National Audit Office: Pollution charges are not persuading companies to prefer environmentally friendly technology

Toomas Mattson | 10/14/2008 | 12:23 PM

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TALLINN, 14 October 2008 - It is the view of the National Audit Office that pollution charges in general have not contributed to a reduction in ambient air pollution or the production of waste, as it is much more economical to pay the charges than it is to cover the cost of investing in environmentally friendly technology.
The limited impact of pollution charges on reducing pollution can also be seen in environmental data, according to which Estonian companies released nearly 20% more of almost all key pollutants into the air in 2007 than in 2006.

The analysis carried out by the National Audit Office revealed that the current charges are seeing hazardous pollutants – regardless of the level of danger they represent – taxed at one and the same rate, pollutants produced in large quantities taxed at a lower rate than others and some pollutants not being taxed at all. For example, the rate for low-temperature coke, an environmentally hazardous by-product of the oil shale oil production process, is ca. ten times lower than that of ordinary waste, while the release of benzene and ethanol into the air – both of which can cause cancer and damage genes – is taxed uniformly and no tax is charged on the emission of fluorine and chlorine compounds.

Pollution charges are effective when they are supported by other legal and administrative measures. During the audit it became clear that the existing ambient air pollution permits in fact enable companies to emit twice as many pollutants as they are currently emitting, if not more. Moreover, waste permits are not restricting the amount of waste being produced, and very few companies causing pollution are being required to adopt better technology.

It is the view of the National Audit Office that the fact that the majority of companies which have disregarded environmental pollution restrictions (e.g. polluting without a permit) have not been forced to pay pollution charges with increased rates is a problem which needs to be addressed immediately. Although the Environmental Inspectorate issued 570 fines to companies for pollution without a permit or exceeding their permits between 2002 and 2006, the state has not enforced the payment of the majority of pollution charges with increased rates of between 10 and 1000 times. It is often the case that companies are merely cautioned to apply for an appropriate permit.

The checks carried out by the environmental services of the Ministry of the Environment into the accuracy of pollution reports and action emissions is lacking. Although the law requires that actual amounts of pollution are checked before a pollution charge is issued, in most cases a review of a report signed by the director of the company is all that is carried out. The annual on-site inspections conducted within companies by the Environmental Inspectorate do not compensate for the shortcomings in these checks.

In entering into agreements for the substitution of pollution charges and the financing of the Environmental Investment Centre the state has measures in place promoting a reduction in environmental pollution, but they have not managed to encourage companies to adopt environmentally friendly technology with the support of the state due to a lack of clear objectives, inflexible criteria and other priorities.

However, the pollution charges that have been collected have had a positive influence in that the funds obtained have helped the state finance the likes of local government projects for the treatment of sewage and the construction of waste treatment facilities.

Of the approximately 2.2 billion kroons in pollution charges received by the state between 2002 and 2007, a total of 15.3 million kroons has been allocated to seven companies for ambient air and waste projects through substitution of pollution charges and approximately 58 million kroons from the state budget has been directly invested in activities and studies connected to the reduction of ambient air pollution through the Environmental Investment Centre.

According to the response received from the Minister of the Environment, the majority of the National Audit Office’s recommendations will be taken into account in the development of amendments to the concept of environmental charges and to the Pollution Charge Act, the restructuring of the jurisdiction of the Ministry of the Environment and the further development of the environmental register.

The National Audit Office’s audit examined whether the state was successful in encouraging companies to invest in the reduction of ambient air pollution and waste through pollution charges between 2002 and 2006.

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The biggest user of natural resources and the biggest polluter in Estonia is the energy sector. In 2003 the sector was responsible for 93% of all of the water used in Estonia; it produced 92% of all air pollution in the country; and generated 73% of the nation’s waste.

Toomas Mattson
Communication Manager of National Audit Office
Telephone: 6400 777
Mob: 51 34900
E-mail: toomas.mattson@riigikontroll.ee

  • Posted: 10/14/2008 12:23 PM
  • Last Update: 9/14/2015 9:48 AM
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