When the Environmental Liability Directive was adopted in 2004, the EU's environment commissioner at the time, Margot Wallström, said: "I am delighted that we have finally come so far, after 15 years of trying." The ELD, she said, "will ensure that future environmental damage in the EU is prevented or remedied and that those who cause it are held responsible".
"The idea that the polluter must pay is a cornerstone of EU environmental policy, and with the new directive, we are, for the first time, putting the 'polluter pays principle' into practice in a comprehensive manner. The new directive should be a strong incentive to prevent environmental damage from happening at all. I find it particularly important and relevant that the new directive will apply to protected habitats and species at a time when so many threats adversely impact the world's biodiversity."
Speaking in the aftermath of the BP oil spill in 2010, EU Energy Commissioner Günther Oettinger described EU legislation based on the 'polluter pays' principle as "serving Europe well, addressing a wide range of risks and challenges associated with this kind of industrial activity".
However, he admitted that there was still "scope for improvement with existing legislation" to make it clearer and up to date. "Be assured that, if proven necessary, we will not hesitate to come with legislative initiatives in the coming months," he told the Parliament's plenary session in July 2010.
On the issue of passing legislation targeting offshore oil drilling, he said that "safety is non-negotiable. We have to make sure that a disaster similar to the one in the Gulf of Mexico will never happen in European waters. This is why we propose that best practices already existing in Europe will become the standard throughout the European Union".
Taking stock of the directive's implementation in June 2010, Hans Lopatta, an official at the European Commission's environment directorate, said the draft conclusions showed that there had only been 50-odd ELD cases so far.
One of the reasons for the low number is the "complicated technical requirements and challenges related to economic valuation and remediation methods," Lopatta suggested.
He stressed that a broad variety of different implementations across the EU 27 made it difficult to assess the effectiveness of the ELD. "Where the directive gives member states the flexibility to choose what action to take, we see a diverse picture across Europe," he said.
The biggest problem with financial liability schemes, he said, may be the "underdeveloped awareness by operators of their ELD liabilities and the available financial security products and markets". Therefore, he saw "awareness-raising with operators as well as brokers" as one of the main challenges to improving the directive's implementation.
The European People's Party (EPP) group, the largest in the European Parliament, said environmental policy should tackle the causes of pollution, not the symptoms. Those responsible for environmental damage should pay for the "overall macroeconomic costs" and be given incentives to avoid producing harmful emissions, it said.
"Only if we take this into account all operators will then take their responsibilities in this field equally seriously," it added.
"We underline that business should operate in a framework where it is held responsible for environmental damage for which it is responsible. Liability has to be well defined and a liability regime must be based on clear definitions, practicalities and consequences," the EPP group said in a statement
In May 2003 the Party of European Socialists and the Greens retabled amendments related to four key issues of the directive: its scope, defences and mitigation factors, financial security provisions for companies and changes to the proposal's legal basis.
But the European Parliament's rapporteur on the directive sought to tame expectations ahead of the Parliament's first reading in 2004, saying it would be "unworkable to go too far at once". Dutch MEP Toine Manders (Liberals) warned that the EU's upcoming enlargement to ten new member states from Central and Eastern Europe risked delaying the directive's adoption. "If this directive is not accepted in the May plenary, we can forget this very important environmental legislation for the coming decade, because of enlargement," he stressed.
The Council of European Municipalities and Regions (CEMR) called on MEPs to reject amendments to the directive that "allow for broad exemptions from liability, limit possibilities for developing an appropriate financial security regime and for authorities to prove that the operator is indeed at fault in order to recover costs".
"In the vast majority of these cases it is the taxpayer who, either wholly or partially, meets the cost of the clean-up," the CEMR's environment spokesperson Lucy Swans said in a statement.
Europabio, the European Association of Bio-industries, which represents GMO crop manufacturers, called for environmental liability to have clear legal principles. "Operators must be encouraged to conform to environmental standards and should not be held liable where they comply with their permits. This is vital toensure the prevention of environmental damage by emphasising the need to adhere to the conditions in a permit."
"Without it, the permitting system will be undermined, and with it the possibility of providing insurance or financial security reduced," it said in a joint statement with Eurochambres, the European network of chambers of commerce. "A clear link between an activity and the damage occurring must be established, with operators liable only for the proportion of the damage they caused," the statement added.
Michaela Koller, director-general of CEA, the European Insurance Federation, welcomed the Commission's decision in October 2010 not to impose mandatory insurance scheme on companies, saying it would not be feasible at the moment.
The CEA said insurers were facing challenges in developing products because of a lack of available data on ELD claims and on the cost of preventive and remedial measures, due to late implementation of the ELD into national law in many countries. "It is likely to take a number of years before detailed and reliable data emerges, especially where compensatory remediation is involved, as the time required to restore the damaged resource to its previous condition could take several years," said Koller.
Lack of data is not the only reason why the CEA believes a compulsory scheme at EU level would not be appropriate. "Such a scheme would face obstacles in terms of differing liability cultures between member states, differences in ELD implementation and different environmental threats," the CEA said. "The current low levels of awareness of the ELD among both operators and the authorities also make a compulsory scheme unfeasible."
A review of the directive by Lockton, the world's largest privately-held insurance broker, describes EU member states' compliance with the directive as "untested". Insurance brokers must therefore be "willing to work with a moving target and be creative in developing environmental insurance solutions in the midst of this uncertainty," it states.
The Federation of European Risk Management Associations, which represents the manufacturing and financial services sectors, found in a January 2010 survey that 27% of businesses were unaware of the ELD. 58% had not obtained insurance to protect against the risk of paying for environmental damages. And almost none were aware of cases arising from member states transposing the directive into national law.
Speaking about the red sludge flows in Hungary, Katerina Ventusova, a Greenpeace expert on toxic substances, warned against claims by the Hungarian government that the disaster was "seven times larger than the incident in Baia Mare" (EurActiv 06/10/10). "The ecological impact can be very wide and take a long time to neutralise because heavy metals and caustic soda form a very dangerous toxic mix," she told Reuters at the scene.
Other NGOs such as the WWF, BirdLife and the European Environmental Bureau say that the current directive leaves several options open as to how member states implement it, engendering the risk that other stakeholders could seek to weaken national legislation.
According to the group, "95% of lobbyists making representations to the Commission on the Directive were from trade and industry".
They warned that the upcoming review of the directive presented "potential opportunities as well as threats" in this regard. "NGOs at national level should be particularly vigilant as the debates on the transposition of the directive into a national legal system could open the door to attempts to weaken existing national legislation or law," the EEB warns.
The NGOs had opposed the introduction 'state-of-the-art' exceptions, which they said would "fundamentally undermine its effectiveness" as many operators would "automatically be granted immunity" for the environmental damage they cause with the introduction of a permit scheme.
Environmental NGOs also expressed scepticism over plans to merge several environmental directives including environmental assessment into a single one following a public consultation carried out by the Commission. The organisations regretted not being able to "express opinions on all the important aspects of the directive and specifically on its functioning in practice" during the Commission's public consultation on the directive.
Paul de Clerck, corporate accountability campaigner at Friends of the Earth Europe, called for the EU to step up environmental liability for companies operating in the EU and other regions of the world as well. "We call on the heads of state of the EU and the European Commission to hold companies operating in the EU legally accountable for any harm they cause to people and the environment across the world. They must disclose accurate information about their activities. Victims should face no barriers in accessing justice in the EU," he said in a statement.
"Shell and other oil companies have spilt as much oil in Nigeria as BP in the Gulf of Mexico. Not even the Nigerian government is stopping them. Continuous oil pollution by European companies in Nigeria is the best example of the urgent need for the EU to take steps to hold European companies accountable for the problems they cause in other parts of the world," he added.
MAL.Zrt, the company that owns the alumina plant where a reservoir ruptured in Hungary in October 2010, said in a statement a day after the disaster that the company's management "stands by their responsibility to continually inform the public in a trustworthy manner on the matter".
The company also stated that the sludge was not considered hazardous waste under European Union conventions and claimed that it had respected the capacity of the sludge reservoir, while experts pointed out that volume exceeded capacity three times over (EurActiv 06/10/10).