The polluter pays, but how?

Concerns about the state of the environment have never been taken more seriously. Yet, despite this, a good deal of confusion resides around the EU’s much lauded environmental liability directive (ELD), which remains unimplemented in the majority of member states.

The confusion is felt no more acutely than in the insurance sector. In most parts of Europe an insurance market for the new liabilities has yet to be established. Those insurers that offer specialised cover say the risks can be analysed based on knowledge of the framework directive. Other commentators claim that offering insurance policies is misleading with no hard and fast ELD laws in place.

In some jurisdictions, like Germany and Spain, efforts have been made to stimulate a competitive insurance market for environmental risks, either through government backed initiatives or private sector collaboration.

Elsewhere indigenous insurers remain weary, particularly in the UK where the government department responsible for transposing the directive is under investigation after severe delays in getting legislation onto the books.

In light of this, the EU’s federation of insurers (CEA) is hosting a technical workshop in mid February to meet with member state transposition authorities, national associations, European Commission officials and key stakeholders to facilitate the development of appropriate financial security instruments.

“In some jurisdictions, like Germany and Spain, efforts have been made to stimulate a competitive insurance market for environmental risks

What remains clearer in this area is that the directive could establish in national law a number of new legal concepts and obligations around the idea of environmental remediation.

One of the most important of these new concepts is that polluters who cause environmental injury may be forced to pay damages in the form of restitution of the environment to its state before the pollution took place.

This, in turn, brings with it more than a few problems associated with assessing and quantifying damages to species and habitats. How can the authorities, for example, quantify in monetary terms the irreversible damage caused by the complete destruction of a unique natural habitat?

The ELD also establishes a positive duty on operators to report if environmental harm is occurring on their premises, designed to bring to an end the ‘bad-old-days’ when landowners found it easier to cover up environmental damage. Third parties are also empowered with the right to require an enforcing authority to act against polluters.

A FULL ROUNDUP OF THE SITUATION IN EUROPE WITH REGARDS THE ELD IS AVAILABLE IN FEBRUARY’S STRATEGICRISK.