Explanatory Memorandum to COM(2022)156 - Amendment of Directive 2010/75/EU on industrial emissions (integrated pollution prevention and control) and Council Directive 1999/31/EC on the landfill of waste

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dossier COM(2022)156 - Amendment of Directive 2010/75/EU on industrial emissions (integrated pollution prevention and control) and Council ...
source COM(2022)156 EN
date 05-04-2022
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Contents

1.

CONTEXT OF THE PROPOSAL

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2.

2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 9


3.

3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS 10


4.

4. BUDGETARY IMPLICATIONS 13


5.

5. OTHER ELEMENTS 14


DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

amending Directive 2010/75/EU of the European Parliament and of the Council of 24 November 2010 on industrial emissions (integrated pollution prevention and control) and Council Directive 1999/31/EC on the landfill of waste 20

LEGISLATIVE FINANCIAL STATEMENT 51

6.

1. FRAMEWORK OF THE PROPOSAL/INITIATIVE 51


7.

1.1. Title of the proposal/initiative 51


8.

1.2. Policy area(s) concerned 51


9.

1.3. The proposal/initiative relates to: 51


10.

1.4. Objective(s) 51


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1.4.1. General objective(s) 51


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1.4.2. Specific objective(s) 51


13.

1.4.3. Expected result(s) and impact 52


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1.4.4. Indicators of performance 52


15.

1.5. Grounds for the proposal/initiative 53


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1.5.1. Requirement(s) to be met in the short or long term including a detailed timeline for roll-out of the implementation of the initiative 53


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1.5.2. Added value of Union involvement. 54


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1.5.3. Lessons learned from similar experiences in the past 54


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1.5.4. Compatibility with the Multiannual Financial Framework and possible synergies with other appropriate instruments 55


20.

1.5.5. Assessment of the different available financing options, including scope for redeployment 55


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1.6. Duration and financial impact of the proposal/initiative 58


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1.7. Management mode(s) planned 58


23.

2. MANAGEMENT MEASURES 58


24.

2.1. Monitoring and reporting rules 58


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2.2. Management and control system(s) 59


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2.2.1. Justification of the management mode(s), the funding implementation mechanism(s), the payment modalities and the control strategy proposed 59


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2.2.2. Information concerning the risks identified and the internal control system(s) set up to mitigate them 59


2.2.3. Estimation and justification of the cost-effectiveness of the controls (ratio of 'control costs ÷ value of the related funds managed'), and assessment of the expected levels of risk of error (at payment & at closure) 59

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2.3. Measures to prevent fraud and irregularities 59


29.

3. ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE 59


30.

3.1. Heading(s) of the multiannual financial framework and expenditure budget line(s) affected 59


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3.2. Estimated financial impact of the proposal on appropriations 60


32.

3.2.1. Summary of estimated impact on operational appropriations 60


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3.2.2. Estimated output funded with operational appropriations - 64


34.

3.2.3. Estimated impact on ECHA resources 66


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3.2.3.1. Estimated requirements of human resources in the Commission 67


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3.2.4. Compatibility with the current multiannual financial framework 67


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3.2.5. Third-party contributions 68


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3.3. Estimated impact on revenue 68


EXPLANATORY MEMORANDUM

1. CONTEXT OF THE PROPOSAL

• Reasons for and objectives of the proposal

Directive 2010/75/EU on industrial emissions (‘the IED’)1 regulates the environmental impacts of around 52 000 of Europe’s large-scale, high-pollution-risk industrial installations and livestock farms (‘agro-industrial installations’) in an integrated manner, on a sector-by-sector basis. It covers all relevant pollutants potentially emitted by agro-industrial installations that affect human health and the environment. Installations regulated by the IED account for about 20% of the EU’s overall pollutant emissions by mass into the air, around 20% of pollutant emissions into water and approximately 40% of greenhouse gas (GHG) emissions. Activities regulated by the IED include power plants, refineries, waste treatment and incineration, production of metals, cement, glass, chemicals, pulp and paper, food and drink, and the intensive rearing of pigs and poultry. An installation regulated by the IED may carry out several IED activities, e.g. cement production and waste co-incineration.

The 2020 evaluation2 of the IED concluded that it was generally effective in preventing and controlling pollution into air, water and soil from industrial activities, and in promoting the use of best available techniques (BAT). The IED has substantially reduced emissions of pollutants into the air and, to a lesser degree, water emissions. It has also helped reducing emissions into the soil from IED installations. Although its impacts on resource efficiency, the circular economy and innovation are harder to assess, the Directive appears to have made a positive contribution, albeit of limited magnitude. It has also made a limited contribution to decarbonisation, within the constraints currently placed on the IED. Other aspects, such as public access to information and access to justice, have improved compared to the earlier legislation that the IED replaced.

However, the evaluation also identified several areas for improvement, in light of new challenges. It showed that, while it provides a sound framework, the Directive is not being implemented consistently across Member States, with different levels of ambition preventing the instrument from fully delivering on its objectives. These challenges undermine the Directive's capacity to reduce the environmental pressures exerted by agro-industrial installations and set a level playing field that provides a high level of protection of human health and the environment. As concluded by the European Court of Auditors, these issues also affect the IED's capacity to implement the ‘polluter pays’ principle in an appropriate manner.

To address those challenges and incentivise the deep industrial transformation required between 2025 and 2050, the Commission committed in the European Green Deal3 (EGD) to revise EU measures to address pollution from large agro-industrial installations. Moreover, the Union is committed to the 2030 Agenda for Sustainable Development4 and its Sustainable Development Goals5. This proposal contributes to several of the SDGs.

This initiative's general objective is to help, in the most effective and efficient way, protect ecosystems and human health from the adverse effects of pollution from large agro-industrial installations and improve EU industry’s resilience to the impacts of climate change. The revision of the IED aims to stimulate a deep agro-industrial transformation towards zero pollution through the use of breakthrough technologies, thereby contributing to the EGD's objectives of reaching carbon neutrality, increased energy efficiency, a non-toxic environment and a circular economy. It also aims to continue supporting the creation of a competitive level playing field providing a high level of protection of human health and the environment. In addition, the IED revision will seek to modernise and simplify the current legislation, e.g. through digitalisation and improving knowledge about sources of pollution. The initiative will also aim to improve public participation in decision-making and increase access to information and justice, including to effective redress mechanisms.

More specifically, the revision of the Directive will seek to:

‘ i. improve IED effectiveness in preventing or, when impractical, minimising the emission of pollutants by agro-industrial installations at source, as evidenced by continued or accelerated decreasing trends of emission levels, to avoid or reduce adverse impacts on health and the environment, taking into account the state of environment in the area affected by these emissions;

ii. ensure access by private individuals and civil society to information, participation in decision-making, and access to justice (including effective redress) in relation to permitting, operation and control of the regulated installations, resulting in increased civil society action;

iii. clarify and simplify the legislation and reduce administrative burden while promoting consistency of implementation by the Member States;

iv. promote the uptake of innovative technologies and techniques during the ongoing industrial transformation, by revising BAT reference documents (BREFs) without delay, when there is evidence that better performing innovative techniques become available, and ensuring permits support frontrunners;

v. support the transition towards the use of safer and less toxic chemicals, improved resource efficiency (energy, water and waste prevention) and greater circularity;

vi. support decarbonisation by fostering synergies in the use of and investments in techniques that prevent or reduce pollution and carbon emissions, as evidenced by a coupling of the trends in emission intensities;

39.

vii. address the harmful impacts on health and the environment from agro-industrial activities currently not regulated by the IED, as evidenced by decreasing trends of emission intensity.’


The Council6 and the European Parliament7,8,9 welcomed the revision of the IED and expressed their expectations that this revision should address pollutant emissions into the air from industrial and agricultural activities and contribute to the circular economy, including by promoting water reuse in industry10,11. The European Citizens Panel on climate change and environment has adopted clear recommendations in this respect in the framework of the Conference on the Future of Europe12. In that context, European citizens have expressed manifest support for the EU to tackle the pollution of water, soil and air and to reduce methane emissions, and they emphasize the responsibilities of the polluters.

The multi-stakeholder High Level Group on Energy-Intensive Industries, advising the Commission on policies relevant to energy-intensive industries since 2015, developed a masterplan13 setting out recommendations to build the policy framework needed to manage this transition while keeping industry competitive. It recommended that ‘the Industrial Emissions Directive permitting process should be adapted to support GHG abatement measures in energy-intensive installations throughout the transition.’

• Consistency with existing policy provisions in the policy area

The EGD is Europe’s growth strategy to ensure a climate-neutral, clean and circular economy by 2050, optimising resource management and energy efficiency, and minimising pollution, while recognising the need for deeply transformative policies in line with the Energy Efficiency First principle. The EU chemicals strategy for sustainability14 of October 2020 and the zero pollution action plan15 adopted in May 2021 specifically address the pollution aspects of the EGD. In parallel, the new industrial strategy for Europe16 highlights the need for research, innovation and investments for new technologies to strengthen Europe’s industrial competitiveness and facilitate industry’s shift to a truly sustainable, greener, efficient and more digital economy. The updated May 2021 version of this strategy17 further emphasises the potential role of transformative technologies.

Other particularly relevant policies include the ‘fit for 55’ package18, the methane strategy19 and the Glasgow methane pledge, the climate adaptation strategy20, the biodiversity strategy21, the ‘farm to fork’ strategy22, the soil strategy23 and the sustainable products initiative24.

In the EGD, the Commission commits to revising EU measures to address pollution from large industrial installations. It does this notably by looking at the scope of the legislation and at how to make EU legislation in this area fully consistent with the zero pollution ambition, and climate, energy and circular economy policies, bearing in mind the benefits for both public health and biodiversity. The IED and Regulation (EC) No 166/2006 on the European Pollutant Release and Transfer Register (‘the E-PRTR Regulation’)25 are complementary instruments regulating the environmental impact of industry. The IED aims to secure a progressive reduction in pollution from the EU’s largest agro-industrial installations26, while preserving a competitive level playing field. The E-PRTR Regulation facilitates the monitoring of pollution-reduction efforts by improving publicly available information on the actual performance of installations.

This legislation has links with many other policies since it seeks to address the environmental pressures from agro-industrial installations in a holistic manner.

The IED has played an important role in reducing emissions of pollutants from industry, especially to the air, but has made a more limited contribution to the circular economy (resource efficiency) and to reducing emissions of pollutants into water.

Water is one of the three main pillars of the ‘zero pollution action plan’, which aims to achieve a toxin-free society by 2050, with pollution reduced to either zero, or levels that are no longer harmful for nature and humans. This implies action not only downstream, such as at the level of wastewater treatment plants, but also upstream, where substances are produced and used. This proposal to revise the IED is consistent with EU water legislation, in particular Directive 2000/60/EC (the Water Framework Directive27), and its two related directives, Directive 2006/118/EC (on groundwater28) and Directive 2008/105/EC, as amended by Directive 2013/39/EC, on environmental quality standards in the field of water policy29.

EU water legislation obliges Member States to avoid deterioration in the status of all water bodies and to achieve good status for all water bodies, through a system of integrated water management per river basin. Through six-yearly management cycles, ecological and chemical status (surface waters) and quantitative and chemicals status (groundwater) are assessed and measures are planned to address all pressures on water bodies, including from agriculture, industry, households and other economic activities (including navigation, flood protection and hydropower). In light of the zero pollution action plan, the Commission has announced that it will formulate a proposal in 2022 to further tighten rules on surface and groundwater pollutants, as part of a legislative proposal on ‘integrated water management’.

The IED proposal complements these initiatives by, among others, widening the Directive’s scope, encouraging the development of new technologies to reduce emissions, improving resource and energy efficiency, promoting water reuse, ensuring better controlled and more integrated permitting requirements, and introducing a mandatory environmental management system. The proposal will strengthen the integrated approach by clarifying requirements for cooperation between relevant competent authorities. This cooperation includes reviewing and updating permits, depending on the status of the receiving environment, and/or planning measures to comply with environmental quality standards, objectives, plans and programmes under the water legislation. Increased coherence will also be created by clarifying the rules that apply to the indirect release of polluting substances into water through urban wastewater treatment plants. Fostering innovation will help address persistent chemical substances and substances newly identified as being of concern, including per- and polyfluoroalkyl substances (PFAS), microplastics and pharmaceuticals. This is consistent with the chemicals strategy for sustainability, the European Commission’s Communication on a strategic approach to pharmaceuticals in the environment30 and the Communication on a pharmaceuticals strategy31.

The ‘exchange of information’ process under the IED to draw up and review Best Available Technique reference documents (BREFs) should take account of the identification of substances of concern under EU water legislation. In particular, these include ‘watch lists’ of substances for groundwater and surface water, and substances identified as possibly posing a significant risk to or via the aquatic environment at EU level.

The exchange of information under the IED will also benefit the development of water efficiency measures and consideration of water reuse by agro-industrial installations, in line with the circular economy action plan32, which commits to promoting water reuse in industry. Regulation (EU) 2020/741 on minimum requirements for water reuse33, adopted in May 2020, applies to water reuse for agricultural irrigation but it also highlights the great potential for the recycling and reuse of treated wastewater for industrial purposes, as part of integrated water management and the circular economy.

By regulating certain activities at source, the IED supports Member States in meeting their obligations under other EU legislation that sets environmental quality standards, such as the Ambient Air Quality Directive34. It also supports Member States in meeting their objectives under EU legislation that sets national targets, such as the National Emission Reduction Commitments Directive35, the Effort Sharing Regulation36, and the Energy Efficiency Directive37.

The IED’s BAT associated emissions levels were utilised to define the ‘do-no-significant-harm’ criteria for the Taxonomy Climate Delegated Act38. The proposed IED revision measures will further support the EU Taxonomy on sustainable investments over time by setting additional and updated criteria. These criteria will be determined with a view to making a substantial contribution to preventing and controlling pollution, with the additional objective of helping the Sustainable Finance Platform to define which activities might be termed as sustainable.

Finally, the IED helps to improve general environmental performance, contributing to meeting the objectives of other EU sectoral legislation including in relation to REACH, waste, and the protection of nature.


• Consistency with other Union policies

The 8th environment action programme39 focuses on six interlinked priority objectives. Among these are:

- Article 2(d) – pursuing zero pollution, including in relation to harmful chemicals, in order to achieve a toxin-free environment, including air, water and soil. It also aims to reduce light and noise pollution, and protect the health and well-being of people, animals and ecosystems from environment-related risks and negative impacts.

- Article 2(f) – promoting environmental aspects of sustainability and significantly reducing key environmental and climate pressures related to the EU’s production and consumption. This particularly relates to the areas of energy, industry, buildings and infrastructure, mobility, tourism, international trade and the food system.

The IED proposal will help meet these objectives.

The new geopolitical and energy market reality requires the Union to drastically accelerate the clean energy transition and increase Europe's energy independence from unreliable suppliers and volatile fossil fuels. As part of the EU response to the 2022 Russia-Ukraine war, the REPowerEU initiative40 aims to increase the resilience of the EU-wide energy system through a diversification of gas supplies and a reduction of the use of fossil fuels by boosting energy efficiency, increasing renewables and electrification, and addressing infrastructure bottlenecks. The revision of the Directive contributes to the resilience of the EU-wide energy system through improving energy efficiency of industrial processes in the Union.

This proposed Directive is a pilot, following the Commission's ‘one in one out’ approach to reduce administrative burden. The supporting impact assessment report provides detailed information on the proposal's expected administrative burden. The section of this memorandum on regulatory fitness and simplification outlines measures proposed to limit the proposal's administrative burden.

2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY

• Legal basis

The legal basis for this proposal is Article 192 TFEU. In accordance with Article 191 and 192(1) TFEU, the EU is required to contribute to the pursuit of the following objectives: preserving, protecting and improving the quality of the environment; promoting measures at international level to deal with regional or worldwide environmental problems, and combating climate change.

• Subsidiarity (for non-exclusive competence)

This Directive's objectives of ensuring a high level of environmental protection and improving environmental quality throughout the Union cannot be sufficiently achieved by Member States. Because of the transboundary nature of pollution from industrial activities, these objectives can be better achieved at EU level, justifying the EU's adoption of measures in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union.

Pollution from agro-industrial installations disperses across national borders and pollution control cannot be sufficiently achieved by one Member State alone. In addition, the operation of industrial plants is closely linked to the functioning of the single market. In the absence of an EU-wide approach for setting environmental performance standards, the same industries would face different pollution control regulations in each Member State, with the risk of creating an uneven playing field, fragmenting the single market and impeding the EU's efforts to pursue the Treaty objective of achieving a high level of environmental and human health protection.

• Proportionality

The design of the IED ensures proportionality of outcomes by (i) defining BAT as the most environmentally effective and economically viable range of proven techniques used in a sector, and (ii) allowing derogations in individual cases if applying the EU-wide BAT requirements would lead to costs disproportionately higher than the expected environmental/health benefits.

The supporting impact assessment assesses the impacts of all proposed revisions of the IED. Both qualitative and quantitative assessment has been undertaken that shows that the proposals are proportionate, i.e. that societal benefits are significantly higher than the costs incurred.

- The measures with the largest impact were identified as extending the scope to cover cattle farms and a larger number of pig and poultry farms. The monetised health and environmental benefits from reduced methane and ammonia emissions are valued at over EUR 5.5 billion per/year, while the compliance costs are EUR 265 million and administrative costs (administrations and operators) are EUR 223 million, resulting in a very beneficial cost-benefit factor of 11.

• Choice of the instrument

The proposal's objectives can be best pursued through a Directive. This is the most appropriate legal instrument to make amendments to the existing Directive on Industrial Emissions (Directive 2010/75/EU).

A Directive requires Member States to achieve its objectives and implement the measures into their national substantive and procedural law systems. This approach gives Member States more freedom when implementing an EU measure than a Regulation, in that Member States are able to choose the most appropriate means of implementing the measures in the Directive. This allows Member States to ensure that the amended rules are embedded in their substantive and procedural legal framework for implementing the EU IED, in particular regulating permits for installations and enforcement measures and penalties.

3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS

• Ex-post evaluations/fitness checks of existing legislation

The evaluation of the IED carried out in 202041 found that it had been effective in reducing environmental impacts and competitive distortions in the EU. The collaborative process for producing BREFs and identifying BAT, also known as the ‘Sevilla Process’, has worked well and is recognised as a model of collaborative governance.

The IED has led to substantially reduced pollutant emissions into the air and, to a lesser degree, into water. It reduced emissions into soil from IED installations. Its impacts on resource efficiency, the circular economy and innovation are harder to assess; it appears to have made a positive contribution of limited magnitude. Other aspects, such as public access to information and access to justice, have somewhat improved.

The IED was evaluated as largely efficient. The benefits of BAT conclusions substantially outweigh costs. No disproportionate or unnecessary administrative costs have been identified. There are mixed impacts on EU competitiveness; no evidence shows these to be significant.

All stakeholder groups considered the IED relevant. It can respond to emerging environmental issues, despite the length of the BREF process. While the IED has not contributed greatly to decarbonisation, views diverge about whether it is relevant to this.

The IED was evaluated as being coherent internally and with other EU policies, however there is scope for greater contribution to these. Some interpretation challenges require clarification.

The IED was deemed to provide significant EU added value. It ensures more consistent requirements to reduce industrial pollution, including through monitoring and enforcement, reducing single market distortions. Absence of EU action would have led to less demanding standards and fewer health and environment benefits. The BREF process is not replicable by individual Member States, and is increasingly used by non-EU countries. The IED’s decentralised approach is consistent with the subsidiarity and proportionality principles.

The evaluation has identified a number of areas where the IED’s performance does not appear to be as satisfactory as desired with regard to reducing pollutant emissions, especially into water, contributing to GHG emission reduction, promoting non-toxic production, and improving resource efficiency and reuse. These areas are central to the revision of the IED announced in the EGD Communication.

• Stakeholder consultations

The impact assessment accompanying the combined revision of the Industrial Emissions Directive (IED) and E-PRTR Regulation was subject to a thorough consultation process. This included a variety of different consultation activities aimed at gathering the views of all relevant stakeholders and ensuring that the views of different organisations and stakeholder types were considered.

Firstly, initial feedback was provided on the published inception impact assessment via the Commission’s ‘Have Your Say’ interactive portal (154 responses; consultation period 24 March 2020 to 21 April 2020). This was followed by a joint IED and E-PRTR public consultation (online survey via the Commission’s ‘Have Your Say’ interactive portal; 336 responses; from 20 December 2020 to 23 March 2021). The survey contained 24 questions, four of which related specifically to the E-PRTR.

Then, a targeted stakeholder survey took place from 8 February to 9 April 2021. This consisted of an online survey of a more detailed nature (235 responses), to further improve the evidence base by collecting more specialised feedback from specific stakeholder groups on six problem areas, grouped by the options being considered in the impact assessment study.

These problem areas were as follows: i) the environment is polluted; ii) a climate crisis is happening; iii) natural resources are being depleted; iv) state of the art techniques cannot respond satisfactorily to problem areas i) to iii); v) private individuals have limited opportunities to become informed about, and take action regarding impacts caused by agro-industrial plants; and vi) excessive burdens may affect the efficiency of the policy instrument.

Feedback received through those surveys was also complemented by consulting focus groups, in June-August 2021, to engage stakeholders in deeper discussions on key themes. Stakeholders were selected based on their sectoral representation and to ensure a good geographical and stakeholder-type distribution between environmental NGOs, industry representatives and Member States’ ministries and competent authorities, to enable balanced discussions.

Finally, two stakeholder workshops were held remotely, on 15 December 2020 and 7-8 July 2021.

Civil society and environmental NGOs considered all the above problem areas to be of high relevance, in particular in relation to:

- the environmental impacts and decarbonisation being insufficiently addressed by the IED;

- the need to have the E-PRTR pollutant list updated more quickly to take account of new threats; and

- limited access to information on installations’ performance levels.

This limited access to information was perceived by all stakeholder groups as an important issue that needs to be addressed.

However, there were differences in the feedback from industry and business associations, who were more neutral (but not negative) in acknowledging issues regarding resource efficiency and less toxic production. Industry and business associations were also more neutral in acknowledging the need to support decarbonisation, highlighting the potential additional reporting costs and risks of overlaps with the Emissions Trading System (ETS)42. Regarding the Directive's limited scope, industry and business associations noted cost issues, and argued that existing national regimes and EU legislation are sufficient to tackle most of the difficulties encountered.

All stakeholders agreed that the IED's contribution to facilitating, harnessing and promoting innovation was too limited.

• Impact assessment

An impact assessment was carried out, which resulted in a positive opinion from the Regulatory Scrutiny Board43 dated of 10 December 2021.

Five partly interlinked but independent policy options were proposed and assessed; the selected sub-options for each problem area were brought together to form the following preferred policy package:

- Effectiveness: full implementation of 24 optimisation and updating measures.

- Innovation: frontrunners have freedom to test novel techniques, combined with setting up an innovation centre for industrial transformation and emissions (INCITE) and 2030 operators’ transformation plans.

- Resource use and chemicals: improved environmental management system.

- Decarbonisation: energy efficiency minimum levels will be introduced, to maximise energy efficiency and minimise energy consumption. A review of the synergies between the IED and the ETS will take place in 2028, allowing optimal synergies from 2030 onwards.

- Sectoral scope: additional activities will come into the scope of the IED, principally intensive cattle rearing, and certain extractive activities.

The impacts of the preferred package are expected to be as follows. Overall, benefits are expected to considerably outweigh costs.

While it has not been possible to quantify and monetise all impacts, is estimated that the set of measures enhancing the effectivenes of the Directive have health benefits between EUR 860 million and EUR 2.8 billion per year with annual business CAPEX/OPEX costs of about EUR 210 million.

The overall administrative burden of the whole proposal is estimated at EUR 250 million per year for industrial operators and EUR 196 million per year for public authorities.

Extending livestock farms coverage would result in methane and ammonia emission reductions, with related health benefits of over EUR 5.5 billion per year. An extended coverage of the 10% largest cattle farms, representing 41% of emissions of the sector, will lead to a yearly reduction of at least 184 kt of methane and 59 kt of ammonia. Extending the coverage of pig and poultry farms to the largest 18% of pig farms and 15% of poultry farms, representing respectively 85% and 91% of the emissions of the sectors, will reduce yearly emissions at least by 135 kt methane and 33 kt ammonia from pig farms, and 62 kt ammonia from poultry farms. Such increased scope will enhance the IED coverage from 18 to 60% of emissions of ammonia by rearing of cattle, pigs and poultry; and from 3% to 43% of methane emissions. Related compliance costs are estimated to be around EUR 265 million per year.

• Regulatory fitness and simplification

In line with the Commission’s commitment to better regulation, this proposal has been prepared inclusively, based on full transparency and continuous engagement with stakeholders, listening to external feedback and taking account of external scrutiny to ensure the proposal strikes the right balance.

The IED is the result of a better regulation initiative that successfully merged and simplified seven Directives44 and streamlined administrative aspects, including cutting reporting requirements by around half45. Whilst this limits the potential for further streamlining, stakeholder consultations have allowed the Commission to identify a number of potential further clarifications and simplifications to the Directive. Those attracting positive interest from stakeholders will solve uncertainties related to the permitting process.

This concerns, in particular, clarifying certain provisions on gasification, liquefaction and pyrolysis that are important activities for achieving a circular low carbon economy. Other aspects involve replacing the indicative list of pollutants in Annex II with references to other EU legislation that sets out lists of relevant pollutants, and establishing harmonised criteria for assessing compliance across the EU. Both measures will enhance legal certainty on the applicable rules for all IED operators. Furthermore, solving discrepancies in compliance assessment approaches used under Chapters II, III and IV of the IED will benefit some 4 000 operators of large combustion plants and waste incinerators.

In addition, a separate and lighter permitting regime will be introduced for 20 000 livestock farms currently regulated by the IED as well for those that will be newly brought within its scope, the smallest businesses regulated by the IED; reducing the administrative burden by EUR 113 Million per year.

A codification of the legislation after the revised act has been adopted will allow provisions that have become obsolete to be eliminated.

• Fundamental rights

The proposal respects the fundamental rights and observes the principles recognised in particular by the Charter of Fundamental Rights of the European Union46.

Pursuant to Article 52(1) of the Charter, any limitation on the exercise of the rights and freedoms recognised by this Charter must be provided for by law and respect the essence of those rights and freedoms. Subject to the principle of proportionality, limitations may be made only if they are necessary and if they genuinely meet objectives of general interest recognised by the Union or the need to protect the rights and freedoms of others.

This proposal strikes the right balance between the fundamental right of freedom to conduct a business and the fundamental right of property and other fundamental rights (environment, health, remedy).

The limitation to the right of freedom to conduct a business and the right of property are limited to what is necessary to preserve the other above-mentioned fundamental rights and objectives of general interest in accordance with Article 52(1) of the Charter.

The proposal contributes to the objective of a high level of environmental protection in accordance with the principle of sustainable development as laid down in Article 37 of the Charter; to the right to right to life and the integrity of the person and its health as laid down in Articles 2, 3 and 35 of the Charter; and to the right to consumer protection as laid down in Article 38.

It also contributes to the right to an effective remedy as laid down in Article 47 of the Charter, in relation to the protection of human health.

4. BUDGETARY IMPLICATIONS

The annexed financial statement shows the budgetary implications and the human and administrative resources required. The proposal will have budgetary implications for the Commission and the European Chemicals Agency (ECHA) in terms of human and administrative resources required. The Commission will have an increased number of implementation and enforcement tasks resulting from the increased scope of the economic activities and environmental aspects covered by the IED. The Commission will also have an increased role in managing the innovation centre and wider work to draft BREFs and BAT conclusions, requiring in total 4 additional full-time-equivalent staff.

The ECHA will support the Commission by: (1) providing input to the information exchange on BAT and emerging techniques including identifying and selecting relevant substances for each sector, developing sector-specific good practice for the use of the safest substances on the market, and (2) providing tools and guidance for use by IED operators in preparing the chemicals chapter of their environmental management system. This requires a total of 3 additional full-time-equivalent staff.

Around EUR 8 200 000 per year is required to finance the necessary expertise to support the Commission in a number of work streams related to INCITE and the drafting of BREFs and BAT conclusions.

5. OTHER ELEMENTS

• Implementation plans and monitoring, evaluation and reporting arrangements

The overall emissions of pollutants per sector, based on data reported by operators to the E-PRTR, will remain key indicators for tracking progress against this initiative's objectives. The E-PRTR Regulation is being revised in parallel to the revision of this Directive and will allow better future monitoring of the IED’s impact on industry’s environmental performance at sector level.

- The increased granularity of reporting of pollutant emission at installation level will allow for analysis of the main processes within sectors whose environmental performance is improving or is lagging behind.

- The inclusion of reporting of resource use will allow new indicators to be identified, on use of materials, water and energy, that will enable resource efficiency improvements to be tracked.

- More dynamic updating of the list of substances covered by the E-PRTR Regulation will allow emission indicators to be identified for substances of emerging and current concern. This will enable improvements in the use and management of such substances to be tracked.

These improvements will also help ensure that this monitoring can be used effectively in the wider zero pollution monitoring and outlook framework, which will be published every 2 years from 2022 onwards47. Data on air, water and soil pollution available through zero pollution monitoring will help evaluate the impacts of emission reductions from the installations that fall within scope of the IED and E-PRTR Regulation.

A central concern in revising the IED is to ensure that the whole range of BAT-associated emissions levels (AELs) is used. The future standardised permit summary will make it significantly easier to collect the emission limit values (ELVs) set in permits, through automated IT tools. This will allow sector-by-sector analysis of the distribution of ELVs within the BAT-AEL ranges, at the end of the permit revision cycles triggered by the adoption of BAT conclusions and will make the information contained in the permits clearer to the public.

The scale of progress in emissions reduction will depend on: technological progress; the outcomes of the innovation centre; any more frequent BREF reviews; and any actions that may be taken as a result. It will also be important to monitor the pace of development and uptake of innovations and the resulting transformation of IED sectors needed to meet the EU’s 2030 and 2050 environmental and climate objectives. The standardised permit summary will allow the number of cases to be quantified where new flexibilities supporting frontrunners in testing and deploying emerging techniques have been used. Wider impacts on innovation dynamics will be more complex to monitor. New indicators will be set out in an industrial transformation scoreboard published by the innovation centre. The centre may develop indicators such as:

- technology readiness level of transformative technologies per sector;

- emissions performance of transformative technologies;

- the anticipated uptake timeline of such technologies;

- distance to target indicators, for each IED sector.

Periodic publication of implementation information by Member States will complement these indicators, by providing readily accessible, machine-readable, common-format information on key provisions via dynamic IT means. This will include information on:

- the granting of flexibilities to support transformative techniques;

- the setting of stricter permit conditions in permits, where required to meet environmental quality standards;

- the granting of derogations allowing pollutant emissions higher than the BAT-AEL range;

- enforcement action taken.

Perceptions on improvements to legal clarity will be monitored via the BREF process, through e-surveys sent to the IED stakeholder community.

The review of the interaction between the IED and the ETS and decarbonisation developments, expected to take place before 2030, will be a key milestone in monitoring and evaluating this revamped and more holistic policy approach.


• Detailed explanation of the specific provisions of the proposal

(a) Amendments to Directive 2010/75/EU

The amendment to Article 1 aims at explicitly clarifying that this Directive lays down rules designed to prevent or, where that is not practicable, to reduce emissions into air, water and land and to prevent the generation of waste, in order to achieve a high level of protection of the environment and of human health taken as a whole; consistent with Article 191 of the Treaty on the Functioning of the European Union (TFEU). Such explicit clarification is also added in other Articles where necessary.

Amendments to Article 3 aim at providing relevant definitions of new concepts or elements which are being added to the Directive by virtue of extension of its scope or strengthening of its provisions.

Amendments to Article 5 aim at further specifying transparency requirements attached to permits granted under this Directive, against the background of uneven practice among Member States. Such permits shall be made available to the public on the internet, free of charge and without restricting access to registered users, and a uniform summary of permits shall be made available to the public.

Incidents or accidents may affect significantly the environment or human health beyond borders of the national territory of the Member State in which they occur. In such cases, pursuant to amendments to Article 7, immediate transboundary information, as well as multidisciplinary cooperation, must take place.

Amendments to Article 8 aim at tightening the rules applying in case of breach of permit conditions and broadening the powers of the competent authority to suspend an installation’s operations until compliance is restored.

In respect of combustion units or other units emitting carbon dioxide which are also in the scope of Directive 2003/87/EC establishing a scheme for greenhouse gas emission allowance trading within the Community, the amendment to Article 9 aims at making any requirements relating to energy efficiency mandatory.

Amendments to Article 11 aim at introducing, as part of the basic obligations of the operator, requirements on resource efficiency, on the taking into account of the overall life-cycle environmental performance of the supply chain and on an environmental management system.

In the context of the exchange of information leading up to the drawing up and review of BAT reference documents (BREFs), amendments to Article 13 are twofold. First, with a view to developing synergies between the work carried out by the European Chemicals Agency (ECHA) on chemicals and the elaboration of BREFs, it is appropriate to give a formal role to ECHA. Second, the handling of confidential business information (CBI) collected from industry should be specified so as to facilitate the exchange of information supporting the determination of emission levels and environmental performance levels associated with BAT and emerging techniques while preserving the confidentiality of relevant business information.

Several amendments are made to Article 14 on permit conditions, with a view to strengthening the requirements attached to permits granted under this Directive; among which a duty for Member States to ensure that all authorities who ensure compliance with EU environmental legislation, including where applicable with environmental quality standards, are duly consulted, before the granting of a permit. Moreover, it is appropriate to refer to Annex II on pollutants of Regulation (EC) No 166/2006 establishing a European Pollutant Release and Transfer Register as being amended. Indeed, by listing individual substances in a non-exhaustive way, Annex II of this Directive on the list of polluting substances is not compatible with the holistic approach sought and the need for competent authorities to take into account all relevant polluting substances, including those of emerging concern. This non-exhaustive list of polluting substances should therefore be deleted. Besides, it is also necessary to clarify the relationship between this Directive and Directive 2006/21/EC of the European Parliament and of the Council of 15 March 2006 on the management of waste from extractive industries48. Where the activity referred to in point 3.6 of Annex I to this Directive falls also under the scope of Directive 2006/21/EC, the BAT conclusions established pursuant to Article 13(5) IED will prevail for the purpose of permitting under Directive 2010/75, over BAT as referred to in Article 21(3) of Directive 2006/21/EC.

A new Article 14a is inserted in the Directive, requiring the operator to establish and implement an environmental management system (EMS) in accordance with relevant BAT conclusions, with a view to the continuous improvement of the environmental and energy efficient performance and safety of the installation. Article 14a bis also interlinks with the audit obligation under the Energy Efficiency Directive49, thus strengthening both proposals.

Several improvements are proposed to tighten rules under Article 15. Firstly, the conditions under which the competent authority, when setting emission limit values applicable to pollutant releases to water in an IED permit, may take account of the downstream treatment processes in a waste water treatment plant, are clarified in order to ensure that such releases do not lead to an increased load of pollutants in receiving waters when compared to a situation where the IED installation applies BAT and meets BAT-AELs for direct releases. Secondly, BAT is applied heterogeneously across Member States, industry sectors and even between individual industrial installations; between 75% and 85% of all emission limit values in permits are set at the least demanding end of the BAT-AEL ranges50, resulting in under-delivery of emissions reductions. Therefore, competent authorities should set the emission limit values (ELVs) at the lowest end of the relevant BAT-AEL range, unless the operator demonstrates that applying BAT as described in BAT conclusions only allows meeting less strict ELVs. Thirdly, in order to prevent or minimise the emission of pollutants by IED installations and level the playing field across the EU, it is necessary to better frame the conditions under which derogations to emissions limit values can be granted, consistent with principles to be set in an annex to this Directive, and with a standardised methodology for assessing the disproportionality between costs of implementation of BAT conclusions and the potential environmental benefits, to be adopted in an implementing act. Such derogations should not be granted where they may put at risk compliance with environmental quality standards.

A new Article 15a is introduced, which empowers the Commission to set common rules for assessing compliance with emission limit values and validation of measured levels for both air and water emissions based on BAT, for installations covered by Chapter II. These compliance assessment rules will take precedent over rules set in Chapters III and IV on assessment of compliance with emission limit values contained in Annexes V and VI.

The amendment to Article 16 aims at complementing monitoring requirements in respect of derogations granted under Article 15(4), as regards the concentration of the pollutants concerned by the derogation which are present in the receiving environment.

The amendment to Article 18 aims at clarifying that environmental quality standards refer to the requirements set out in Union law, such as EU legislation on air or water; which must be fulfilled at a given time by a given environment or particular part thereof, and that where stricter conditions than those achievable by the use of the BAT by an IED installation are necessary to ensure compliance with such environmental quality standards, specific additional measures must be included in the permit as set out in this article.

The amendment to Article 21 aims at clarifying that permit conditions should be reviewed and, where necessary, updated by the competent authority where it is necessary for the installation to comply with an environmental quality standard.

Amendments to Article 24 include broadening the cases where the public concerned are given early and effective opportunities to participate in the granting or updating of permit conditions by the competent authority, consistent with the Aarhus Convention.

The amendment to Article 25 aims at clarifying that Member States may not restrict legal standing to challenge a decision of a public authority to those members of the public concerned who participated in the preceding administrative procedure to adopt that decision.

Amendments to Article 26 seek to strengthen transboundary cooperation, information exchange and public participation in permitting processes.

After Article 26, a new Chapter IIa on ‘promoting innovation’ is inserted, comprising Articles 27 to 27d, so as to foster innovation, facilitate the testing and deployment of emerging techniques with improved environmental performance, as well as to set up a dedicated centre to support innovation by collecting and analysing information on innovative techniques and characterise their state of development from research to deployment. The centre will allow BAT to develop a forward looking approach and help industries identifying solutions to decarbonise and reduce pollution. It will over time become a hub to foster innovation dynamics for the industrial transition on all European Green Deal policies. Operators will be required to produce transformation plans by 30 June 2030 as part of their environmental management systems, or later, depending on the activites of Annex I at stake, as a contribution towards achieving EU objectives on a clean, circular and climate neutral economy.

Amendments to Article 42 further clarify how to assess whether the cleaned gases or liquids resulting from gasification and pyrolysis of waste are sufficiently purified to be combusted without stricter controls than those applying to clean commercial fuels.

A new Chapter VIa on ‘special provisions for rearing of poultry, pigs and cattle’ is inserted after Chapter VI and before Chapter VII, and comprising Articles 70a to 70i. In order to reduce the significant pollutant emissions to air and water caused by such rearing, this Chapter includes lowering the threshold above which pigs and poultry installations are included within the scope of Directive 2010/75/EU; and add cattle farming in this scope, alongside pigs and poultry installations. It also sets specific permitting procedures suited to the sector, mindful of the need to balance the administrative permitting procedures with public information and participation and compliance requirements. Operating Rules for livestock farms will take into consideration not only the nature, type, size and density but also the complexity of these installations and the range of environmental impacts they may have, together with economical aspects. This will allow establishing proportionate requirements for different farming practices (intensive, extensive, organic), including by taking into account the specificities of pasture based cattle rearing systems, where animals are only seasonally reared in indoor installations, while minimising burdens for the sector and the competent authorities.

Amendments to Article 73 include setting a five-year frequency according to which the Commission shall submit to the European Parliament and to the Council a report reviewing the implementation of this Directive, the first of which will be due by June 2028. This report will take into account the dynamics of innovation and the review referred to in Article 8 of Directive 2003/87/EC.

The amendment to Article 74 empowers the Commission to adopt a delegated act in accordance with Article 290 TFEU in respect of adding an agro-industrial activity to Annex I or Annex I a of this Directive, with a view to ensuring that it meets its objectives to prevent or reduce pollutants emissions and achieve a high level of protection of human health and the environment.

The amendments to Article 79 aim at specifying the minimum content of penalties, so that they are effective, proportionate and dissuasive, without prejudice to Directive 2008/99/EC on the protection of the environment through criminal law51.

A new Article 79a on compensation is introduced, which aims at securing that, where damage to health has occurred, fully or partially as a result of a breach of national measures adopted pursuant to this Directive, the public concerned is able to claim and obtain compensation for that damage from the relevant competent authorities and, where identified, the natural or legal persons responsible for the violation.

Amendments to Annex I include bringing within the scope of this Directive the extraction of industrial and metallic minerals, activity which has a significant impact on the environment. Similarly, whilst several of the activities of the batteries value chain are already regulated by this Directive, adding as well in the scope of this instrument large installations undertaking the manufacturing of batteries ensures that all stages of the life-cycle of batteries are covered by the Directive’s requirements, aiming at a more sustainable growth of this industrial sector.

(b) Amendment to Council Directive 1999/31/EC

The amendment to Article 1 of Council Directive 1999/31/EC on the landfill of waste52 aims at allowing the adoption of BAT conclusions on landfills under this Directive. Although landfills are included within the scope of the IED, no BAT conclusions exist for landfills owing to the coverage of this activity under Council Directive 1999/31/EC, pursuant to which its requirements are deemed to constitute BAT. Given technical development and innovation that has taken place since the adoption of Council Directive 1999/31/EC, more effective techniques for protecting human health and the environment are now available. The adoption of BAT conclusions would enable addressing the key environmental issues related to the operation of waste landfills, including significant emissions of methane.