How is Environmental Compensation levied under PWM rules?

How is Environmental Compensation levied under PWM rules?
| 3 Min read

Two amendments to the Plastic Waste Management Rules on Environmental Compensation were made in 2022. According to the February 16, 2022 amendment, CPCB was mandated to establish guidelines for the imposition and collection of Environmental Compensation if PIBOs failed to meet the obligations specified in the guidelines.

The July 6, 2022 amendment states that Environmental Compensation shall be levied based on the polluter pays principle on those who do not adhere to the provisions of the PWM rules, as per guidelines established by the Central Pollution Control Board.

Before we get into the topic, let’s first know what EC is.

What is Environmental Compensation?

Environmental Compensation is a provision in the PWM guidelines that works on the polluter pays principle to safeguard the environment. The violator of said guidelines by CPCB is charged with a monetary fine, which varies depending on the nature of the violation. 

How to calculate Environmental Compensation?

There’s a formula to calculate Environmental Compensation,

EC= PI x N x R x S x LF


EC is Environmental Compensation in Rupees (₹)

PI = Pollution Index of the industrial sector

N = Number of days of violation that took place

R = A factor in Rupees (₹) for EC

S = Factor for the scale of operation

LF = Location Factor 

The formula states the predicted severity of environmental pollution in terms of the Pollution Index, duration of violation in terms of the number of days, the scale of operation of small/medium/large industry, and location in terms of closeness to large habitations.

What are the Environmental Compensation provisions under PWM Rules?

  1. When PIBOs fail to meet EPR targets, EC is levied based on the polluter pays concept.
  2. If PIBOs, recyclers, and co-processors fail to meet the duties outlined in these guidelines, CPCB will set standards for imposing and collecting EC.
  3. If PIBOs operate in more than two states, the EPR targets vary by state; the CPCB imposes Environmental Compensation if PIBOs fail to meet EPR targets in at least one state.
  4. SPCB imposes EC on PIBOs, plastic waste processors, recyclers, and co-processors operating in that state if they fail to meet the EPR targets.
  5. If the SPCB or PCC does not respond within the specified time frame in imposing Environmental Compensation, the CPCB will issue guidelines to the SPCB/PCC.

Also, read Extended producer responsibility in India.

What is the EC levied for non-compliance with EPR targets? 

The payment for EC does not relieve PIBOs of the obligations under the CPCB guidelines.

If PIBOs fail to meet EPR targets in a given year, they can carry them over to the following year for a three-year term. Even if they fail to meet the targets in three years, the levied EC will not be returned. 

The EC levied will be returned to the PIBOs under the following condition:

PIBOs get a 75% return within a year, 60% return within two years, and 40% return within three years from the levied Environmental Compensation if the EPR targets are fulfilled. 

After completion of three years of EC getting due, the entire Environmental Compensation amount shall be fortified.

What actions are subject to EC?

  1. Intentional emissions in the land, water, and air cause severe harm to humans and the environment.
  2. Emissions that are predominantly in violation of set standards and permit requirements.
  3. Non-compliance with the guidelines, such as a closure order issued due to the failure to install OCEMS. Failure to follow the action plans submitted, etc.
  4. Accidental emissions last for short periods and cause environmental damage.
  5. The injection of treated, partially treated, or untreated wastewater into groundwater.

Are you concerned about facing an EC for your brand? Talk to our experts to learn how to avoid it.

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