Integrated Product Policy (IPP) is an approach that begins by examining how the environmental performance of products can be improved more cost-effectively. It is based on the reflection of the impacts of products throughout their life cycle, from the natural resources from which they come, through their use and marketing to their eventual disposal as waste. It is also a relatively new approach to environmental policy.
IPP seeks to minimise environmental degradation caused by products. It covers the whole product life cycle, from the extraction of natural resources, through their design, manufacture, assembly, marketing, distribution, sale and use to their eventual disposal as waste.
"Integrated" refers to the comprehensive study and documentation of the way products are produced, packaged, transported, sold, used, reused, cascaded, recycled and disposed of. It also refers to examination of the mix of instruments for life-cycle management that can be implemented by various stakeholders. Analysis of an existing situation can provide feedback for future research, design, and development stages of making a product to lessen the possible burden on the environment at each level of its production, distribution, appropriate use and disposal.
In February 2001, the European Commission presented a Green Paper on Integrated Product Policy (IPP). The Green Paper intends to promote the development of a market for greener products, by mainly using the market forces and the economic interests of the various market actors to find eco-efficient solutions, and proposes a strategy to strengthen and refocus existing product-related environmental policies. The objective is to improve the environmental performance of products throughout their life cycle. Following the adoption of the Green Paper, the Commission invited all interested parties to submit comments on the role and possible measures that could be taken on a European Union level in the view of producing a White Paper on IPP.
In its Green Paper, the Commission outlined the following objectives and mixture of instruments to implement an integrated policy for products: (1) Getting the Prices Right: The use of price mechanisms will be necessary in order to stimulate and develop markets for greener products. Instruments here could include the differentiated taxation such as reduced VAT rates on eco-labelled products; an extension of the producer responsibility concept to new areas; and the use of state aid policy within the New Guidelines on State Aid for Environmental Protection. (2) Strengthening Green Production: To stimulate business leadership in the supply of green products, instruments such as improving the generation and flow of life-cycle information, eco-design guidelines and the integration of environmental aspects into standardization would be necessary. (3) Stimulating Demand for Greener Products: In order to stimulate demand for greener products consumers need information that is easily accessible, understandable, relevant and credible. This can only be achieved through various types of eco-labelling and public procurement via public authorities. Faced with criticisms that such a general framework would not bring the expected results, the Commission decided to select a small number of products which cause environmental problems, for which concrete proposals – legislative and non-legislative – will be made in order to show that this policy can work.
Unless there is firm application across a broad range of instruments – including taxation, fiscal incentives and low VAT on environmentally friendly products, the promotion of criteria led eco-labels and green public procurement – there is a risk that only the voluntary, informational and consensual instruments will survive.