This study addresses the compatibility of the Polluter Pays Principle (PPP) with obligations under world trade law as administered by the World Trade Organization (WTO). In particular we look at the instruments of German domestic and international energy policy. The Polluter Pays Principle The PPP is an environmental policy guideline stipulating that the costs of pollution prevention and control should be borne by the polluter. The OECD has included the PPP in its environmental policy guidelines and it can also be found in European Law and in the UNCED Rio Declaration (1992). The PPP is applied to differing degrees by arious countries around the world.