not have the analytical tools to sort out the relative benefits of alternatives. Small businesses, in
particular, are at a disadvantage on both counts.
Moreover, the financial community, regulators, and the public often lack the ability to make
informed decisions about innovative technologies without independently developed or verified credible
data about performance, cost of performance, and range of applicability. Thus, information, skills, tools,
testing protocols, and facilities provided by EPA and other Federal agencies can make the environmental
technology market function more efficiently. The critical barriers to efficiency, as currently understood,
by EPA can be outlined in six broad areas:
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Lack of Credible Performance Data
The environmental technology market is weakened by a lack of credible data on the cost,
performance, and range of applicability of new and innovative technologies. Data must be
accessible, understandable, and credible to investors, prospective users, the public, and permit
writers and enforcement officials. Government can play a catalytic role in the development,
verification, and widespread dissemination of objective data, and is especially well positioned to
do so in this highly regulated market.
Lack of Testing Venues
A key factor that impedes technology development and commercialization and increases the
costs and risks of technology testing is a lack of venues to test pilot-scale and demonstration-
scale innovative technologies. This is a primary cause of the scarcity of credible performance
data noted above. Such venues must be appropriately permitted, and backup equipment is often
needed to allow rigorous testing across the full range of potential operating parameters.
Environmental technologies are especially dependent on appropriate testing, because they must
pass regulatory muster before being widely used for compliance purposes. Such regulatory
approvals often turn on the availability of credible data. This has disadvantaged many new
technologies in comparison to established but often less effective technologies.
Lack of Guidance About The Technology Gaps That Limit Environmental Progress
In most markets, the development of new products is driven by entrepreneurs who accurately
predict customer demand. In the environmental technology market, however, the primary factor
influencing demand is government policies and regulations. The absence of a periodic
government assessment and forecast of the technology gaps that limit environmental progress
contributes significantly to the difficulty of targeting investments in the development and
commercialization of environmental technologies. Without a better understanding of what the
future is likely to demand, two fundamental problems will continue to afflict the technology
marketplace: (1) technologies will not always be available to solve critical environmental
problems when they are needed; and (2) markets will not be available for some innovative
technologies that are developed, often at considerable expense.
Need for Planning, Design, and Decisionmaking Tools
Planning tools to help technology designers and users identify the optimal technologies for their
particular application are not fully developed and disseminated. Factoring environmental design
considerations into the choice of design, feedstocks, and manufacturing process is a complex
analytical task. Life-cycle costs and the efficiencies offered by cleaner technologies are often
not fully understood or credited by businesses. Without more sophisticated accounting methodologies
and other analytic tools for integrating environmental and productivity decisions, demand for
environmental technologies that prevent pollution and heighten productivity will be dampened.
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Inadequate Federal Government Understanding of the Environmental
Technology Industry
The Federal government has not, to date, given adequate attention to understanding the complex
environmental technology industry. Federal agencies do collect and analyze data on national
expenditures for pollution abatement, environmentally related capital investments and operating
costs. This enables government officials to understand the demand-side of the equation, such as
compliance costs sustained by businesses, but not the supply-side. Without greater government
efforts to understand and address the constraints facing the technology suppliers, innovative
technologies will not be produced at the needed rate, and the compliance costs that receive
considerable attention will not be reduced. Government can only begin to tackle these problems
if it becomes a more effective partner for the environmental technology industry. The mirror
image of this problem is the private sector's limited understanding of the government's regulatory
and enforcement processes that govern the development and testing of environmental technolo-
gies and limit the ultimate choices potential customers can make when selecting technologies.
This problem is particularly acute for small, independent developers who cannot easily obtain
this information or keep it up to date.
Lack of Skills, Financial Capacity, and Facilities
Many technology developers possess an incomplete set of skills and other resources needed to
successfully develop and commercialize environmental technologies. These may include
technical or business skills, laboratories or sites for field testing, market research capabilities, or
other assets. This problem is more serious in the environmental technology industry than many
others since it is still a relatively new economic sector and comprises many small and
independent technology developers. Without support, many promising environmental
technologies may be lost.
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Strengthening the Capacity of Industry to Make Better Environmental
Technology Decisions: Design for the Environment Program
During the early days of environmental regulation, many chemicals were identified as hazardous
to the environment Before they could be phased out, however, substitutes had to be found, and
sometimes the latter proved worse for the environment than the original. EPA's Design for the
Environment (DflE) program is a voluntary cooperative program that attempts to reduce this
problem by helping industry evaluate multiple alternatives, compare their relative performance
and risks to the environment in the earliest design stages, and organize collaborative efforts to
develop and commercialize these innovative technological opportunities.
Currently, DfE staff are working with the dry cleaning, printing, and computer industries.
For instance, in cooperation with the dry cleaning industry, EPA is studying alternatives to
perchloroethylene (perc), the solvent used by most dry cleaners, by comparing costs and
performance of perc with other cleaning methods. A report wftt be produced for industry
and the public to communicate the cost- effectiveness of the alternate dry cleaning methods.
The printing industry project presently focuses on pollution prevention in three areas: blanket
washes in lithography, screen printing, and inks used in flexography, all of which have been
identified by the industry as high risk areas for printers.
EPA'S PROPOSED STRATEGY:
1. EPA will improve the system for developing and validating technology performance data,
Assist in standardizing testing protocols to ensure the acceptability, quality, comparability, and
transferability of performance data. Many organizations both inside and outside the federal
government will be encouraged to adopt the agreed methods. Accomplishing the goal of greater
standardization will involve reaching agreements about methods and protocols used in conducting
tests and demonstrations for: gathering and analyzing test data; producing predictive models;
quality assurance; and reporting results, including performance and cost data. Special emphasis
will be placed on pollution prevention technologies and techniques for small businesses.
• Pilot an environmental technology verification program to evaluate the claims of environmental
technology vendors. This program may involve testing or demonstrations by independent third
parties, national or EPA laboratories, or some combination thereof.
• Expand existing efforts to collect, review, format, and report credible data on technology
performance, particularly on a multi-media basis. In this expansion, EPA will emphasize the
collection of credible information developed by others.
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2. In collaboration with other Federal agencies, EPA mil expand the availability of sites for safely testing
and evaluating innovative technologies.
• Work with other Federal and state agencies to expand the availability of venues to test innovative
technologies safely. Both EPA and non-EPA sites, such as closing military bases and other
Federal facilities, may be used. A range of locations is needed to address the differing stages of
development, the varying risks of testing, and the need to test over a wide range of operating
conditions. In some cases, controlled, permitted settings with backup safety and pollution
control equipment will be necessary to assure safe testing and evaluation.
• Establish procedures and criteria for the use of EPA laboratories to test and evaluate environ-
mental technologies developed outside EPA.
3. EPA will both convene and strengthen technology partnerships
The Agency will catalyze innovation by convening new partnerships and strengthening existing
ones among groups from industry, government, non-profits, and other organizations. Successful
EPA programs like Design for the Environment (see box, page 20) will serve as a foundation for
some of these activities. These partnerships will be designed to jointly develop and
commercialize environmental technologies that have wide applicability, particularly those that
prevent pollution and increase productivity. EPA will seek broad-based private sector participa-
tion, including industry associations, individual companies, and equipment suppliers. In addition
to its critical role in convening partnerships, EPA may support them with partial EPA funding
and facilitate their work through Cooperative Research and Development Agreements (CRADAs).
4. EPA will identify and communicate information concerning priority environmental technology gaps
In concert with technology stakeholders, EPA will develop and issue a periodic multi-media
assessment of the environmental technology gaps that limit environmental progress. This
"National Agenda of Environmental Technology Gaps" will identify and communicate existing
and anticipated technology gaps impeding progress in meeting both short and long-term
environmental objectives. This ambitious needs assessment will require the refinement of
available models and criteria, and the development of new ones. The National Agenda report
will help technology developers to better link the supply of their innovative technologies to the
present and future demands of the environmental market. It will also help drive EPA's priorities
for its own direct investment in the innovative technology arena.
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5. EPA mil increase the availability of regulatory information to the environmental technology
innovation community.
The Agency will increase the availability of information about regulations and regulatory
processes, including permitting and enforcement policies, to reduce the difficulty and risk of
technology innovation and adoption. For example, EPA will more aggressively publicize
information about EPA's approval processes for new and innovative monitoring methods.
Supporting the Market for Innovation by Validating Technology Performance:
EPA's SITE Program
EPA's Superfund Innovative Technology Evaluation (SITE) demonstration program
evaluates innovative technologies at sites where cleanup is required by the Comprehensive
Environmental Response, Compensation, and Liability Act (Superfund) or Resource Conservation
and Recovery Act (RCRA). During a SITE demonstration, EPA determines an innovative technology's
performance under real or simulated environmental conditions. While many private
developers of innovative technology can test their equipment or process independently,
the SITE program gives potential users of the new technology added assurance about costs
and performance of the new technique. The purpose of the program is to bring performance
credibility to innovative technologies in order to help them enter the Superfund cleanup market
place. Developers of the technologies are then responsible for operating their innovative systems
at the site. EPA is responsible for community relations at the site, testing the technology's
performance, and reporting the results.
From 1987, when the SITE program became operational, through 1992,58 demonstration
projects have been completed. An additional 90 developers are now planning or working
on projects for testing. Project managers in EPA who are responsible for cleaning up new
Superfund sites use the information provided through the SITE program extensively. Since
1991, innovative technologies have been chosen on more than half of the Records of
Decision (ROD's) at Superfund sites. Prior to 1987, new technologies were rarely considered.
A study of Region 5 projects found that savings of over $140 million were achieved in seven
sites that used innovative technologies, an average cost reduction of 68% for each site.
6. EPA mil strengthen its collaborative efforts with developers and users of environmental technology
to reduce market barriers to innovation.
• Establish and strengthen collaborative environmental technology R&D planning processes.
These partnerships may involve industry, government agencies (federal, state, and local), non-
profit organizations, and other entities. EPA will encourage wider participation in the planning
of non-federal innovative technology R&D in the public and private sectors.
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• Increase Agency participation in federal interagency activities for planning innovative
technology R&D. EPA can work through existing mechanisms, such as the Federal
Coordinating Committee on Science, Environment and Technology (or its successor), or
bilateral and multilateral mechanisms newly established for this purpose.
• Sponsor and support centers at which technology developers can obtain assistance in nurturing
an innovation through the development pipeline. These centers will emphasize assistance to
smaller technology developers. Among the support the centers will provide are: (a) assistance in
writing business plans for innovative technologies; (b) provision of scientific and engineering
skills needed to develop and build pilot and prototype equipment; and (c) help in locating places
to test and evaluate the performance of technologies.
• Collaborate with the private sector through the signing of Cooperative Research and Develop-
ment Agreements (CRADAs) in order to share expertise and facilities among stakeholders in
ensuring the success of critical innovations.
• Collaborate in the development and refinement of tools for evaluating and selecting among
potential technology R&D opportunities, including life-cycle analysis techniques and "design-
for-the-environment" methods that integrate environmental and productivity decisions.
• Work with other agencies and stakeholders to identify government policies outside of EPA's
jurisdiction where changes might provide incentives or reduce barriers to technological innova-
tion. Such policies might include federal, state, and local tax policies, accounting policies, and
codes and practices.
7. EPA will consult with stakeholders to develop greater institutional understanding of the market
barriers to innovation and commercialization of environmental technologies.
• Increase efforts to understand the barriers that impede the development and commercialization of
the products and services needed for environmental improvement This will enable EPA to
better engage all of the key stakeholders in the environmental technology marketplace and to
target its role in the technology innovation process to achieve maximum impact. One approach
EPA will use to accomplish this is to co-sponsor and provide leadership in inter-governmental
conferences, symposia, and focus groups.
• Working with other federal agencies, EPA will increase its efforts to understand the businesses
that provide the products and services used for environmental purposes and the constraints under
which they operate. This will enable the Federal government to anticipate the effects of present
and future policies on innovation.
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OBJECTIVE #3: STRATEGICALLY INVEST EPA FUNDS IN THE
DEVELOPMENT AND COMMERCIALIZATION OF PROMISING NEW
TECHNOLOGIES
Provide direct EPA funding to develop and commercialize selected technologies that are poised to
meet critical environmental needs, offer high prospects for breakthrough, and require public finan-
cial support for timely success. Technologies will be evaluated for support under two broad catego-
ries: (1) cleaner industrial technologies and practices that prevent pollution, and (2) control,
remediation, monitoring, and other technologies that comprise the traditional environmental
technology sector. Federal funding will not supplant funding available from the private sector.
INTRODUCTION:
EPA's direct financial contribution to the development of environmental technology has been ~
and will continue to be - a small percentage of the total amount invested by both the private sector and
other Federal agencies. Yet EPA's unique vantage point allows it to identify emerging technologies,
which if successfully developed would fill a present or anticipated environmental or regulatory need. In
cases where such a need is identified and private investment in a potential technological solution is
inadequate, targeted EPA funding can boost the chances for success.
EPA funding will leverage rather than displace private sector funding, and be injected at critical
developmental stages. Under this part of the strategy, EPA will both co-fund and wholly fund develop-
ment undertaken by private and public sector collaborators, as well as in its own and other government
laboratories. Special emphasis will be given to funding cleaner technologies that show promise for
preventing pollution, but spending will also be directed to control, remediation, monitoring, and other
technologies that fill critical environmental gaps, including the unmet needs of small businesses.
EPA funding will supplement non-EPA sources or, in a few cases, be the sole support for a
project. By emphasizing joint projects, EPA will be able to spread its direct financial support across a
larger number of new technologies. However, the primary intended benefit of a partnership approach is
the maximizing of expertise brought to bear on achieving successful commercialization of selected
technologies. Each potential party to a joint project ~ EPA, other Federal agencies, private developers,
university researchers, and potential users ~ can bring important and unique knowledge and expertise to
the effort. In a marketplace as complex as environmental technology, it is difficult for any one individual
or institution to develop the comprehensive expertise necessary to take a new technology idea success-
fully all the way from the garage to the global marketplace. As a result, commercialization plans devel-
oped by either the Federal government or the private sector can be shortsighted and not realistic in their
appraisal of the inherent constraints in this highly regulated marketplace. EPA will seek to overcome
these limitations through its emphasis on stronger partnerships.
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An innovative idea that is never incorporated into a new technology or that sits on a shelf and is
never installed contributes nothing to the nation's environmental effort or to the entrepreneur who
created it. EPA will seek to ensure that a high proportion of environmental technologies developed with
its funding are successfully commercialized and used to solve environmental problems. EPA will use its
direct funding authority to seek out joint projects with other stakeholders that hold significant potential
for success and promise to fill critical environmental gaps.
STATEMENT OF THE PROBLEM:
Investors typically regard the environmental technology market as risky and uncertain, particu-
larly at certain points in the development pipeline. They have difficulty assessing investment risks and
limiting them to acceptable levels. The environmental technology market is unusual in that it is driven
by environmental policies and programs. Nearly all new technologies must pass regulatory muster by
permit writers at one or more levels of government (federal, state, and local). Investment risk is difficult
to measure, in part, because of varying regulatory requirements and processes, uncertainties about
whether permits will be issued, and concerns about the scarcity and credibility of data demonstrating
that a particular new technology can meet compliance requirements. Thus, investors tend not to back
environmental technologies until late in the development sequence, constraining developers' ability to
fund the pilot and prototype scale-up stages.
A new environmental technology is not a good investment for financiers simply because it
promises to produce significant environmental benefits. The environmental technology marketplace is
structured in a way that some environmentally beneficial technology improvements are not profitable.
In such cases, since the technology's social benefits cannot be adequately captured by a private investor,
the level of investment in its success may be inadequate, and public investment by EPA may be justi-
fied. A private investment shortfall may also emerge when development of an innovative technology is
proposed in advance of the promulgation of the specific regulatory requirements that create a market for
it. Being "ahead of one's time" can be perilous in a market created primarily by government policies.
EPA'S PROPOSED STRATEGY:
1. EPA will provide funding to technology developers, usually on a collaborative basis, to conduct
research and development on promising technologies that are critical to environmental progress.
• EPA financial support may be given to projects at any stage of the R&D cycle, including
planning, research, development, testing, and commercialization. These investments will be
guided by evaluation criteria and by EPA's assessment of which gaps in the U.S. environmental
technology base are most responsible for constraining progress toward national environmental
goals. Special priority will be given to funding the development of innovative clean
technologies that prevent pollution, rather than those that control or cleanup pollution after it is
generated. High priority will also be given to projects benefiting small businesses.
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Direct Co-funding of a Promising Technology that Fulfills An Environmental and
Regulatory Need: ADVACATE Technology
A major obstacle to achieving the dean Air Act's goals has been the high costs to coal-fired electric
utilities Of scrubbing stack gases by the wet lime process. In the mid- 1980's EPA's Air and Energy
Research Laboratory in North Carolina entered into a cooperative research partnership with the
University of Texas to develop a more cost-effective method of cleaning flue gases* Out of this
collaboration came a technique known as ADVACATE, using an advanced silicate that is more
absorbent than lime. This process removes 90-95% Of the sulfur dioxide and other acidic gases from
stacks of any coal-fired burner.
The Electric Power Research Institute estimates the new process to cost $85 per kilowatt ($130 per
kilowatt less than conventional flue gas scrubbing). If 10-25% of present American utility boiler
capacity were retrofitted with the ADVACATE process, an estimated capital costs savings of from $1
to $3 billion could result, saving operating costs over a five year period (1995-2000) of from $4 to $10
billion,
A short-term pilot scale test of the ADVACATE technology has taken place at Ohio Edison's
Edgewater Plant and ABB/Flakt has just completed tests on a large scale pilot at TVA's Shawnee
Steam Plant through a Cooperative Research and Development Agreement (CRADA). If the process
proves as successful as projected, it should go a long way toward achieving acid rain reduction goals
of the Clean Air Act Amendments of 1990. ADVACATE has also been discussed with Thailand and
Poland as a possible way to address SO2 problems, demonstrating the technology's export potential.
EPA will expand its capacity to collaborate with the private sector by continuing to improve the
Cooperative Research and Development Agreement (CRADA) process under the Federal
Technology Transfer Act. EPA will expand its use of CRADAs both to support the commercial-
ization of innovative technologies in which EPA holds a proprietary position and to help develop
and commercialize technologies whose rights are owned by others.
EPA will evaluate alternative funding mechanisms ~ including revolving funds, loan guarantees,
and the decision criteria used by other agencies and financial support organizations — in order to
examine the circumstances under which each might be most effective.
EPA will also provide funding for evaluations of demonstration projects as part of the Clinton
Administration's program to promote the export of U.S. environmental technology. In particular,
as part of the U.S. Technology for International Environmental Solutions Program (U.S. TIES),
EPA will provide financial and technical assistance to U.S. technology developers to help them
evaluate their technologies under conditions expected to be encountered in foreign locations.
This assistance can be applied to testing of technologies and in-country demonstrations, thereby
increasing the availability of U.S. technologies.
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2. EPA will target and strengthen technology research, development and demonstration activities in
its own laboratories.
EPA will apply its own development capacity in its laboratories to emerging technologies that
will fill important gaps in the U.S. environmental technology base. Targeting decisions for these
investments will be guided by similar decision criteria to those used in EPA's direct funding of
projects conducted elsewhere, including, the technology gaps assessment. Projects in
EPA laboratories will be both co-funded and wholly funded by EPA.
3. EPA will enhance its capacity to strategically target promising technologies for R&D funding.
• EPA will seek to increase the effectiveness of its technology investments by developing and
applying evaluation tools to R&D funding decisions. These could include such tools as life-
cycle analysis and design-for-the-environment methods that integrate environmental and product
ivity decisions. These tools will allow the refinement and application of key criteria for selecting
promising technologies such as: their potential to yield advances in filling critical environmental
technology gaps, especially those not being nurtured by other technology developers ("orphan
technologies"); their potential for eliciting financial co-sponsorship from either other federal
agencies or the private sector; and their likelihood of commercial success in the market. EPA
will also share these assessment tools with technology developers in other Federal agencies and
in the private sector.
• EPA will involve private sector firms and other knowledgeable organizations in the planning of
its own R&D agenda. Where possible, EPA will transfer responsibility for the latter stages of
development and commercialization of a particular technology to a private entrepreneur as soon
as sufficient interest is demonstrated to make it independently viable. This should encourage
commercialization, a phase of the technology development process that EPA laboratories are not
as equipped to pursue as effectively as its earlier phases.
• In order both to become a more effective partner in technology R&D and to better target its own
technology R&D, EPA will seek to increase its staffs knowledge about the commercialization
process and the factors that affect the success of technology commercialization efforts. EPA will
be able to apply this knowledge to its own commercialization plans, to evaluate its own progress,
and to share this knowledge with others.
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OBJECTIVE #4: ACCELERATE DIFFUSION THE OF INNOVATIVE
TECHNOLOGIES AT HOME AND ABROAD
Enhance the capacity and efficiency of public and private networks that transfer information on
domestic and international market needs and the availability, performance and cost of innovative
technologies. Provide technical assistance, training, education, and information management to
support a more efficient marketplace in environmental technologies. Catalyze demand by promoting
federal purchases of innovative technologies at home and strengthening environmental policy and
regulatory frameworks abroad.
INTRODUCTION:
Once an innovative technology crosses the hurdle of its first commercial application, it must gain
widespread use if its full potential for protecting the environment is to be realized and its developer duly
rewarded. By strengthening partnerships and networks that compile and disseminate information on
innovative technologies, EPA will broaden the choices available to potential customers and help create a
more informed domestic and international market in which American technology developers can com-
pete on the basis of the quality of their products. In particular, EPA will emphasize multi-media tech-
nologies in its diffusion efforts in an effort to break down entrenched information barriers and pathways
that today tend to favor control technologies over cleaner technologies that prevent pollution.
Strengthened partnerships and mechanisms for exchanging information, while critical, will only
boost the diffusion of innovative technologies if market demand for them is also high. EPA will help
catalyze domestic demand by encouraging the use of government purchasing programs and voluntary
programs that favor innovative technologies. Abroad, EPA will address trans-boundary and global
environmental problems affecting the United States by providing international technical assistance,
training, and other capacity-building programs that strengthen environmental infrastructures and thereby
expand the global demand for more effective environmental technologies.
Well-constructed and targeted EPA technology diffusion programs can accelerate environmental
progress and regulatory compliance. By emphasizing partnerships, EPA can combine its own strengths
with those of existing organizations in the public, private, and non-profit sectors that are active in diffu-
sion. Important partners include: federal, state, and local agencies, developers, vendors, and users of
technologies and environmental services, universities, professional associations, and industry trade
associations. Many of these organizations are driven by research, development or diffusion missions,
economic motivations, or other factors to maintain positive relationships with regulated parties.
EPA will emphasize coordination with other federal agencies in implementing its international
diffusion efforts. In November of 1993, EPA released the first-ever coordinated interagency export
strategy for the environmental technology sector. EPA jointly produced the export strategy along with
the Departments of Commerce and Energy in response to a charge from President Clinton in his Earth
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Day speech in April, 1993. Entitled "Environmental Technologies Exports: Strategic Framework for
U.S. Leadership," the strategy calls for enlisting a range of traditional trade promotion activities on
behalf of the environmental technology industry. But it also recognized that these activities will not
succeed in the absence of a more disciplined effort to support the domestic industry in navigating the
fragmented U.S. market and building more innovative products.
STATEMENT OF THE PROBLEM:
Inefficient transfer of information between technology developers, technology vendors, users,
government agencies, and others hinders informed customer choice and restricts the efficiency of the
environmental technology market. New technologies fare poorly in this imperfect marketplace and often
do not gain widespread use, in part because their performance is less well established and communicated
than commonly used technologies. These market inefficiencies limit the tool-box available for address-
ing environmental problems, and translate into less protection than would otherwise be obtained.
EPA is broadly perceived as impartial and objective with respect to environmental technologies,
a factor that positions it to be a credible agent for transferring information. On the other hand, the
regulated community traditionally avoids non-essential contact with regulators, fearing that EPA's
knowledge of the performance levels of new and innovative technologies may trigger a ratcheting up of
regulatory requirements. Together, these factors suggest that there is an important role for EPA in
technology diffusion, but that, in many cases, it can have a more positive impact by working to
strengthen other organizations with which businesses are accustomed to working cooperatively.
Imperfections in the environmental technology marketplace are even more pronounced abroad.
This limits the worldwide availability of U.S. environmental technologies and hampers global environ-
mental improvement. The lack of strong policy and regulatory frameworks for environmental protection
in many countries, and the widely differing requirements for environmental improvement in others, are
also significant limiting factors. These and other limitations restrict the opportunities for U.S. firms to
export technologies and services to both the large markets in developed countries and the fast-growing
markets in developing countries. Informational deficiencies in the international marketplace also restrict
the opportunities for U.S. customers and the domestic environment to benefit from the use of new
technologies developed elsewhere in the world. America's principal trade competitors, Germany and
Japan, have already positioned themselves to support environmental technology innovation and capture a
leading share of the global market. The United States now has a limited window of opportunity either to
strengthen its own presence in this market, or be left behind.
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U.S. Environmental Training Institute:
Building Environmental Capacity Abroad
The U.S, Environmental Training Institute (USETI) is a public-private partnership launched by EPA
and the U.S, business community in 1991 to build environmental institutions and capacity in indus-
trializing countries. USETI serves as a training forum to link U.S. businesses with foreign professionals
in need of appropriate and effective environmental solutions. By providing these professionals
with comprehensive, short-term training courses, U.S. ETl seeks to forge long-term, productive
relationships between the private sector, governments, international agencies, and non-governmental
organizations in the U.S. and industrializing countries.
Through human resource development and continuous opportunities for information and technology
exchange, professionals can work together to generate positive global environmental change. USETI
currently has twenty-five courses scheduled for 1994, including nine overseas. Organized according to
specific needs of participants, courses range from a general overview of environmental risk management,
pollution prevention, and other environmental management techniques to more specific courses on
water quality testing, bioremediation, and air and water pollution control techniques. The development
of environmental capacity abroad will help stimulate demand for U.S. environmental technology and
expertise*
EPA'S PROPOSED STRATEGY:
1. EPA will evaluate the effectiveness of existing diffusion programs and develop a strategy to
strengthen them.
• To provide a stronger underpinning for expanding its diffusion efforts, EPA will assess the
effectiveness of existing programs conducted by the Agency and other public and private enti-
ties. This will involve increased efforts both to define measures of success for those programs
and to consult with their users: the wide range of organizations that manage environmental
protection, as well as develop and adopt innovative technologies. The Agency will assess the
information needs of various customers, the adequacy of existing diffusion tools and programs,
and the opportunities to design improvements to them. Among the specific tools to be assessed
are: clearinghouses, report dissemination, conferences and symposia, training, and professional
publications.
• Building on its assessment of existing diffusion programs, EPA will develop a coordinated
strategy to strengthen and supplement them. This strategy will reflect both the needs of differ-
ent categories of regulated parties, and the Agency's objective to emphasize multi-media ap-
proaches. The strategy will address a number of issues, such as how EPA can most effectively
disseminate credible technology information, and how it can best partner with other organiza-
tions involved in this area.
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2. EPA will expand its efforts to increase the flow of constructive and credible information into the
environmental technology marketplace.
• Increase efforts to collect and report credible and usable technology information produced by
EPA, other government agencies, and other sources. EPA will make a special effort to collect
information on cleaner technologies that offer multi-media benefits.
• Building on its strengthened collection and reporting systems, EPA will expand its programs to
disseminate information directly to technology users. This will enable EPA to provide a wider
variety of information about more technologies to more potential customers and to more organi-
zations that independently diffuse information.
• Develop partnerships with, and strengthen the information transfer capability of, organizations
that may have both a clear understanding of the information and technology needs of the market
and a strong relationship with technology users.
3. EPA will catalyze domestic demand for innovative technologies by strengthening voluntary, non-
regulatory programs and encouraging other federal agencies to favor innovative technologies in their
purchasing decisions.
• Expand programs that help strengthen markets for innovative technology through non-regulatory
means. During the last several years, EPA has had remarkable success in working with the
private sector on a voluntary basis to create markets that result in substantial environmental
improvements. Among these are the "Green Lights" program that encourages the use of energy-
efficient lighting in commercial buildings, the "Energy Star" program that encourages the diffu-
sion of energy-efficient components in computers, and the "Golden Carrot" program that stimu-
lated the development and commercialization of energy-efficient refrigerators by assuring a
market.
• Encourage other federal agencies to expand their purchases of innovative technologies or prod-
ucts manufactured with clean technologies. In addition, EPA will explore with other federal
agencies the development of amendments to procurement procedures that make it easier for
federal government staff to purchase new technologies.
4. EPA will expand its international technology diffusion activities, as part of the Administration's
new interagency export strategy for environmental technologies.
EPA will promote the application of U.S. environmental technologies in solving international
environmental problems. Under the President's Environmental Technology Initiative, the
Agency is greatly expanding its international activities related to technology innovation and use
through the U.S. Technology for International Environmental Solutions (U.S. TIES) program.
Under its U.S. TIES program, EPA will enlist the expertise, creativity, and resources of the
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private sector in environmental progress overseas. The concept of a public-private partnership
on behalf of the global environment has been emphasized in a number of Presidential and Con-
gressional mandates, including the President's State of the Union Address in January 1993, the
1994 legislation appropriating resources for EPA, and the Clinton Administration's environmen-
tal technology export strategy, released in November 1993 and entitled, "Environmental Tech-
nologies Exports: Strategic Framework for U.S. Leadership". In implementing its export-related
activities, EPA will take special precautions to safeguard its international credibility and reputa-
tion for objectivity.
EPA's objectives include the reduction of trans-boundary and global environmental problems
affecting the United States and stronger environmental policy frameworks throughout Eastern
Europe and the former Soviet Union, Mexico, and other parts of the developing world. In addi-
tion, by expanding commercial opportunities for U.S. suppliers, EPA will also advance broader
U.S. objectives on global competitiveness and trade. EPA's U.S. TIES overseas on-site technol-
ogy demonstration and evaluation activities are is described above in Objective #3. These
activities will help foster the use of U.S. technologies in other countries by, among other things,
producing performance data under actual operating conditions. Under U.S. TIES and other
international technology programs, EPA will undertake the following activities.
• Provide international technical assistance, training, and other capacity-building programs
to strengthen or build environmental infrastructures throughout the world and expand the
global market for new environmental technologies and expertise. Specifically, EPA will
assist developing country governments in establishing policy and program frameworks
for environmental protection; in developing environmental assessment, monitoring and
enforcement capabilities; and in applying pollution prevention, risk management and
other environmental management techniques.
• Collect and disseminate credible and non-proprietary information on international envi-
ronmental markets and needs and on the performance and costs of relevant U.S. technolo-
gies for meeting these needs. Such information will assist U.S. suppliers in identifying
environmental opportunities overseas and encourage greater international recognition of
the role U.S. technologies and expertise can play in solving international environmental
problems.
• Promote greater participation of the U.S. public and private sectors in the development of
both regulatory and voluntary international standards that set requirements for technolo-
gies for environmental protection. This will help to "level the playing field" and provide
consistent standards for the environmental technology industry.
32
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Provide financial support for prc-feasibility and feasibility studies for international
environmental projects that involve renewable energy, efficient and other reduced
emission technologies. This effort will serve as a pilot to demonstrate effective
measures for overcoming financial and other barriers to the adoption of additional
categories of technologies in the future.
33
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Electronic Availability
This Strategy is available in ASCII format from a variety of electronic sources,
inducting:
U.S. EPA Public Access Gopher
Internet Access: Gopher to GQPHER.RTPNC.EPA.GQV
Directory: EPA Environmental Technology
Document: U.S. EPA Technology innovation Strategy
CLU-IN Clean-up information Bulletin Board ;
System Operator (301) 589-8368
Modem Access; (301) 589-8366
{1200, 2400,9600 bps - 8 data bits, 1 stop bit, no parity).
Filename: TECSTRAT.EPA
U.S. Department of Commerce Economic Bulletin Board (EBB]
User Hotline {202} 482-1986 (8:30 a.m.-4:30 p.m.)
Modem Access:(202) 482-3870 (300,1200, 2400 BPS]
Internet Access; telnet to ebb.stat-usa.gov
Filename: TECSTRAT.EPA
SBA ONLINE
Modem Access: (8001 $59-4636 (2400 baud); (800} 697-4636 (9600 baud)
Local Access: (202) 205-7265 (2400 baud); (202) 401-9600 (9600 baud)
Filename: TECSTRAT.EPA
34
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