BACKGROUND

The Commission proposes to overhaul seven existing pieces of legislation on industrial emissions (Directive 96/61/EC concerning integrated pollution prevention and control (IPPC) (as consolidated into Directive 2008/1/EC) and 6 so-called sectoral directives for large combustion plants, waste incineration, activities using organic solvents and titanium dioxide production) moulding them into a single directive. The aim is to improve the clarity and coherence of the legislation and reduce the administrative burden through combined requirements on granting permits and streamlining reporting.

The impact for some heavy industries could be considerable. The regime intends to apply stricter emission limits for large combustion plants and extends the IPPC regime to certain other activities, including medium sized combustion plants. The extent of changes to be made to the current regime are still being debated by the European Parliament.

It is useful to review the existing regime before examining the possible effects of the proposed changes.

THE EXISTING DIRECTIVE

The Directive concerning Integrated Pollution Prevention and Control (IPPC) was adopted in 1996 and had to be transposed into the national legislation of EU Member States by 30 October 1999. This was also the date of application for new installations, while all existing installations had to fully comply by 30 October 2007.

The Directive's aim was to achieve a high level of environmental protection through the integrated permitting of industrial and agricultural installations. It covers a wide range of activities, including the production of metals, the processing of minerals, chemical manufacture, poultry and pig farming, waste incineration and fuel combustion in large combustion plants. About 52,000 installations across the EU currently fall under the scope of the IPPC Directive.

The permit system to be put in place by Member States aimed to ensure that all of the relevant environmental issues for an installation are considered in an integrated way. This includes placing the following obligations on operators of installations:

  • to take preventive measures against pollution, in particular through the application of the Best Available Techniques (BATs);
  • to ensure significant pollution (air, water, land, noise, odour etc.) is not caused;
  • to ensure waste that cannot be avoided is recovered or disposed of safely;
  • to ensure energy is used efficiently;
  • to prevent accidents and limit their consequences; and
  • to ensure the site is returned to a satisfactory state when the installation closes.

Member States were required to ensure that permits issued under the IPPC Directive included emission limit values based on Best Available Techniques (BATs). Operators of the installations concerned were obliged to obtain and comply with the permit conditions in order to continue to undertake their activity.

In the UK, the IPPC Directive was implemented into UK law via the Pollution Prevention and Contract Act 1999 and the Pollution Prevention and Control (England and Wales) Regulations 2000 (collectively the "Environmental Permitting Regime").

CONSOLIDATION OF THE EXISTING DIRECTIVE

In April 2008, a consolidated version of the IPPC Directive (Directive 2008/1/EC) was adopted (the 'codified' version). No substantive changes were made to the IPPC regime, the consolidation designed to simply provide regulators and industry with a more user-friendly version of the existing IPPC Directive (Directive 96/61/EC) which had been amended a number of times. The adopted new legal act is without prejudice to the new proposals for a Directive on Industrial Emissions.

THE PROPOSED NEW DIRECTIVE ON INDUSTRIAL EMISSIONS

On 21 December 2007, the European Commission published a draft Directive which aims to:

  • simplify and tighten the existing IPPC regime;
  • consolidate the existing IPPC Directive and the six related Directives into a single Directive;
  • require Member States to apply tighter and more consistent standards when determining BATs for individual installations, leading to a more coherent and EU-wide application of BATs;
  • apply stricter emission limits for large combustion plants to ensure that emission reductions needed for achieving the objectives of the Commission's Thematic Strategy on Air Pollution are carried out; and
  • extend the IPPC regime to certain other activities, including Small Combustion Plants (SCPs).

On 6 June 2008 the UK Government launched four related consultations on the proposals. The four consultations sought views on:

  • the substantive amendments to the IPPC Directive (not subject to the other three consultations);
  • changes to the scope of the IPPC Directive (as discussed below);
  • intensive livestock production; and
  • combustion plants (as discussed below).

The aim of the consultations was to inform the UK's position for the debate on the new IPPC Directive under the EU's co-decision process from this autumn onwards. The consultations closed on 31 July 2008.

On 9 September 2008 the European Parliament's Environment Committee debated the planned draft Directive with a view to voting on the rapporteur's draft report on 5 November 2008 before the Parliament closes its first reading in December.

POTENTIAL IMPACTS OF THE PROPOSED DIRECTIVE

Extending the scope of the directive

The following summaries the main extensions of activities subject to the IPPC regime:

  • Non-ferrous metal foundries: the definition has been clarified, however it is not expected that it will have any real regulatory impact in the UK nor will it be necessary to change existing guidance on BAT for the non-ferrous industry.
  • Biological processing for chemical production: this definition has been added, but will have no effect on UK installations as the Environment Agency has already interpreted the definition for chemical production to include biological processing.
  • Production of chemicals for use as fuel or lubricants: this new category has been added to improve the consistency of approach to the regulation of biofuel production plants across Member States and to ensure that they are regulated by the IPPC regime. There may be additional costs in complying with new permit conditions or in applying for a permit.
  • Specified treatments of non-hazardous waste: the scope of the IPPC Directive has been extended to include 'treatment for recovery' as well as 'treatment for disposal' of non-hazardous waste. This extension will have additional costs for affected businesses.

Changes to regulation of Combustion Plants

The principal changes are as follows:

  • The inclusion of SCPs with a rated thermal input of between 20 and 50 MW.
  • The introduction of new minimum Emission Limit Values (ELVs) (targeting sulphur dioxide and nitrogen oxide) for Large Combustion Plants (LCPs).
  • The prevention of installations from diverging from the use of BATs unless under specific conditions, meaning that governments will no longer be able to grant increased flexibility to certain installations according to their location or design.

COMMENTS

When the proposals were first tabled in January this year, BusinessEurope, which represents employers across the European Union, said that the costs of compliance could force many plants to close, stating in a letter sent to Industry Commissioner Günter Verheugen on 3 January:

"These directives will impose a disproportionate cost on industry, leading to production cuts in Europe rather than to further innovation and investment in clean technologies."

It further stated that crucially, governments' rights to allow flexibility according to the location and design of, for example, power stations and steel mills, would be taken away. The Financial Times explored the example of issues arising under the current Directives by looking to Rio Tinto Alcan's coal fired Lynemouth power station and the adjacent aluminium smelter in Northumberland. The UK claims Lynemouth is exempt from the Large Combustion Plant Directive, however a Commission spokeswoman told the Financial Times, "this breaches the Directive. It is precisely the sort of plant that is covered. We have strict controls and we have to ensure a level playing field across Europe." A test case over the interpretation of the Directive is currently being run. It is possible that even if it is not caught by the current Directives, the stricter regime being proposed could apply.

It is clear then that there are concerns over the viability of some plants if stricter regulations based on BATs are imposed. However, Environment Commissioner Stavros Dimas stressed that:

"Industrial emissions in the European Union remain too high and are having detrimental effects on human health and the environment … The EU must ensure that companies meet their obligations and use the best available techniques."

According to the Commission, making the granting of permits conditional on the use of BATs:

"will have positive knock-on effects on health and the environment, greatly exceeding the costs (that) installations will incur to comply with the new directive".

Indeed, it foresees that the emission reductions achieved at large combustion plants alone could offer net benefits ranging between €7 to €28bn per year and will reduce administrative costs for authorities and operators by between €105 and €255m per year, "thus contributing to the future sustainability of EU industry".

We will wait to see the final form of the proposed Directive following its passage through the EU Parliament.