The government appears very confident that the European Commission will grant it more time to meet EU limits on particulate pollution in London.

Every official I have spoken to has been at pains to stress that the process is a mere formality. The UK is absolutely not at risk of being taken to court, let alone of facing EU-imposed fines, they chorus.

Meanwhile, local government is beginning to notice with alarm that the Localism Bill currently in parliament would make councils – who are responsible for delivering on local air quality targets – liable in the (unimaginable) eventuality that the UK faced EU fines for breaching European air quality standards.

Does the government know something we don’t?

There are certainly plausible reasons why its confidence of winning EU approval at the second attempt to delay full compliance with EU air quality rules from 2005 to July next year could be premature.

Notable among these is a defect in the model used to predict that there will be no exceedances after July this year. European Environment Commissioner Janez Potočnik will not grant the extension unless he is persuaded that this will be so.

The UK’s reapplication assumed that the western extension of London’s congestion charging zone would still be in place. But the mayor’s longstanding promise to remove it was fulfilled in December, partly invalidating the model.

There are also concerns that dust emissions from waste sites will cause exceedances that will not be picked up by air quality monitoring or modelling. Furthermore, the government is making concerted efforts to avoid exposing discussions on air quality with the mayor of London to public scrutiny.

Mr Potočnik’s decision is expected by the middle of this month. If he rejects an extension this would mean that the UK would be liable for continuing air quality breaches since EU air quality directive rules entered force in 2005.

The European Commission is already begun legal action against the UK. Looming on the horizon then would be the – admittedly remote – possibility of fines imposed by the European Court of Justice.

Were this to happen then the sums of money could be enormous. One unofficial estimate doing the rounds is a lump sum of £300m for the longstanding failure to comply with particulate limits.

Quite separately from all this, or at least so you would think, Parliament is considering the Localism Bill, which the government hopes will lay the foundations of its ‘big society’ project.

The bill will extend many new rights to public authorities. It will also pass on new responsibilities.

One is a power for central government to pass on the cost of EU-imposed fines to councils up to an amount that “fairly reflects the authority’s share of the responsibility for that infraction”.

Under current arrangements, were the UK to receive EU fines – and it hasn’t happened at all yet – these would be covered by central government alone. The sole exception currently would be any fine associated with landfilling of biodegradable waste, which would be passed on to the local councils concerned.

Due to its difficulties with air quality compliance, London is especially exposed by this. In a worst case scenario for the capital a minister (not even the secretary of state) could still pass the full sum of an eventual EU fine for non-compliance to the Greater London Authority.

The effects on the city’s finances could be extraordinary. For example, a fine of £300m, were this to materialise, would be about 9% of its 2010/11 budget. Even a much smaller fine would be hard to swallow, particularly at a time of austerity.

London is not the only possible recipient of air quality-related fines. Although outside the capital the UK has largely eliminated its particulate problem, limits on nitrogen oxides are exceeded over much of the country, from cities to rural towns. Air quality standards for the irritant gas entered force last year. But it is possible that they could be put back to 2015, should the commission agree that the UK will meet the standards by then.

Is the government trying to shift future blame because it is privately less confident of avoiding EU environmental fines than it is prepared to admit in public? Well possibly.

But whatever its underlying motives, one positive result of the government’s sharing out of liability could actually be a greater chance of compliance. As awareness of the financial risks sink in across the country, expect more low emission zones.