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EC to widen industrial emissions regulation, takes aim at farmers

07 April 2022 IHS Markit Chemical Expert

The European Commission (EC) unveiled proposals 5 April to update the EU Industrial Emissions Directive, with the revamp intended to aid the bloc's path to net-zero emissions and meet its Green Deal commitments.

The directive covers industrial activities, like electricity and cement production, waste management and incineration, and the intensive rearing of livestock.

Industry contributed more than 21% of the EU's total GHG emissions in 2019, agriculture accounted for more than 10% of the bloc's GHG emissions, while waste management was responsible for more than 3% of the total, according to European Environment Agency data.

The update will see the regulations cover more sites, with particular scrutiny of large-scale intensive livestock farming. Under the proposed rules, coverage of the largest cattle, pig, and poultry farms would be gradually introduced. About 13% of Europe's commercial farms are responsible for 60% of the EU's livestock emissions of ammonia and 43% of methane emissions, it noted.

Extending such coverage is expected to bring public health benefits of more than €5.5 billion/year ($5.99 billion/year), although the EC said that as farms have simpler operations than industrial plants, the sites covered will benefit from a "lighter permitting regime."

Previously, intensive cattle farms were given a "free pass," said campaign group Greenpeace, and only farms with over 40,000 chickens, 2,000 pigs or 750 sows were covered.

The updated rules will apply to farms with 150 "livestock units." This is equivalent to 150 adult cows, 375 calves, 10,000 laying hens, 500 pigs or 300 sows, said Greenpeace, adding that regulations for operations as small as 100 livestock units had been on the table until recently.

Battery plants under scrutiny too

As the EU gears up to align with net zero via the proposed Fit for 55 policy package, and its focus on slashing pollution from the transportation sector, the bloc's second largest source of emissions, the directive is being extended to cover extraction of industrial minerals and metals and large-scale production of batteries that will enable a low-pollution shift to zero emission vehicles.

The revisions build on the overall approach of the existing Industrial Emissions Directive, which currently covers about 50,000 large industrial installations and intensive livestock farms in Europe.

Industrial installations covered account for around 40% of regional GHG emissions, over 50% of total emissions to air of sulfur oxides, heavy metals and other harmful substances, and around 30% of nitrogen oxides and fine particulate matter air emissions, warranting further action, the EC said.

Installations need to comply with emissions conditions by applying activity-specific best available techniques, under the terms of the directive. These techniques are determined together by industry, national and EC experts, and civil society.

The new rules will cover "more relevant sources of emissions," make permitting more effective, reduce administrative costs, increase transparency, and give more support to breakthrough technologies and other innovative approaches, according to the EC.

More stringent permits for installations will be introduced. Instead of settling for the least demanding limits of the best available techniques, as about 80% of installations do currently, permitting will have to assess the feasibility of reaching the best performance.

In addition, more help will be provided for "EU innovation frontrunners," the EC said. As an alternative to permits based on well-established best techniques, frontrunners will be able to test emerging techniques, benefiting from more flexible permits, it added.

An Innovation Centre for Industrial Transformation and Emissions will be established to help industry identify pollution-control solutions. By 2030 or 2034, operators will need to develop transformation plans for their sites to achieve the EU's 2050 zero-pollution ambition, circular economy, and decarbonization aims.

Additional planned changes to the directive include supporting industry's circular-economy investments. New best available techniques could include binding resource-use performance levels, it said. The existing environmental management system will be upgraded to reduce the use of toxic chemicals, it added.

Executive Vice-President for the European Green Deal Frans Timmermans said the proposals gave "certainty about future rules to guide long-term investments, increase Europe's energy and resource independence, and encourage innovation."

EC Commissioner for the Environment, Oceans and Fisheries Virginijus Sinkevičius added: "We've modernized the Industrial Emissions Directive, substantially raising the level of ambition and its potential to accompany industry in the green transition. The new version takes account of advances inside industry, it has a wider scope, and it gives citizens more detailed information about these emissions."

Synergies between depollution and decarbonization will also be sought. "Under the previous rules, the requirements for depollution and decarbonization were independent. The new rules bring them closer together, so that future investments take better account of greenhouse gas emissions, resource efficiency and water reuse, all at the same time," Sinkevičius said, adding: "Large installations will need to draw up Transformation Plans, showing how they propose to adopt techniques for pollution and carbon management between 2030 and 2050."

Farming lobby hits back

Agricultural lobby umbrella group Copa Cogeca, one of the most powerful interest groups in the bloc, hit out at the proposed updates to the directive, arguing that the revisions would hike the number of cattle, pig, and poultry farms covered almost ten-fold.

The revisions "would force thousands of family livestock farms to comply with a costly emission protocol designed primarily for large companies," it warned, adding that the widening of the enforcement of emissions regulations for the sector shows a "profound disconnect with farm realities" on the ground.

Copa Cogeca accused the EC of biting the hand that feeds it and damaging wider geopolitical goals, extending that observation to policy proposals in REPowerEU, the bloc's plan to wean itself off Russian hydrocarbons. "Whilst saying that livestock has a crucial role to play in developing a resilient and independent EU energy sector … this proposal is likely to affect both existing livestock farms and upcoming projects," it said.

Chemical industry concerned about competitiveness

The EU chemical industry, meanwhile, called for more clarity on the new measures and warned they could harm the sector's competitiveness.

Industry trade group Cefic said the chemical industry supports the overall policy goals of the proposal to revise the directive, but said "we also clearly note there is nothing in the new proposal that would increase the competitiveness of the European industry."

"Against an already very challenging backdrop for European industry, companies need clarity and certainty to invest in Europe and European solutions now," Cefic said. "Even longer permitting processes will not bring the EU Green Deal forward."

Practical implementation of the text of the revised directive "is unclear and appears to create more hurdles for industry" as it continues its transition toward the 2050 goals of the Green Deal, Cefic added.

But waste water treatment lobby group EurEau on 6 April applauded the rules. Reducing the release of potentially harmful contaminants into the environment "benefits everyone, which is why we want an Industrial Emissions Directive that is robust to deal with pollutants," it said.

Drinking and waste water plant operators would like more information about what is in the industrial water releases into sewers and other water bodies, EurEau said, adding: "Our members would also like to have a say in the permit process."

Critics see missed opportunity

However, environmental lawyers at ClientEarth argue there's a bigger problem. The revisions "fails once again to explicitly cap carbon and other GHGs for all installations, instead introducing vague 'transformation plans' that ask operators to chart a path to climate-neutral operations by 2050," it said.

ClientEarth's Bellinda Bartolucci added: "This one law applies to over 50,000 agro-industrial installations across Europe and it puts no direct cap on emissions of carbon and other GHGs from the most climate-intensive installations. This has been an eye-watering wasted opportunity for years. We now want to see the EU grab this chance with both hands and leverage the IED to slash climate-sabotaging emissions - it is vitally important to achieving the Green Deal commitments."

They said this despite the Fit for 55 proposals last July including a plan to create carbon sinks on agricultural land through national emissions removal targets and a proposed revision of the Land Use Change and Forestry Regulation that would also pay farmers to do so.

The proposal is subject to adoption by the European Parliament and European Council, after which EU member states will have 18 months to transpose the directive into national legislation. After that, the best available techniques will be developed and, once adopted by the EC, industrial operators will have four years and farmers three years to comply.

--Article based on original Chemical Week reporting.

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.


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