Pollution curbs worry ICI: EC proposals set liability for environmental damage

ICI has challenged proposals by the European Commission to hold companies liable for environmental damage. The UK group said the EC plans would add to company costs and exacerbate the economic downturn. Unveiling a green paper on the subject yesterday, the Commission said that it would try to ensure that the interests of chemical companies such as ICI were taken into account.

Sir Denys Henderson, ICI's chairman, visited Brussels on Tuesday for what ICI said was a regular two-yearly visit. He discussed plans for energy liberalisation but also emphasised that attempts to deal with the costs of environmental damage must not penalise business.

Although the British government and ICI regard the green paper as an important first step, they are concerned that any legislation arising out of it must be kept within reasonable limits. Ioannis Paleokrassas, the EC environment commissioner, emphasised that the document was only a first step. 'This green paper will be the beginning of a very extended discussion,' he said.

He set a deadline of October for comments on it and hoped that the European Community could move rapidly afterwards with legislation. The paper investigated the basic issues, he said: 'Who is the polluter, what is the cost, and who pays?'

The EC initiative follows the damage caused by the tanker Braer off the Shetlands and oil spills off the Spanish coast. It forms part of an attempt to incorporate environmental costs in the prices of goods and services - what the Commission's president, Jacques Delors, has called 'green logistics'.

'We are looking for a balanced solution which will not create a tremendous increase in costs but will ensure that the principle of 'the polluter pays' will be respected,' Mr Paleokrassas said. The commissioner confirmed that one approach under discussion was an EC-wide fund to pay for environmental damage.

ICI specifically warned against reproducing the US Super Fund, which has proved more effective at boosting lawyers' incomes than remedying the problem. Mr Paleokrassas said this had been taken into account, adding: 'We are aware of the shortcomings of the Super Fund.' Any approach would have to rest on two pillars - 'a system of economic incentives and disincentives' but also 'legal sanctions and penalties, which in some cases should be severe'. He hinted that the EC might close down persistent environmental offenders.

The Government is keeping a close watch on the discussions, which could have very far-reaching consequences for the insurance and banking sectors as well as chemical companies and other branches of industry.

(Photograph omitted)