Industry balks at plans to make polluters pay for environmental damage

Date: 07/10/1999

By Gareth Harding

THE European Commission's soon-to-be-released White Paper on environmental liability has been leaked so many times since it was first drafted that if the EU executive were legally responsible for its confidentiality, it would be hauled before the courts.

The idea of making polluters pay for the environmental damage they cause dates back over a decade. But it was not until 1993 that the Commission finally got around to issuing a Green Paper on this highly sensitive subject. Reflecting the deep divisions within the institution's services over the issue, the policy paper arrived at no firm conclusions and made no concrete proposals.

The various options were narrowed down in a 1997 communication from the institution's environment directorate-general. Again, the Commission dodged the issue of what form an EU environmental liability scheme should take, but it did at least promise a White Paper on the subject.

When a draft drawn up at the end of last year was widely leaked, it immediately provoked howls of protest from industry.

The document, which sparked such a furious debate within the Commission and beyond, opts for a strict liability scheme under which authorities seeking to punish suspected offenders would have to provide evidence of a link between the alleged polluter's activities and the environmental damage caused, but they would not have to show actual fault.

However, unlike many other liability schemes around the world, responsibility for cleaning up environmental damage would not be applied retroactively.

In its White Paper, the Commission is set to plump for a legally-binding framework directive, rather than a recommendation. But in a key concession to industry, it is likely to propose that the scope of the scheme is limited to damage to the environment already covered by EU laws rather than applying to any new Union legislation that might be proposed in the future.

Just as the Commission appeared to have ironed out its problems with the proposal in the spring, the entire EU executive resigned over allegations of cronyism and corruption, so delaying publication of the draft directive once again.

Industry, which has long argued that an EU-wide liability scheme would be both costly and unnecessary, fervently hoped that the proposal would be buried in the rubble of the old Commission.

But those hopes were dashed when new Environment Commissioner Margot Wallström made clear her enthusiasm for a strict application of the 'polluter pays principle' during her confirmation hearing at the European Parliament last month.

The Swede told MEPs that she would "push for comprehensive rules on liability and try to ensure the proposal is completed as soon as possible and applied across the board" .

Wallström added that she was confident that the plan would not be blocked by other members of the Commission, as it was in March.

"I do not think the problem is actually making the proposal," she said. "It is a question of how far the member states want to go and where the conflicts are with the other stakeholders."

The problem for Wallström and other champions of the 'polluter pays' principle is that many of the EU's larger member states remain firmly opposed to the Commission's plans.

They have heeded the warnings from European companies about the potential costs of the proposal, and the fact that it would be difficult to insure themselves against the risk of potentially enormous bills for repairing environmental damage, and are already digging in their heels.

But even if the Commission's proposals are eventually watered down by Union governments, moves towards making firms responsible for the pollution they produce are likely to continue.

Since the Amsterdam Treaty entered into force earlier this year, the EU's environmental policy has been based on three key principles: that preventative action should be taken; that damage should be rectified at source; and that polluters should pay.

In line with the new EU treaty, the Commission is shortly due to present a policy paper on the precautionary principle.

It is also planning to issue a Green Paper this autumn on integrated product policy, which aims to extend producer responsibility to all the stages in the life cycle of a product.

Part of a survey 'Challenges for industry', p13-20.