Environmental rules

Updated 07/2011

Companies have a major impact on the environment and must comply with EU environmental rules in many areas, such as air quality, chemicals or waste management.

EU environmental legislation relevant to small businesses

Reducing pollution, fighting climate change, preserving biodiversity and making wiser use of natural resources are all part of being an environmentally responsible business - and have been identified as priorities in the EU's Sixth Environment Action Programme.

The Sixth Environment Action Programme

Contributing to sustainable development can be seen as an investment with long-term benefits for your business. Meeting environmental rules also helps create new markets for environmentally-friendly products and stimulates research and innovation.

Sustainable development, climate change and competitiveness

EU environment policy adheres to two fundamental principles:

the precautionary principle - when an activity or policy carries a risk of harm to the environment or human health, urgent measures are taken;
the "polluter pays" principle - the polluter is liable for preventing and remedying environmental damage.
Precautionary principle [139 KB]
Environmental liability

EU companies have to meet certain environmental requirements, which include:

Emissions Trading System

The EU has established an Emissions Trading System to reduce greenhouse gas emissions in a cost-effective way. It covers installations such as power stations, combustion plants, oil refineries and iron and steel works, as well as factories making cement, glass, lime, bricks, ceramics, pulp, paper and board.

The operators of such installations are required to monitor and report their greenhouse gas emissions. For each tonne of greenhouse gas emitted, emitters must surrender one emission "allowance" (permit). The total amount of allowances in the system (the "cap") is fixed and declines over time to ensure that overall greenhouse gas emissions are reduced.

While a share of allowances is distributed free of charge, operators may also purchase allowances through auctions or from other emitters. Operators can:

either use their allowances for compliance with the surrendering obligation (i.e. to cover their emissions);
or take abatement measures to reduce their emissions.

In such a case, they can sell the surplus allowances to other market participants who prefer to purchase additional allowances to cover their emissions. This way the emission reductions take place where they are the cheapest in the system.

In 2009, the European legislators decided to improve the system by:

centralising the setting of the cap;
moving to auctioning as the default method for allocating allowances;
establishing EU-wide rules for the free allocation of allowances;
including other greenhouse gases and further sectors of the economy in the system.
EU Emissions Trading System

Waste management

Companies must comply with legislation on avoiding, recycling and re-using waste.

Waste

Eco-design of energy-using products

Energy efficiency aspects should be taken into account at an early stage in the design phase of a product. The EU has passed laws requiring energy-using products, especially those with high potential for energy saving, such as electrical and electronic devices and heating equipment, to be designed to be more energy-efficient.

Eco-design of energy-using products

REACH

The aim of REACH is to ensure that the most dangerous substances are replaced with safer alternatives. Businesses must actually prove that the substances they produce or use are safe.

All companies that produce or use chemicals are being given obligations under REACH.

Integrated Pollution Prevention and Control (IPPC)

IPPC covers highly polluting industries and businesses in the energy, metal, mineral, chemical, waste management and livestock-farming industries.

Plants in these sectors above a certain size must obtain a permit for their activities and meet a number of 'best available technology' criteria on pollution prevention, energy efficiency and waste disposal. National authorities are responsible for administering permits.

Going beyond requirements

Businesses are free to go beyond the minimum environmental legal requirements at their own initiative.

Taking sustainability further - European Union

Programmes

LIFE+ provides specific support for environmental and nature conservation projects. With a budget of €2.1 billion for 2007-13, the programme co-finances environmental projects under three headings: nature & biodiversity, environment policy & governance, information & communication.

The Environmental Compliance Assistance Programme targets small businesses, especially micro-enterprises, which often lack the resources and expertise to understand and tackle environmental impacts. The programme helps provide these firms with the resources, information and tools they need to green up their operations. Funding is available from various sources to help businesses improve their environmental performance.

Check also the legislation on this topic in: