Revised Industrial Emissions Directive: EU institutions reach political agreement

On 29 November 2023, the EU Parliament and Council finally reached a political agreement on the Commission’s proposal (the “Proposal”) for a Directive amending the existing Directive 2010/75/EU on industrial emissions (the “Current IED”) and Directive 1999/31/EC on the landfill of waste (the “Recast Directive”).

The Recast Directive provides for stricter emissions targets, mandatory emission/environmental performance targets, as well as increased penalties for non-compliance. The political agreement was reached a day ahead of the official launching of COP28 , the global climate summit, where the EU is said to call on all parties to accelerate emissions reductions (see here).

The text of the Recast Directive is not yet available. Meanwhile, the press releases from the EU Parliament and Council (see here and here) explain the key changes made to the Proposal. 

Key Takeaways

• The Recast Directive will add to the scope of the IED regime industrial emissions from intensive poultry and pig farms, as well as from ore mines and large battery factories. The Commission will need to review the need to include cattle farms by 2026.
• Stricter emissions levels and emissions/environmental performance targets will become mandatory for covered sectors.
• EU Member States will need to foresee penalties of at least 3% of the operator’s annual EU turnover, for the most serious breaches.
• Citizens will have a right to claim compensation for damages to their health.
• Transparency and public participation are increased, notably with the setting up of the EU Industrial Emissions Portal and the possibility to apply for e-permits.

Background 

The Current IED is the main EU instrument regulating the pollutant emissions (such as nitrogen oxide, ammonia, mercury, methane and carbon dioxide) of Europe’s large-scale industrial installations, as well as of livestock farms (i.e. “agro-industrial installations”). It currently requires around 52,000 agro-industrial installations (such as 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) to have integrated permits, granted by the authorities of EU Member States and which include, among others, emission limits. The Current IED also requires operators to immediately take measures to limit the environmental consequences of any incident or accident significantly affecting the environment and to prevent further possible incidents or accidents. 

The main amendments proposed by the Commission related to the introduction of a right for individuals to claim compensation for health damages caused by breaches of agro-industrial installations’ IED permits, as well as the reversal of the burden of proof in favour of the victims of such breaches (see our previous alert). The Proposal also specified minimum penalties in case of infringement of the IED.

The Recast Directive overcame the initial discrepancies in the respective positions of the Parliament and the Council (see our previous briefing), which notably included the (non-)inclusion of livestock farms and cattle farming in the scope of the Recast Directive, as well as the Commission’s suggestion to reverse the burden of proof in favour of the victims of breaches of IED permits, and the level of statutory penalties.

The political agreement in a nutshell

• EU institutions agreed to extend the Current IED to large battery factories (the press releases do not elaborate on this term) and extractive industry installations (mining, covering the extraction and treatment of “non-energy ores produced on an industrial scale” such as iron, copper, gold, nickel and platinum). Subject to review at a later stage, the Commission may propose to extend the Recast Directive to industrial minerals too.

As for livestock farms, before the so-called ‘trilogues’ began, the Parliament was adamant about extending the Current IED on livestock farms. That being said, it seems that the EU institutions managed to find a compromise and to extend the Current IED to: 

• pig farms with more than 350 livestock units (“LSU”);
• poultry farms with laying hens with more than 300 LSU or with broilers with more than 280 LSU; and
• farms with both pigs and poultry with more than 380 LSU.

EU institutions failed to include cattle farms, seen as too controversial for the Parliament (see our previous briefing). The political compromise does however foresee that the Commission will need to review by 31 December 2026 the need to include cattle farms, “as well as a reciprocity clause to ensure producers outside the EU meet requirements similar to EU rules when exporting to the EU”.

Extensive farms and animal farming for domestic use are excluded.

• The Recast Directive will require covered sectors to comply with stricter emissions levels and mandatory emission or environmental performance targets. This is expected to encourage in-scope operators to devote more attention to energy, water and material efficiency and reuse, as well as to the use of safer chemicals in industrial processes. Thus, for instance, environmental performance targets for water consumption will be mandatory. 
• EU institutions added dicofol and two types of PFAS to the list of polluting substances in Annex II (meaning that permit conditions must also include emission limit values for these substances).
• As regards enforcement, non-complying operators can face penalties of up to at least 3% of the operator’s annual EU turnover. 
• Citizens are also granted the right to claim compensation for damage to their health. The press releases do not mention a right to claim compensation for damage to the environment.
• The EU institutions’ press releases do not mention the Commission’s initial proposal to reverse the burden of proof, so until the revised text of the Recast Directive is made available it is not clear what the position is in this respect.
• The Recast Directive also increases transparency and public participation in the licensing, operation and control of in-scope agro-industrial installations. Citizens will be able to access the EU Industrial Emissions Portal, which will gather data on all IED permits and local polluting activities. And by 2035, in-scope agro-industrial installations will be able to file for e-permits.

Next steps

The political agreement still needs to be formally adopted by the EU Parliament and Council before it can be published in the Official Journal of the EU and become EU law. Although we do not expect major changes in substance to happen in the process of the formal adoption, it is possible that there may yet be some tweaks to the final wording of the final Directive.

Once adopted, the Directive would enter into force 20 days after its publication in the Official Journal. EU Member States would then still need to transpose it into their national laws within 22 months. The Current IED would be replaced by the Recast Directive from the date of its transposition.

If you would like to discuss any aspect of the new regime, please reach out to the contacts on this post, or to your usual Linklaters contact(s).