Introduction and Context
The Industrial Emissions Directive (“IED”) is the main EU instrument regulating pollutant emissions from industrial installations.
Around 52,000 installations undertaking the industrial activities listed in Annex I of the Directive are required to operate in accordance with a permit. This permit should contain conditions set in accordance with the principles and provisions of the IED.
Upon evaluation of the IED, adopted in its initial version already in 2010, the need to modernise, streamline and update the IED in line with European Green Deal objectives has emerged. While pollution prevention and control will still be based on so-called Best Available Techniques, (“BAT”), the framework of the IED will change. As Trilogues have just yet started, definitive results are still unclear. Still, some trends and topics to watch out for can already be identified now.
This article aims at providing an overview of the Euopean Commission’s initial proposal as well as an outlook on the direction individual “hot topics” might be heading towards, taking into account the levels of consensus between the European Commission (“Commission”), Council of the European Union (“Council”) and European Parliament (“Parliament”).
Commission's Proposal of 5 April 2022 - Cornerstones
The Commission Proposal aims at guiding the EU to meeting the Zero Pollution ambition by 2050. The main changes to the IED proposed by the Commission include:
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- Applicability of IED to additional 1,500 to 1,900 installations (especially: mines, battery giga-factories, larger-scale cattle, pig, poultry farms);
- New Art. 79a stipulating a compensation claim for health damage incurred due to breaches of national measures pursuant IED – in initial proposal with partial reversal of burden of proof re causality link;
- Requirement for permitting authorities to use stricter pollutant emission limit values (reason: currently, 80% of industrial plant permits set the least ambitious levels of pollutants that are legally allowed);
- Energy efficiency as integral part of permits, inclusion of activities that are source of methane emissions;
- New EU Industrial Emissions Portal will make emissions data and resource use publicly available; Member States will publicise IED permits; digital compliance data can be used for reporting and EU taxonomy.
Council's and Parliaments negotiating positions
On 16 March 2023, the Council has adopted its negotiating position (“General Approach”). On 11 July 2023, also the Parliament has adopted amendments to the proposal.
Consensus and Controversy: Topics to watch
With all three positions publicly available, first forecasts can be made on the possible outcome of the Trilogues.
The likelihood of implementation of the respective proposals could be inferred to some extent from the consensus reached between the three EU legislative bodies; controversial topics are likely to be sorted out in political compromise somewhere between the border positions.
The differing opinions of the EU legislative bodies on some of the most discussed topics of the IED revision are described in more detail below:
- Scope of application of the IED:
While generally, extensions to the scope upon the revision of the IED are likely, details – inter alia regarding livestock farms – remain unclear.
The Commission proposed to extend the scope of application of the IED inter alia to the extraction and treatment of industrial minerals and metalliferous ores and the manufacture of lithium-ion batteries with a production capacity of 3,5 GWh or more per year. It furthermore proposed to include livestock farming activities: The rearing of cattle, pigs and poultry in installations of 150 livestock units or more, and the rearing of any mix of cattle, pigs and poultry, in installations of 150 livestock units or more.
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- Livestock units (LSU) according to a Press Release of the Council of 16 March 2023 is a reference unit that uses coefficients based on feed requirements for different types of animals and is usually larger than the number of animals on a given farm.
While the Parliament proposed to delete the above-mentioned extensions to the scope for the extraction and treatment of industrial minerals and metalliferous ores and for livestock farms altogether, it proposed to only amend the extension for the manufacture of lithium-ion batteries.
The Council however proposed to narrow down the scope extension for the extraction and treatment of industrial minerals to industrial scale activities, and to only relate to explicitly referenced minerals and ores. For the scope extension for the manufacture of batteries, it proposed to include all batteries and proposed a smaller production capacity threshold than the Parliament, thus being stricter than the Commission’s and Parliament’s position. For the proposed scope extensions to livestock farms, it raised the LSU thresholds and proposed exclusions for installations operating under extensive production regimes which it specifies in detail, therefore settling in the middle of the Commission’s and Parliament’s position on that matter.
- Art. 79a IED (new), compensation claims:
A compensation claim will likely be included as new Art. 79a IED – however, a rock-hard reversal of the burden of proof will likely not find its way into the final version of the IED revision.
Following a public letter by various stakeholders on the necessity of an adoption of an effective compensation right for EU citizens, there have been many discussions on the newly proposed Art. 79a IED concerning compensation claims for damage to human health that has occurred as a result of violation of national measures that were adopted pursuant to the IED.
While the three EU legislative bodies agree in principle on the need to include such claim within the revised IED, they differ in their opinions in how strict it should be phrased. It is to be expected that the final version of Art. 79a IED will be watered down significantly from the initial Commission’s version, especially regarding the initially proposed reversal of the burden of proof.
The new Art. 79a proposed by the Commission would require the Member States to create a right to claim and obtain compensation for the damage from the relevant natural or legal persons and, where appropriate, even from the relevant competent authorities.
While the Parliament welcomes this proposal as such, it significantly watered down the initial proposal on the reversal of the burden of proof. The Council even proposed to delete the reversal of the burden of proof altogether and furthermore proposed to only grant those claims vis-à-vis the natural or legal person, but not vis-à-vis authorities.
- Art. 14a IED (new), Environmental Management System:
The proposal to establish an Environmental Management System, requiring operators to include specific environmental data in it, will likely be accepted with comparably small alterations.
The Commission proposed to oblige Member States to require the operator to prepare and implement an environmental management system (“EMS”), which shall include specific environmental data like, inter alia, environmental policy objectives for the continuous improvement of the environmental performance and safety of the plant, objectives and performance indicators, or a chemicals inventory of the hazardous substances present in the installation. It aims to interlink with the audit obligation under the Energy Efficiency Directive. The Council and Parliament mainly agreed with the proposal, watering down the initial proposal to some extent but not disagreeing with the proposal of the establishment of an EMS and specific information requirements as such.
- Art. 7 IED (recast), incidents and accidents:
Incidents or accidents affecting human health are likely to be included next to such affecting the environment, as are transboundary information and multidisciplinary cooperation regulations - other details remain unclear.
The current Art. 7 IED obliges the Member States to take specific necessary measures in the event of any incident or accident significantly affecting the environment. The Commission proposed to add incidents or accidents affecting human health as well, and proposed to add a paragraph on incidents and accidents affecting human health or the environment in other Member States, establishing immediate transboundary information and multidisciplinary cooperation. The Parliament proposed to include another paragraph on pollution events affecting drinking water resources, including transboundary resources, or affecting wastewater infrastructure in the case of indirect discharge, and to include specific communication channels in the Commission’s proposal on transboundary information. The Council proposed to slightly alter the wording of the Commission’s proposal so that Member States shall take the necessary measures to ensure operators not only limit the environmental consequences, but also those on human health, creating consistency within the regulation, and agreed with the Commission on the rest.
- Art. 5 IED (recast), public access to IED permits:
Whether IED permits will be publicly available online upon the IED revision remains to be clarified.
The Commission pursues the idea to increase transparency and public participation within the IED framework. It therefore included a para. 4 to the existing Art. 5 IED according to which Member States shall ensure that IED permits are made available on the Internet free of charge and without restrincting access to registered users. Also, a summary of each permit shall be made available. The Council however proposed to delete this proposal altogether. The Parliament sided with the Commission with only slight alterations to its initial proposal.
- Art. 8 IED (recast), non-compliance:
Regulations on permit suspensions will likely be tightened upon IED revision.
The Commission proposed to supplement the current Art. 8 para. 2 IED with a stricter regulation on the suspension of the plants in case of breaches of permit conditions that pose an immediate danger to human health or threatens to cause an immediate significant adverse affect upon the environment. It furthermore included a para. 3, regulating that the suspension of the permit for continued dangers may take on until compliance with the permit conditions are restored. The Council agreed with the Commission’s proposal. The Parliament proposed an even stricter version also including dangers to drinking water intake, proposed to include a para. 2a on breaches of compliance affecting drinking water resources, including transboundary resources, or affecting wastewater infrastructure in the case of indirect discharge, and proposed to phrase the suspension regulation for continued breaches stricter. The Parliament furthermore proposed two new subparagraphs to para. 3 concerned with the effectuation of public enforcement.
Outlook
With some similar, but more divergent approaches, the inter-institutional Trilogue negotiations launched in July 2023. The legislative bodies aim to find a political agreement in the best case end of November 2023. While generally, further restrictions within the IED framework in light of the Green Deal are to be expected, and operators will need to expect the requirement to establish an EMS upon the IED revision, it is still unclear how the IED will apply inter alia to livestock farms, and it is likely that inter alia the compensation claim wording, especially the reversal of the burden of proof, will be watered-down in the final version.
After establishing compromise, the co-legislators will formally adopt and publish the revised Directive in the Official Journal of the EU. Once published, the Member States must transpose the regulations into national law.
Next steps
Although the IED revision will, just as the initial version of the IED, be addressed to the Member States which will need to transpose its regulations, in-scope operators – or such that might be in-scope after the revision – should watch the developments closely.
After a political compromise has been found, new and old in-scope operators are advised to assess how to best set up internal processes to prepare for the obligations established upon (IED and consequently) Member State legislation revisions.
If you have any questions on how the IED might relate to your business, and on how to best prepare for national legislation transposition upon IED revision, please do not hesitate to contact us. We will be happy to provide further guidance or get you in touch with local experts.
Authored byProf. Dr. Thomas Duenchheim, and Dr. Viktoria Herold.
