INSIGHT: EU industrial emissions rules will tighten screw on industry

20 July 2011 15:11  [Source: ICIS news]

By Nigel Davis

LONDON (ICIS)--New rules governing emissions from EU industrial sites will hit chemical producers hard as they are forced to install upgraded abatement technology or make financial provisions for site clean-up.

There could be derogations from some national authorities but as the Industrial Emissions Directive (IED) is brought into law in the 27 member states, chemical sector players will be among those bearing the greatest burden.

UK-established law firm Allen & Overy calls the IED one of the most far-reaching pieces of European environmental law adopted to date.

It replaces and expands on seven significant EU directives that cover pollution from industrial sites, including power generation plants. The directives – packages of legislation agreed at the EU level that are expected to be adopted into national law – have not delivered the cuts in pollution expected of them.

Among the seven pollution directives being replaced are the Large Combustion Plant Directive and the Integrated Pollution Control (IPPC) Directive. They cover environmental permits issued to some 52,000 industrial and agricultural business locations.

The chemical industry has accepted the compromise positions arrived at in the IED after years of debate but sector companies will eventually be expected to comply with a tougher legislative and inspection regime.

The IPPC particularly is seen not to have worked effectively across the member states. EU countries have not been keen to fully implement IPPC rules, although the directive itself can hardly have been said to have introduced a level playing field across Europe for environmental control.

“Although much will still depend on national implementing measures and, above al1 local enforcement practice, there is no doubt that the collection of new provisions in the IED represent a significant ratcheting up of regulatory standards and supervisions for all installations required to hold environmental permits,” the law firm says.

The more highly prescriptive nature of the directive will be difficult to stomach for those critical of the ways in which EU regulation pervades industrial operations, it adds.

More regulation could help level the industrial playing field between EU member states. However, Allen & Overy makes the strong point that a level playing field in the EU would do little to help EU competitiveness with industrial producers in Asia and elsewhere.

In that respect, industry gained a pyrrhic victory last year when the IED directive was finally adopted by the EU Parliament and the EU’s Council of Ministers, which represents the individual member states.

The IED can be seen as a step forward from the IPPC and the other directives it replaces. And there remains considerable scope within the framework of the directive for industry lobbying to impose less costly and stringent environmental permitting requirements should local conditions dictate. Environmental benefits can still be weighed against the cost of achieving them – or of installing the best available technology (BAT) to do so.

But the IED provisions are onerous.

Member states will be obliged to review all environmental permit conditions, including those that are designed to ensure that BAT is applied within a four-year timeframe. The chemical industry had argued that this period is much shorter than the typical EU chemical industry investment life-cycle that requires a longer payback time.

Companies will be obliged to report instances when their sites breach permit conditions immediately to the national regulator and take steps to fix the problem. The IPPC was seen a deficient in this regard.

The information disclosure provisions of the directive also are tougher on industry.

Non-governmental organisations (NGOs) and the wider public are given more say in the assessment of permit conditions and derogations, and in the work of the regulator. Letting the public take a view on environmental pollution decisions should make policing of the IED essentially more effective.

Allen & Overy notes that there are greatly expanded provisions in the IED covering site closure. To comply with the obligations, member states will be better placed to help monitor compliance with the directive in a number of ways that the law firm expects to become standard practice.

“In order to achieve this, installations are likely to be required to make financial provisions against the likely costs, so as to ensure that sites do not close, with their operators lacking the financial resources to meet their clean-up obligations,” it adds.

Among the EU member states, the UK is due to implement the IED provisions at the start of 2013. A consultation period with industry closes early in 2012.


By: Nigel Davis
+44 20 8652 3214



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