Regulatory Experimenting

The figure “illustrates the differences between regulatory sandboxes and other experimentation tools, and provides a ‘decision tree’ for innovators and public authorities interested in organising experimentation. All three experimentation tools can offer significant benefits. Regulatory sandboxes facilitate dialogue between regulators and innovators, increase innovators’ knowledge of and compliance with regulatory frameworks, can accelerate the introduction of new products and services into the market and foster regulatory learning. Living labs help innovators and regulators by revealing hidden user needs and possible social impacts. Living labs also provide strategic foresight about future socio-technical systems. The benefits of testbeds are similar to those of sandboxes and living labs but there is more emphasis on technical aspects. While these remain distinct tools for regulatory experimentation, synergies between them are also beneficial as they can mutually reinforce and complement each other to support innovation.”

[Source: European Commission. ‘Regulatory Learning in the EU - Guidance on Regulatory Sandboxes, Testbeds, and Living Labs in the EU, with a Focus Section on Energy’. European Commission: Commission Staff Working Document {SWD(2023) 277 final, 25 July 2023. https://data.consilium.europa.eu/doc/document/ST-12199-2023-INIT/en/pdf.]

“A regulatory experiment is a test or trial of a new product, service, approach or process designed to generate evidence or information that can inform the design or administration of a regulatory regime. In practice, a regulator might experiment with:

• Unordered List ItemA regulated product or service. This includes new products, services and business models that create regulatory uncertainty. These may be unregulated or prohibited in some way by existing regulation. The experiment might be designed to understand the implications of those innovations if they were used in the real world or assess how easy they would be to regulate using existing mechanisms.
• Unordered List ItemA new approach to regulating. In some cases, regulators may want to trial a new version of a regulation under controlled conditions in order to monitor its effects. For example, regulators could test proposed regulations with a specific group of regulated entities to assess their effectiveness before being formally implemented.
• Unordered List ItemA regulatory process. This covers a broad range of activities. For example, a regulator could test different ways of consulting stakeholders on the design of new regulations, such as co-development, or it could run an experiment to understand if a new process for compliance or enforcement is better than the current procedures in place.”

https://wiki.gccollab.ca/Regulatory_Sandboxes

“.. the meaning of “experiment” varies markedly  …. diversity of experimentation, identifying three distinct experimental logics—controlled, Darwinian, and generative. …

Controlled experiments primarily aim to isolate causality, while

Darwinian experimentation endeavors to enhance systemic innovation and

generative experimentation seeks to generate new solution concepts.”

[Source: Ansell, C.K., Bartenberger, M., 2016. Varieties of experimentalism. Ecological Economics 130, 64–73. https://doi.org/10.1016/j.ecolecon.2016.05.016 ]

According the JRC science policy brief ‘Regulatory learning in experimentation spaces’ (Kert, Vebrova, & Schade, 2022) regulatory sandboxes, living labs and test beds are experimentation spaces that can generate evidence and learning useful to support innovation and regulatory governance However, they have different features that require different form of actors’ involvement and support different types or regulatory learning. The primary motivation of regulatory sandboxes is to test innovation and regulations in controlled real-world market conditions to improve legal certainty and focus on technologies mature for market deployment; test beds and living labs have as their primary motivation to develop, test and upscale innovative products or services in controlled (near) real-world (test beds) or uncontrolled (near) real-world physical or virtual environment (living labs).

[Source: Kert, K., Verbova, M., Schade, S., 2022. Regulatory learning in experimentation spaces (Science for Policy Brief No. JRC130458). European Commission.]

“Regulatory experimentation initiatives are not yet evenly spread across the EU. Early initiatives were reported in Italy and the Netherlands, while other countries started more recently to draft their regulatory innovation strategy. Figure 3 shows the geographical distribution of regulatory experimentation initiatives in the EU. At the time of writing, and based on the collected data, initiatives have been adopted or are under development in 12 Member States, while 3 more Member States are considering their adoption.”

[Source: European Commission. Joint Research Centre., 2023. Making energy regulation fit for purpose: state of play of regulatory experimentation in the EU : insights from running regulatory sandboxes. Publications Office, LU. https://data.europa.eu/doi/10.2760/32253 ]

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