Committing to the polluter-pay principle – I applaud Minister Joe Oliver.

Ted Hsu
Comments Off on Committing to the polluter-pay principle – I applaud Minister Joe Oliver.

Last week, the Harper government said that it will be raising the liability cap for offshore oil drilling. This is the maximum amount that a company drilling offshore need be liable for in an accident. (they could be liable for more if found to be negligent by a court)

The current liability caps are $30m or $40m depending on the region, amounts which are minuscule compared to, say, the billions of dollars in damages paid by BP for the accident in the Gulf of Mexico. With this change, oil and gas companies will have to take responsibility for a lot more of the risk of damage from offshore drilling accidents.

The current liability cap for offshore drilling is surprisingly low, and, being somebody who values a well-regulated market economy, I welcome a more accurate pricing of externalities, in this case the pricing of the risk of damage from accidents.

Last week’s announcement also agrees with a promise in the Liberal Party 2011 election platform:

“In the event of an oil spill, absolute liability limits on companies are currently a maximum of $30 million or $40 million, depending on the regulatory body they fall under. They would be required to pay more only if found negligent in court. Given that billions of dollars will be spent on cleanup in Gulf of Mexico, a Liberal government will put in place new liability limits to ensure taxpayers are not left to pay for the clean-up of a major spill.”

I especially welcome the fact that Natural Resources Minister Joe Oliver has committed his government to the polluter-pay principle. In the news articles above Minister Oliver is quoted as saying, “In Canada, the foundation of our environmental liability regime is polluter-pay”. Let’s remember that for future reference!


You are invited to leave your comments on my Facebook page at this link: