The polluter pays principle requires polluters to bear the costs of their pollution. But this is not always the case in the EU, as the European Court of Auditors (ECA) reports today. Although the principle is generally reflected in EU environmental policies, its coverage remains incomplete and it is applied unevenly across sectors and Member States. As a result, public money – instead of that of polluters – is sometimes used to finance cleanup actions, auditors point out.
In the EU, nearly 3 million sites are potentially contaminated, mainly through industrial activity and the treatment and disposal of waste. Six out of ten surface water bodies, such as rivers and lakes, are not in good chemical and ecological status. Air pollution, a major health risk in the EU, also damages vegetation and ecosystems. All of this entails significant costs for EU citizens. The polluter pays principle holds polluters responsible for their pollution and the environmental damage they cause. It is the polluters, not the taxpayers, who are supposed to cover the associated costs.
“To realize the ambitions of the EU’s Green Deal effectively and fairly, polluters must pay for the environmental damage they cause,” said Viorel Ștefan, member of the European Court of Auditors responsible for the report. “Until now, however, European taxpayers have far too often been forced to bear the costs that polluters should have paid.”
The polluter pays principle is one of the key principles underpinning EU environmental law and policies, but it is applied unevenly and to varying degrees, the auditors found. While the Industrial Emissions Directive covers the most polluting installations, most Member States still fail to hold industries responsible when the allowable emissions cause environmental damage. Nor does the directive oblige industries to bear the costs of the impact of residual pollution, which amounts to hundreds of billions of euros. Likewise, EU waste legislation incorporates the polluter pays principle, for example through “extended producer responsibility”. But auditors note that large public investments are often needed to close the funding gap.
Polluters also do not bear the full costs of water pollution. Households in the EU usually pay the most, even if they only consume 10% of water. The polluter pays principle remains difficult to apply in the case of pollution of diffuse origin, and in particular in agriculture.
Very often the contamination of sites has occurred so long ago that the polluters no longer exist, cannot be identified or cannot be held responsible. This “orphan pollution” is one of the reasons why the EU has had to finance clean-up projects that should have been paid for by polluters. Worse yet, EU public money has also been used contrary to the polluter pays principle, for example when Member State authorities have failed to enforce environmental law and make polluters pay.
Finally, the auditors point out that when companies do not have sufficient financial security (for example an insurance policy covering environmental liability), there is a risk that the costs of environmental clean-up will end up being borne by the taxpayers. . To date, only seven Member States (the Czech Republic, Ireland, Spain, Italy, Poland, Portugal and Slovakia) require the granting of a financial guarantee for all or part of the environmental liabilities. . But at EU level, these guarantees are not mandatory, which in practice means that taxpayers are forced to step in and pay the cleanup costs when a company that has caused environmental damage becomes insolvent.
A significant part of the EU budget is devoted to meeting the EU’s climate change and environmental objectives. Over the period 2014-2020, around € 29 billion from EU cohesion policy and the LIFE program were specifically earmarked for environmental protection.
The special report 12/2021: “The polluter pays principle: inconsistent application in EU environmental policies and actions” is available on the website ECA website in 23 EU languages. This report does not focus on the energy and climate sector, as these topics have been addressed in several recent reports from the European Court of Auditors, such as a special report on the The EU Emissions Trading Systems and a special report on air pollution. Two weeks ago, the Court also published a report on climate change and agriculture in the EU. However, today’s report is the first time that the polluter pays principle has been specifically examined.
The Court presents its special reports to the European Parliament and the Council of the EU, as well as to other interested parties such as national parliaments, industry stakeholders and representatives of civil society. The vast majority of recommendations made in the reports are being implemented.