Changes to industrial regulation will affect future waste and energy investment decisions

Out-Law Analysis | 08 Mar 2013 | 4:03 pm | 3 min. read

FOCUS: The biggest change to industrial regulation in the UK for more than a decade recently took effect and while it will not have immediate major impacts for operators of existing installations, it will affect future investment decisions particularly in the waste management and energy sectors.

The Environmental Permitting (England and Wales) (Amendment) Regulations 2013 (2013 Regulations) (34-page / 247KB PDF) came into force on 27 February and implement the European Union's Industrial Emissions Directive (IED) in England and Wales.

The regulatory changes affect up to 10,000 industrial installations including those operating in the heat and power; waste management and recovery; minerals and chemicals; and the food and drink sectors.

The IED is being implemented in phases. All new installations which are caught by the IED and commenced operation from 7 January 2013 must now comply with the 2013 Regulations.

For most operators of existing Integrated Pollution Prevention and Control (IPPC) installations, the changes will not be immediate unless they are applying for a permit variation which introduces new IED activities. This is the case because existing installations will not be subject to the IED requirements until 7 January 2014 as part of the phased implementation of the IED in England and Wales. The 2013 Regulations do not overhaul the existing environmental permitting regime.

Much of the impact for operators of existing installations will be felt in the future. That said, operators should start planning for and costing any required future changes into business strategies to ensure compliance with the environmental permitting regime.

The IED will place new requirements on some installations and extend the scope of activities covered by the environmental permitting regime. For example, there will be new prescribed activities in the waste sector where the IED will extend to certain mechanical and biological treatment plants (MBT); large composting and anaerobic digestion operators; WEEE storage sites; hazardous waste storage sites, and even waste water treatment activities. Some facilities currently regulated as exempt or as waste activities will need to apply to the Environment Agency for an environmental permit. 

New Large Combustion Plants (LCPs) must now meet stricter Emission Limit Values (ELVs) for nitrogen, sulphur dioxides and particulates, with existing LCPs not becoming subject to the requirements until 1 January 2016.

One of the most important changes brought in by the IED is the tightening of the application of the requirement for operators to use Best Available Techniques (BAT). Whilst some flexibility is retained, it will be harder for the regulators such as the Environment Agency to set permit conditions and ELVs that deviate from the BAT requirement.

In the future any derogation from BAT will be recorded in an annex to the permit template and made available to the public through an electronic public register opening up operators to further public scrutiny. There will be additional costs and operators may have to invest in new or upgraded abatement equipment to comply with permit conditions based on the revised BAT Conclusions.

Under BAT-based regulation it is likely that operators of many sites will need to put in place additional measures in a number of areas. These areas include waste minimisation, accident/incident control, improved site condition reports (with the need for quantified baseline condition data), more regular monitoring programmes, and improved energy efficiency. All of this will mean an increase in operating costs.

Operators will also have to consider how they approach environmental permit applications for sites. The IED introduces direct public participation in the permit procedure, so operators should take into account the need for early engagement with local community groups if they want to avoid delays and judicial reviews of their environmental permit applications.

The 2013 Regulations are very like the draft regulations previously consulted on but there are a few changes. There is a change in relation to which waste management activities are subject to IPPC requirements; there are now no BAT requirements for waste incineration and co-incineration installations that are not subject to the IPPC in England; and there is an end to IPPC requirements for mobile plant, with the IED only applying to stationary installations.

The Environmental Permitting Regulations of 2010 (EPR) have already been heavily amended over the last couple of years and the Government is aware that constant amendments make it difficult for business.

The Department for the Environment, Food and Rural Affairs (DEFRA) has said that it will publish unofficial consolidated regulations as soon as possible together with updated guidance on the changes. The EPR are up for review in 2015, however, it would be beneficial for DEFRA to bring this forward to 2014.  This would allow the existing EPR to be withdrawn and replaced by a coherent set of consolidated regulations to replace what has now become a real maze to navigate.

This would be welcomed because the 2013 Regulations are complex, enacting a few major changes and lots of little ones, all with different implementation dates for different sectors which cut across lots of different aspects of the existing environmental permitting regime. 

A more consolidated approach would make it easier for operators to plan for the changes required to comply with the IED.

The IED was designed to produce a single, clear and coherent legislative instrument for controlling pollution so reflecting that at a national level would be good for operators and industry as a whole.

Eluned Watson is a environmental law specialist at Pinsent Masons, the law firm behind