The polluter pays principle requires that polluters should bearthe costs of their pollution. But this is not always the case in the EU, as reported today by the European Court of Auditors (ECA). While the principle is generally reflected in the EU’s environmental policies, its coverage remainsincomplete and it is applied unevenly across sectors and Member States. As a result, public money – instead of polluters’ – is sometimes used to fund clean-up actions, the auditors point out.

In the EU, nearly 3 million sites are potentially contaminated, primarily by industrial activity and waste treatment and disposal. Six in tenbodies of surface water, such as rivers and lakes, are not in good chemical and ecological condition. Air pollution, a major health risk in the EU, also damages vegetation and ecosystems. All of this entailssignificant costs for EU citizens. The polluter pays principle holds polluters responsible for their pollution and the environmental damage they cause. It is polluters, and not taxpayers, who are supposed to cover the associated costs.

Polluters need to pay for environmental damages

“To deliver the EU’s Green Deal ambitions efficiently and fairly, polluters need to pay for the environmental damage they cause”, said Viorel Ștefan, the member of the European Court of Auditors responsible for the report. “Up to now, though, European taxpayers have far too often been forced to bearthe costs that polluters should have paid.”

The polluter pays principle is one of the key principles underlying EU environment legislation and policies, but it is applied unevenly, and to differing extents, the auditors found. While the Industrial Emissions Directive coversthe most polluting installations, most Member Statesstill do not make industries liable when allowed emissions cause environmental damage. Nor does the Directive require industries to meet the costs of the impact of residual pollution, which runs into the hundreds of billions of euros. Similarly, the EU’swaste legislation incorporatesthe polluter pays principle, for instance through ‘extended producer responsibility’. But the auditors note that significant public investments are often needed to bridge the funding gap.

Difficulties because of diffuse sources

Polluters also do not bear the full costs of water pollution. EU households usually pay the most, even though they consume only 10 % of water. The polluter pays principle remains difficult to apply in the case of pollution originating from diffuse sources, and particularly from agriculture.

Very often, the contamination of sites happened so long ago that polluters no longer exist, cannot be identified, or cannot be made liable. This ‘orphan pollution’ is one of the reasons why the EU has had to finance remediation projects that should have been paid for by polluters. What is worse, EU public money has also been used contrary to the polluter-pays principle, for instance when authorities in Member States have failed to enforce environmental legislation and make polluters pay.

Finally, the auditors underline that, where businesses do not have sufficient financial security (e.g. insurance policy covering environmental liability), there is a risk that environmental clean-up costs will end up being borne by taxpayers. To date, only seven Member States (the Czech Republic, Ireland, Spain, Italy, Poland, Portugal and Slovakia) require financial security to be given for some or all environmental liabilities. But at EU level, such guarantees are not mandatory, which in practice means that taxpayersare forced to step in and pay for clean-up costs when a company which has caused environmental damage becomes insolvent.

Here you can download the pdf of the Special Report “The Polluter Pays Principle: Inconsistent application across EU environmental policies and actions”.