ESG Quick Guide: EU Industrial Emissions Directive (IED)

The IED regulates pollutant emissions from large-scale industrial and agro-industrial activities. 

Its core objectives are to prevent and control pollution discharged into air, water and land (including nitrogen oxides, ammonia, mercury, methane and carbon dioxide), as well as reduce waste generation, improve resource efficiency, and promote the circular economy and decarbonisation. 

The IED requires operators of in-scope installations to hold integrated permits, comply with emission limit values and environmental performance standards based on Best Available Techniques (“BAT”), and implement Environmental Management Systems (“EMS”) and transformation plans.

The most recent revision of the IED, done via Directive (EU) 2024/1785, came into force on 4 August 2024. It expanded the IED’s scope, strengthened emission and environmental performance standards, set a minimum penalty threshold, and introduced a right for citizens to claim compensation for damage to their health. The deadline for transposition of this revision into national law was 1 July 2026. However, transposition remains outstanding in a significant number of Member States, with several still at the drafting or public consultation stage as of mid-2026.

The EU Environmental Omnibus, which was published by the Commission on 10 December 2025 and is still going through the legislative process, contains a number of simplification proposals for the IED. 

Mandatory

The IED applies to operators carrying out activities listed in annexes to and specific chapters of the Directive. 

It currently covers approximately 75,000 installations across sectors, including energy industries, metals, minerals, chemicals, pulp and paper, CO₂ capture, waste, etc. 

However, the IED does not apply to research activities, development activities or the testing of new products and processes.

In addition, the 2024 revision expanded the IED’s scope to cover new industrial activities, most notably intensive livestock farms, ore mines, large battery factories and electrolysis of water for hydrogen production.

Under the IED, Member States must ensure that no in-scope operator can operate without a permit. 

Permits must include, among other things, emission limit values, environmental performance limit values for water, monitoring requirements, soil and groundwater protection measures, requirements relating to the EMS, and waste management requirements. 

Member States may provide that a single permit covers two or more installations (or parts of installations) on the same site if they are operated by the same operator. Conversely, where a permit covers several parts of an installation run by different operators, it must clearly allocate responsibilities among them. In addition to individual permits, Member States may adopt so-called “general binding rules”, which set sector-level emission limit values or other conditions that competent authorities apply directly when granting permits to installations in the relevant sector.

Each operator of an installation listed in Annex I (e.g. energy industries, metals, minerals, chemicals, etc.) must prepare and implement an EMS covering, at a minimum, environmental policy objectives, performance indicators, energy audit results, a chemicals inventory and a transformation plan. Relevant EMS information must be published online, free of charge. The EMS must be audited by an accredited body for the first time by 1 July 2027 and then at least every three years.

Operators of energy-intensive installations must include an indicative transformation plan in their EMS by 30 June 2030, setting out how the installation will transform during the 2030-2050 period towards a sustainable, clean, circular and climate-neutral economy. For all other Annex I installations, transformation plans must be produced as part of the permit reconsideration following publication of BAT conclusions after 1 January 2030. Transformation plans must be made public. The IED itself does not prescribe specific quantitative targets, such as alignment with the Paris Agreement 1.5-degree pathway or defined interim emission reduction milestones; it anchors the plan in the EU's broader 2050 climate-neutrality objective and requires the plan to be indicative in nature. In practice, an IED transformation plan is expected to feed into, rather than replace, the more comprehensive CSRD transition plan.

In addition, competent authorities must set the strictest achievable emission limit values by applying BAT in the installation, considering the entire range of emission levels associated with the best available techniques (“BAT-AELs”). They must also set binding environmental performance ranges. These BAT-AELs are directly reflected in the permit: an installation’s permitted emissions cannot exceed the BAT-AEL levels, and under the revised IED competent authorities must, as a default, set emission limit values at the strictest achievable end of the BAT-AEL range unless a derogation applies. Derogations are available on grounds of disproportionate cost or local conditions, subject to regular reassessment. There are also temporary derogations available in the event of a crisis due to extraordinary circumstances leading to a severe shortage of energy supplies or other essential resources to perform activities in the public interest.

Permits must include monitoring requirements. Operators must supply the competent authority with emission monitoring results at least annually. Periodic monitoring of soil and groundwater is also required (i.e. unless determined differently by the competent authority, at least once every ten years for soil and five years for groundwater).

Where an installation’s activities involve the use, production or release of relevant hazardous substances, operators must prepare and submit a baseline report to the competent authority before starting operations or before a permit is first updated. Upon definitive cessation of activities, operators must assess the state of soil and groundwater contamination. Where significant pollution compared to the baseline has occurred, operators must take the necessary remediation measures to return the site to its baseline state, subject to technical feasibility.

Operators must notify about incidents and accidents,  permit breaches, and planned changes.

Finally, the IED also contains special provisions for combustion plants (Chapter III), waste incineration and co-incineration plants (Chapter IV), installations using organic solvents (Chapter V), titanium dioxide installations (Chapter VI), and intensive livestock rearing farms (Chapter VIa).

Pursuant to Regulation (EU) 2024/1244, permits and data are made publicly available online on the European Industrial Emissions Portal.

The IED is enforced by Member States’ competent authorities, responsible for granting permits, monitoring compliance and imposing enforcement measures.

In the event of a breach of permit conditions, an incident or an accident, operators must: 

• immediately inform the competent authority; 

• immediately take the measures necessary to restore compliance; and 

• implement any complementary measures required by the competent authority. 

Where a breach poses an immediate danger to human health or threatens a significant adverse effect on the environment, operation of the installation must be suspended without delay.

Member States must ensure that effective, proportionate and dissuasive penalties are imposed in case of breach. For the most serious infringements by legal persons, the maximum administrative financial penalty must be at least 3% of the operator’s annual EU turnover in the preceding financial year. Criminal penalties may also be imposed.

Citizens have a right to claim compensation for damage to their health caused by an infringement of national measures adopted pursuant to the IED. 

The IED provides that Member States must ensure that:

• the public concerned is given early and effective opportunities to participate, in substance, in the permit procedure (i.e. the granting of a permit for a new installation, for substantial changes, and for the update of the conditions thereof);

• when issuing its decision, the competent authority must also make available to the public specific information (such as a copy of the permit, the reasons of the decision, the results of the public consultations and a motivation on how they were taken into account, the specific reasons if a derogation is granted in accordance with the IED, etc.); and

• the members of the public concerned must also have access to a review procedure before a court of law or another independent and impartial body established by law to challenge the substantive or procedural legality of the decisions, acts or omissions subject to the public participation provisions. Any such procedure must be fair, equitable, timely and not prohibitively expensive.

When adopted in 2024, the IED’s obligation on operators to produce transformation plans was intended to complement the climate transition plan requirements in the Corporate Sustainability Reporting Directive (“CSRD”), by providing a means for implementing those requirements at installation level. However, in practice, the two regimes operate at different levels: the CSRD transition plan is prepared at company (group) level and is disclosure-driven, whereas the IED transformation plan is prepared at installation level as part of the EMS and feeds into the permitting process. A group-level climate transition plan produced under the CSRD does not therefore automatically discharge the IED transformation plan obligation, although the two are expected to be consistent and can draw on the same underlying strategy, targets and data. The interaction is likely to evolve further as the Environmental Omnibus includes a proposal to delete the IED indicative transformation plan requirement altogether (see below). 

Many IED installations are also subject to the EU Emissions Trading System Directive (“ETS”). The IED allows Member States to exempt ETS-covered installations from certain IED energy efficiency requirements, to avoid double regulation of the same CO₂ emissions. The Commission is required to review synergies between the two instruments by 30 June 2028 and every five years thereafter.

In addition, the IED also complements the Critical Raw Materials Act (“CRMA”): the IED’s governance mechanisms support the sustainable development of mining activities in the EU in line with CRMA’s 2030 benchmarks. The IED is also intended to help meet the CRMA’s targets for streamlining permit granting processes.

Finally, note that, under the proposed EU Industrial Accelerator Act (“IAA”), the development of industrial manufacturing acceleration areas is promoted by, among other things, the establishment of “aggregated baseline permits” which should cover the permits commonly required for such activities within the area. However, this aggregated baseline permit excludes permits that are installation specific such as, for instance, IED permits. 

On 10 December 2025, the Commission published the Environmental Omnibus containing six legislative proposals to simplify environmental legislation. 

In relation to the IED specifically, the Environmental Omnibus proposes, among other things, to:

• allow EMS to be prepared at company level rather than per installation;

• simplify EMS content, in particular by deleting requirements for chemical inventories and transformation plans;

• adjust the IED and the Medium Combustion Plants Directive to enable permitting of decarbonisation projects using oxy-fuel or hydrogen combustion; and

• extend certain compliance deadlines for new or revised provisions.

The Environmental Omnibus proposals are subject to the ordinary legislative procedure. As of August 2026, the proposals remain in the early stages of that procedure, with the European Parliament and Council negotiating the six proposals in parallel.

• IED (as amended)

• 2024 Revision

• European Industrial Emissions Portal Regulation

• European Industrial Emissions Portal

• European Innovation Centre for Industrial Transformation and Emissions

• Commission Q&As on IED

• Commission Q&As on Revised IED

• Factsheet on Industrial Emissions

• Revised Industrial Emissions Directive published in the Official Journal of the EU

• European Commission publishes draft Industrial Accelerator Act

• EU: Commission publishes Environmental Omnibus

• EU Omnibus Tracker

• Other ESG Quick Guides