What is the Polluter Pays Principle?

The Polluter Pays Principle aims to deter and reduce greenhouse gas emissions by taxing the industries responsible for the emissions. The Polluter Pays Principle has received strong support from many member countries of both the European Union (EU) and the Organisation for Economic Co-operation and Development (OECD). The reasoning behind the principle is that those responsible for the pollution, either industry or person, should bear the cost of dealing with that pollution, removing the burden from the government, and in turn the taxpayers.

The Polluter Pays Principle in Action

Different countries around the world have enacted the Polluter Pays Principle into law.

European Union

The European Union implemented the Polluter Pays Principle in April 2004 through Directive 2004/35/EC of the European Parliament and the European Council. Member states were allowed three years from April 30, 2004 to incorporate the directive into domestic law. The directive aimed to enforce the polluter pays principle in that companies responsible for environmental damage to land, water resources, natural habitats, and protected species would be responsible to bear the full costs for preventative and remedial action. A 2016 report confirmed that while the Polluter Pays Principle had been effective in motivating prevention and addressing damages, it has not reached its full potential.

United States

The Polluter Pays Principle is employed in many areas of pollution control laws such as the Clean Air Act, Clean Water Act, Resource Conservation and Recovery Act, and Superfund as well as eco-taxes such as the Gas Guzzler Tax and the Corporate Average Fuel Economy. However, the US Environmental Protection Agency has noted that the enacted laws and taxes have not reached the full potential of the Polluter Pays Principle.

Limits of the Polluter Pays Principle

One of the issues surrounding the Polluter Pays Principle is the limited ability of the government in forcing those responsible to cover the costs of both preventative and remedial action. Although many countries around the world have enacted the Polluter Pays Principle into law, in reality, there are limited mechanisms in place to ensure those responsible fully engage in appropriate action in regards to environmental damage.