Extra expenditure for cleaner technologies
Most pollution prevention investments involve a share of environmental improvement and a share of improved production, with the respective shares to be estimated by an in-house review panel. Integrated or cleaner technologies allow for more efficient production processes, which reduce or prevent emission at the source. Often, the new technology also uses less energy, is faster and has more production capacity. A new bottling plant, for instance, is less noisy, requires less water and is equipped with an automatic supply of detergents. Environmental concerns were integrated when the device was designed. Because of the integration of environmental protection appliances and considerations, the question is often raised whether and to what degree cleaner technologies should be quoted as investments for environmental protection.
For imputation purposes, the cost difference of such an approach to an environmentally less favorable solution, with identical production values and state of the art, could be regarded. If there are significant differences and the investment was mainly done for environment protection purposes, the relevant share could be quoted as an environmental investment and the annual costs considered by depreciation. However, if the cleaner technology represents the current state of the art and was installed mainly as a regular replacement of an old device, it should not be regarded as environmental investment.
In contrast to end-of-pipe technologies, integrated anti-pollution technologies are part of the ordinary production assets. They are mainly bought for economic purposes. The environmentally induced part of cleaner technologies often cannot be determined. Sometimes, for the sake of enhancing their reputation, companies tend to overstate the environmentrelated part of their investments.
“ Cleaner technologies should be treated as normal capital investment (assets) and not as environmental investment because:
· the investment was made mainly for economic reasons;
· it is difficult to determine exactly the environmental element of the cleaner technology. 6 “
Cleaner technologies are thereby automatically capitalized over their useful life and do not need to be expensed immediately. A further incentive may be that, as they do not appear under the heading of environmental management costs, the belief that environmental protection is invariably associated with costly investments becomes more and more untenable. Still, investments in cleaner technologies should be mentioned in the notes to the financial and/or environmental report, as they are the core element of any solution consisting of prevention rather than treatment.