'Green' regulations will make extractives R&D leaders

Subject

The impact of environmental regulations on the extractive sector.

Significance

The White House announced on March 18 that it would conduct a final review on regulation of mountaintop removal mining (MRM). MRM has been criticised for its environmental consequences and has seen investment fade because of reputational risks for financing firms. Increasingly, developed nations are implementing dense regulatory requirements on extractive industries, especially costly when commodities are facing slumping prices.

Impacts

• Stricter environmental regulations favour larger companies with resources to comply and stay with additional costs.
• Large extractive firms may therefore lobby for greater regulation to squeeze smaller competitors.
• Since extractives and environmentalists tend to support opposing parties, this would create a winning political coalition.