There's money in the air: the CFC ban and DuPont's regulatory strategy

Abstract

DuPont, the world's dominant CFC producer, played a key role in the development of the Montreal Protocol on Ozone Depleting Substances. We argue that DuPont's pursuit of its economic interests, along with the political impact of the discovery of an ozone hole and the threat of domestic regulation, shaped the international regulatory regime for ozone‐depleting substances. International regulation offered DuPont and a few other producers the possibility of new and more profitable chemical markets at a time when CFC production was losing its profitability and promising alternative chemicals had already been identified. DuPont's organization and strategy were key to the successful leveraging of the Montreal process. For example, the Freon Division had close interaction with public officials and external groups, and benefited from the input of DuPont's external affairs department. This positioned DuPont to exploit the situation when regulatory discussions were stepped up. From a public policy perspective, the Montreal process offers a valuable example of harnessing diversity in industry: some producers stood to gain more from the envisioned regulations than others. Such industry heterogeneity provides frequent opportunities for coalitions of ‘the green and the greedy’, such as that between DuPont and environmental interests. Methods to encourage potential industry winners into supporting environmental initiatives deserve further attention. © 1997 John Wiley & Sons, Ltd and ERP Environment.

Replacement Decisions for Potentially Hazardous Substances

“…Although DuPont lobbied against regulation, to minimize its risk, DuPont also dedicated resources for development. When regulation was announced, DuPont was the only firm with a replacement substance and as such, gained significant market share from its competitors (Barrett 1992, Maxwell and Briscoe 1997).…”

Tackling toxins: Case studies of industrial pollutants and implications for climate policy

“…Scientific evidence of ozone depletion began fueling calls for bans on CFCs as early as the mid-1970s. Large chemical companies vehemently resisted regulatory intrusions at this point, and the largest producer of CFCs, DuPont, even gutted existing projects to develop substitutes (Maxwell & Briscoe, 1997). The landscape changed significantly, though, with the detection of an ozone "hole" over Antarctica in 1985, which demonstrated the severity of ozone depletion and powerfully symbolized the problem for mass audiences.…”

“…Second, some incumbent CFC producers—most notably, DuPont—revived their own projects to develop substitutes. For DuPont, this was an opportunity to shift away from commoditized CFCs to higher‐priced alternatives that it expected to be more profitable (Brune, 2015; Maxwell & Briscoe, 1997). Since DuPont's business was not heavily focused on CFCs, and since CFCs and their alternatives represented a small fraction of industrial customers' costs, a ban on CFCs did not pose serious or existential risks for the company (Stadelmann‐Steffen et al, 2021).…”

“…Since DuPont's business was not heavily focused on CFCs, and since CFCs and their alternatives represented a small fraction of industrial customers' costs, a ban on CFCs did not pose serious or existential risks for the company (Stadelmann‐Steffen et al, 2021). Although DuPont backtracked or delayed some CFC phaseouts, it also abandoned the pro‐CFC industry lobbying group it had formed in the early 1980s—the Alliance for Responsible CFC Policy—signaling a decisive switch in strategy (Maxwell & Briscoe, 1997; Smith, 1998). While scholars disagree on the relative importance of change among CFC users (Sabel & Victor, 2022) and producers (Maxwell & Briscoe, 1997), we suspect that the combination of the two, disciplined by an international treaty that banned entire classes of substances, was especially potent.…”

“…Here, firms may lobby for more regulation or signal their support for stronger national standards or international agreements. Existing research suggests that this is more likely if firms (a) are facing competitive challenges that could be lessened through regulatory controls or barriers to entry (Yandle, 2011); (b) have proprietary technologies that could give them competitive advantages or expanded markets (Maxwell & Briscoe, 1997); (c) operate in heavily regulated jurisdictions and want to push new costs on their competitors in less regulated jurisdictions (Vogel & Kagan, 2004); or (d) have found voluntary initiatives insufficient for accomplishing operational goals (Tzankova, 2021). To the extent that these conditions are combined with controversies or political challenges to the legitimacy of the industry, this should increase the chances that at least some subset of firms will embrace regulatory change or join sustainability transition coalitions (Hess, 2019).…”