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Improving Financial Security in the Context of the Environmental Liability Directive (ELD)

Improving Financial Security in the Context of the Environmental Liability Directive (ELD)

The 2016 REFIT Evaluation of the Environmental Liability Directive (ELD) showed that the national implementation is working to a much lower extent than could be expected and with a great variation between the Member States. Under the Multi-Annual Work Programme for the period 2017 to 2020, the European Commission promotes, among others, the availability of financial security across the EU. Supporting this objective, the project aims to enhance the evidence base in relation to the current situation in Member States.

Financial security instruments can be important in the event of an operator’s insolvency or other inability to remediate environmental damage. The 2004 Environmental Liability Directive did not introduce mandatory financial security instruments, but required Member States to encourage the development of such instruments. Hence, different Member States follow different approaches as regards the instruments.

The results of the REFIT Evaluation published by the European Commission in 2016 indicate that there is sufficient insurance cover for environmental and ELD liabilities available in most insurance markets across the EU, but the demand by operators for such insurance is low. The project team led by Valerie Fogleman will examine and analyse all aspects of financial security and insurance markets for environmental liabilities. To this end, it will implement the following tasks:

  • Explore the state of financial security for ELD liabilities in all Member States
  • Outline the developments in financial security on Member State level in the last 10 years
  • Investigate and formulate the most promising and appropriate financial security instruments

The project is being implemented in different stages as follows.

The project team is carrying out desk research and information gathering via questionnaires sent to ELD stakeholders and experts at Member State and EU level. Different questionnaires have been prepared for (1) operators, environmental NGOs and academics, (2) government and competent authorities, and (3) re/insurers, brokers and related parties. The questionnaires have been designed to collect information and data (not comments) in order to improve the evidence base on financial security.

Based on the information gathered on the state of financial security for ELD liabilities in Member States as well as extensive research, the project team will compare and analyse the status of voluntary and mandatory financial security for ELD liabilities in the Member States.

The project team is, in addition, outlining developments in financial security for ELD and other environmental liabilities during the last 10 years and investigating the most promising and appropriate financial security instruments.

The outcome of the project will be discussed during an interactive expert workshop in autumn 2019 that will allow for feedback and input.

The study will support the work of the European Commission under the Multi-Annual Work Programme for the period 2017 to 2020.

Ecologic Institute supports the project in all organisational issues and with language expertise in, among others, German, Dutch, French, Spanish and Bulgarian. Its Events Team supports the preparation and implementation of the expert workshop.

European Commission, Directorate-General Environment (DG Environment)
Maastricht University, Institute for Transnational Legal Research (METRO), Netherlands
University of Catania (UniCT), Italy
Stevens & Bolton LLP, United Kingdom
Stephen Stec, United States
November 2018 to March 2020
Project ID
Environmental Liability, Insurance, Financial Security, Environmental Damage, Policy Assessment, Questionnaires, Europe