Pollution quotas

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The Government is planning to introduce tradeable permits for river and estuary pollution. Companies that cut their liquid effluents cheaply will be able to sell quota to companies that want to produce more pollution.

The new development was revealed in letter from Prime Minister John Major to his senior `green' adviser, Sir Crispin Tickell, published yesterday.

The Government has been working for years on a scheme for tradeable air pollution permits for power stations and refineries, covering acid rain- causing sulphur dioxide. It hopes to publish a consultation document within a few months.

It is likely that the scheme will begin on a trial basis covering one fairly polluted stretch of river or estuary. It will cover the sewage treatment works of the big water companies as well as other polluters.

Originally, the Government had been considering a water pollution tax: the more damage a firm's effluent caused the more it would pay. Polluters already pay a fee to the Government's water watchdog, the National Rivers Authority, to pay for its monitoring work. But this idea has been shelved because of acute political sensitivity over anything that would enable the big 10 water companies to charge customers more.

Eventually, the new scheme could be used to cut pollution and improve water quality - the Government's long term objective. Each firm putting effluent into the river could be told that its allocation of pollution rights was being cut by an across-the-board percentage at some future date. Firms could then begin buying and selling these future quotas.