[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 21.12.2007

SEC(2007) 1679

COMMISSION STAFF WORKING DOCUMENT

Accompanying document to the Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on industrial emissions (integrated pollution prevention and control) (recast) IMPACT ASSESSMENT [COM(2007) 843 final][COM(2007) 844 final][SEC(2007) 1682]

TABLE OF CONTENTS

1. Policy background, procedural issues and consultation of interested parties 5

1.1. Policy background – why review the IPPC Directive and related legislation on industrial emissions? 5

1.2. Consultation 6

1.3. Expertise and information 7

1.4. Integration of the Impact Assessment Board's recommendations 8

2. Background information on industrial emissions and Best Available Techniques 10

2.1. Key figures on industrial emissions 10

2.2. Current EU legal framework on industrial emissions 12

2.3. Best Available Techniques (BAT) and role of the BREFs 13

3. General problem definition and objectives 15

3.1. General problem definition 15

3.2. Objectives 15

4. Support Member States in implementing BAT-based permitting 17

4.1. Role of the BREFs 20

4.2. Use of sectoral Emission Limit Values (ELVs) versus BAT 29

4.3. Status of the BREF process 41

5. Strengthen compliance and increase environmental improvements, whilestimulating innovation 44

5.1. Inspection framework 46

5.2. Regular reporting from operators to demonstrate compliance 52

5.3. Review of permit conditions 55

5.4. Facilitating continuous improvement by increasing IPPC's impact on theinnovation of BAT 59

6. Cut unnecessary administrative burden and simplify legislation 63

6.1. Addressing inconsistency in multiple Directives 64

6.2. Reducing costs of IPPC permitting and enforcement 67

6.3. Reducing costs of Member State reporting 72

7. Better contribute to the objectives of the Thematic Strategies by reviewing the current scope and provisions of the IPPC Directive 75

7.1. Help achieving the objectives set in the Thematic Strategy on Air Pollution (combustion installations below 50 MW and intensive livestock farming) 76

7.2. Help achieving the objectives set in the Thematic Strategy on the Prevention and Recycling of Waste 84

7.3. Help achieving the objectives of the Thematic Strategy on Soil Protection 88

7.4. Possible regulation of additional industrial sectors through the IPPC Directive 95

7.5. Clarification of current IPPC scope 98

8. Facilitate possible future use of IPPC-compatible market based instrumentssuch as an emission trading scheme for NOx/SO2 99

9. Monitoring and evaluation 105

9.1. Indicators of progress towards meeting the objectives 105

9.2. Outline for monitoring and evaluation arrangements 105

10. Conclusions 107

Chapter 1 provides the background of this initiative as well as a summary of the consultation and data collection process carried out to inform this review.

Chapter 2 presents some information on industrial emissions, the current legal framework and the key principles of the IPPC Directive which plays an important role for the impact assessment.

Chapter 3 describes the general problem definition as well as the general and five specific objectives set to address these problems.

The report is further structured along five main chapters ( chapters 4 to 8 ) focusing on the five specific problems and objectives identified above. It presents, in a clear and structured way, the wide range of options and issues assessed while keeping the overall coherence of the impact assessment. In particular, the synergies and linkages between the various chapters, objectives and options have been carefully assessed throughout the whole impact assessment.

Chapters 9 and 10 present the outline for monitoring and evaluation arrangements as well as the conclusions of the impact assessment.

Index of Annexes

Annex 1: Summary tables of policy options considered and recommended 110

Annex 2: Consultation process 112

Annex 3: Main studies carried out by the Commission during the IPPC review process 114

Annex 4: Background data on industrial emissions 120

Annex 5: Cost optimized emission reductions to achieve the TSAP objectives (2020) 129

Annex 6 : Background information on competitiveness impacts 132

Annex 7: Background data on LCP emissions of SO2 and NOx 134

Annex 8: Background data concerning administrative burdens related to permitting and reporting 145

Annex 9: Assessment of Administrative Costs based on the Standard Cost Model (SCM) 168

Annex 10: Background information on Titanium Dioxide 171

Annex 11: IPPC Scope: background information on the analysis of impacts for possible extension and clarification 173

Annex 12: Background analysis of flexible instruments including emission trading for NOx and SO2 208

Annex 13: Glossary 219

Annex 14: List of main references used in the report 221

POLICY BACKGROUND, PROCEDURAL ISSUES AND CONSULTATION OF INTERESTED PARTIES

Policy background – why review the IPPC Directive and related legislation on industrial emissions?

The review of the EU legislation on industrial emissions has been driven by the following main policy developments.

Lisbon Strategy and the EU Sustainable Development Strategy

The EU Sustainable Development Strategy and the Lisbon Strategy identify environmental protection as an important pillar of current and future European policy and stress the role of environmental technologies as having “significant economic, environmental and employment potential” [1]. Along the same lines the 2006 Spring European Council endorsed “a strong promotion and diffusion of eco-innovations and environmental technologies, inter alia through the Environmental Technologies Action Plan, ETAP”[2] . This was echoed by the Council conclusions on industrial policy calling for suitable initiatives "to promote the penetration of sustainable, environmentally friendly and safe technologies" .

Within this context the renewed EU Sustainable Development Strategy stresses the importance of implementing the actions set out in ETAP aimed at tackling sustainable consumption and production, climate change and clean energy. The 2nd ETAP review report[3] presents an analysis and sets priorities for the future, identifying the IPPC Directive as a key tool to pave the way for sustainable production and eco-innovation.

As announced in the Mid-term review of industrial policy[4], the Commission will adopt a new initiative on a sustainable industrial policy in order to help industries to benefit from the emergence of new markets in environmental technologies. In addition, the Commission will also draw up a complementary Action Plan to promote sustainable production and consumption in the EU.

Specific developments in environmental policy

The Thematic Strategy on Air Pollution has set objectives to protect human health and the environment from key air pollutants. To transform these objectives into concrete obligations for emission reductions, the Commission will propose a revision of the National Emission Ceilings (NEC) Directive.

The regulation of industrial installations is expected to play a significant role in the emission reductions to be achieved in Member States. Without further emission reduction from IPPC installations, the positive health and environmental effects that are to be obtained from these objectives will not materialise. As illustrated in Annex 5, the full implementation of current legislation would not be sufficient to meet the 2020 targets of the Thematic Strategy. Further measures are needed in particular in the field of industrial emissions. In this context, Member States have been calling repeatedly for measures at EU level which could help them achieve their targets.

Other Thematic Strategies (on Soil Protection and on the Prevention and Recycling of Waste) have called for establishing and/or enhancing links with the IPPC Directive to help achieve their environmental objectives. The European Parliament and the Council, as part of the inter-institutional debate, have been supportive of such requests.

Furthermore, the "Energy and Climate Change Package" adopted by the European Council in March 2007 also stresses the need to further improve energy efficiency in industrial activities. The IPPC Directive plays an important role in this context since the efficient use of energy is one of the key environmental objectives of this legislation.

The policy measures currently developed under the above package will also lead to a higher use of renewable energy and changes in the energy mix with probable impacts on overall levels of industrial emissions (for instance through the reduced use of coal as fuel).

Better Regulation

The review of the IPPC Directive furthermore has been identified in the context of Better Regulation and has been included in the EC's Simplification rolling programme covering the period 2006-2009[5]. Better Regulation is about designing laws and regulations in ways that legislation is coherent, effective with a minimum of administrative burden, both in public administration and industry[6].

Experiences gained on implementation

More than 10 years after the adoption of the IPPC Directive, much experience has been gained on its actual implementation by Member States, on the problems raised and on the possibilities to improve the legal framework to ensure that its objectives are met.

Consultation

This impact assessment is based on an extensive consultation of stakeholders and collection of data, information and views (see Annex 2).

The process started in 2003 with the consultation process launched as part of the 2003 Commission Communication[7] on progress in implementing the IPPC Directive. The Commission received on this occasion a number of contributions, expressing strong support for the IPPC Directive and the BAT-based permitting approach as well as comments which have been important drivers for this review process. Following its first IPPC implementation report[8] in 2005, the Commission then decided to formally initiate a review process.

The Commission set up the "IPPC Review Advisory Group" (composed of about 70 representatives of all Member States, Industry and NGOs) which was closely involved in the preparation of the studies carried out by the Commission and contributed largely to the collection of data. Throughout the process a continuous information exchange with stakeholders was carried out.

An electronic mailbox for receiving questions, comments and information on the IPPC review was created as well as a comprehensive public electronic library and information repository, called CIRCA[9]. This allowed stakeholders within and outside the Advisory Group to follow the work being carried out and to provide comments.

A public consultation based on an internet-questionnaire took place from mid-April to mid-June and a Stakeholder Hearing was organized in May 2007. A summary of the results of the consultation can be found in Annex 2.

Illustration on the extent of the consultation process : four plenary meetings with the Advisory Group; contribution to 10 studies; 5 questionnaires circulated; more than 120 replies to questionnaires; more than 150 additional comments received as part of the elaboration of the studies; consultation of authorities and stakeholders on more than 200 case studies and 40 fact sheets; 400 documents placed on the CIRCA website; 200 participants at the public hearing; 450 responses to the internet questionnaire.

In the light of the above, the stakeholder consultation in the review process has been carried out according to the Commission's general principles and minimum standards for consultation[10].

Furthermore, a Commission's inter-service group including all the relevant services[11] was set up in order to ensure the necessary internal co-ordination throughout the review process.

Expertise and information

This report is mainly based, but not exclusively, on the information gathered in the context of an extensive programme of studies commissioned by the Commission . The main 10 studies[12] carried out by the Commission in 2006 and 2007 in the context of the IPPC review are described in Annex 3. A budget of about € 1.5 million was allocated to this data collection process.

In addition, support has also been obtained from other sources, such as the IMPEL network, the work carried out in the context of the Air Thematic Strategy, revision of the NEC Directive and previous studies such as the BEST project Expert Group on the "streamlining and simplification of environment related regulatory requirements for companies"[13]. Annex 14 provides a list of the main references used to draw up the impact assessment.

A lot of experience has also been gained and exchanged with Member States and stakeholders since the adoption of the IPPC Directive. Member States have reported to the Commission on its implementation twice, as well as on other sectoral legislation. In addition, the Commission has set up an Action Plan on implementation as part of its 2005 Report. This Action Plan was instrumental in collecting information and data on the permitting progress in Member States and on the difficulties that emerged during the implementation process.

The fact that existing installations had to fully comply with the IPPC Directive at the latest by 30 October 2007 has been taken into consideration in the collection of data on implementation. In order to meet this deadline, Member States had to issue or review existing permits in advance to it. The analysis of implementation is therefore based on the extensive experience and actual permitting practices put in place to meet this deadline.

However, it has to be noted that detailed information on some of the subjects covered by the studies, in particular with regard to quantitative data on environmental impacts and costs, could not always be obtained. In such cases the analysis is focused on the more qualitative aspects of the options considered.

Integration of the Impact Assessment Board's recommendations

On 8 October 2007, the Impact Assessment Board adopted the following opinion on the draft version of the Impact Assessment.

(A) Context

Together with the Large Combustion Plants, the Integrated Pollution Prevention and Control (IPPC) Directives are the major pieces of Community legislation regulating industrial emissions. The review of the legislation on industrial emissions has been driven by the underlying EU strategies for growth and jobs (Lisbon) and sustainable development. The Council has supported the promotion and diffusion of eco-innovations and environmental technologies. The Commission's second Environment Technology Action Plan review report identified the IPPC Directive as a key tool for sustainable production and innovation. In this respect, there is a policy link to the forthcoming initiatives on sustainable industrial policy (ENTR) and sustainable consumption and production (ENV). Existing thematic strategies on air pollution, soil protection and the prevention and recycling of waste, and the energy efficiency action plan are also relevant.

(B) Positive aspects

The IA report contains a wide range of options and detailed analysis of impacts. The stakeholder consultation has been sought in an appropriate manner.

(C) Main recommendations for improvements

The recommendations below are listed in order of descending importance. Some more technical comments have been transmitted directly to the author DG.

General recommendation : Whereas the IA report contains a good amount of information, some of the aspects (see below) must be made more visible. In view of the many sub-options considered, the IA report should present the scope of aggregate policy packages and the combined impact they will have.

Specific recommendations:

(1) The expected impact of the chosen policy mix should be made more visible. Whereas the IA report contains a good amount of analysis of impacts of sub-options, the combined impact of the overall preferred option could be made clearer (given that the IA report explicitly recommends preferred options). This recommendation holds also for the analysis of administrative costs, the results of which should be presented in a concise way in the main text of the IA report.

(2) Simplification benefits need to be highlighted . The IA concerns several directives being merged into a single one while the proposal also aims at enhancing the implementation of the best available technology (BAT). An additional option to be analysed, in order to facilitate effective implementation could be to provide assistance to the MS on implementation well before the new directive comes into force.

(3) The RAINS baseline used in the IA needs to be clarified, in particular concerning the extent to which experience with the current, insufficient implementation rates have been taken into account.

(4) Some of the impacts need to be clarified . In particular the impact on health, the regional impacts on employment and impact across various sectors need to be better analysed. The geographical location of the concerned installations should be presented.

(D) Procedure and presentation

The IA report is well written. It exceeds the 30 page limit provided in the IA Guidelines, but given the scope of the proposal and the impacts, this can be accepted.

All recommendations for improvements have been fully incorporated into the impact assessment as outlined below.

General recommendation : the executive summary and section 10 on conclusions have been refined to present in a clearer and more structured way the aggregate policy package and the combined impacts.

(1) The expected impact of the chosen policy mix should be made more visible

As indicated above, a clearer presentation is made on the combined impacts both in the executive summary and in section 10 on conclusions. The outcome of the analysis of the administrative costs is also presented more clearly in the main text of the Impact Assessment by providing an overall summary table in chapter 6 on administrative burden and by summarizing this issue in the executive summary and in section 10 on conclusions.

(2) Simplification benefits need to be highlighted .

The simplification benefits have been more clearly highlighted as presented above. In addition, as indicated in the accompanying Communication to this initiative, it is made clear that the assistance by the Commission to Member States on the implementation of the current or future legislation will be continued in particular through enhanced information exchange, guidance development, visits to authorities and training. In addition, an option (see under section 6.2) is included on the establishment of an action programme with Member States to share best practice and help identify actions to reduce administrative burdens at the national or regional level. Such an option would facilitate effective implementation of the existing or upcoming legislation.

(3) The RAINS baseline used in the IA needs to be clarified

The use of the RAINS baseline has been clarified in section 4.2.3 as well as in Annex 5 and Annex 7.

(4) Some of the impacts (on health, employment, across sectors and regions) need to be clarified

Further analysis has been carried out and presented in particular in section 4.1 on best available techniques, in section 4.2 on the use of sectoral emission limit values and in section 7 regarding the scope of the legislation. In addition, more specific information on the geographical location of the installations has been added in Annex 4.

BACKGROUND INFORMATION ON INDUSTRIAL EMISSIONS AND BEST AVAILABLE TECHNIQUES

Key figures on industrial emissions

The contribution of industrial activities to environmental problems is significant and varies widely according to the sectors or the impacts concerned. For instance industrial activities covered by the IPPC Directive (which covers about 52,000 installations[14]) emit about 55% of the EU’s anthropogenic CO2, 83% of SO2, 34% of NOx, 43% of particulate matter and 55% of VOC[15] emissions. About 38% of ammonia emissions are emitted by agricultural installations covered by the IPPC Directive[16]. IPPC installations also contribute to about 23% and 25% of mercury and dioxin emissions to air respectively[17].

In the field of emissions to water, the contributions of IPPC installations are also significant, for instance for phosphorus, nitrogen and heavy metals[18]. In addition, many priority substances and priority hazardous substances listed in the Water Framework Directive are exclusively or predominantly emitted by industrial installations falling under the IPPC Directive.

The installations covered by the IPPC Directive and more generally the legislation on industrial emissions are located in all the Member States. The 52,000 IPPC installations are spread across the Member States depending on their size and the level of their industrial activities. More information about the geographical and sectoral repartition of the installations as well as expected evolutions can be found in Annex 4.

The damage cost of industrial emissions (both locally and transboundary) is very high. For example, looking only at the pollutants covered by the Thematic Strategy on Air Pollution (NH3, NOx, particulate matter, SO2 and VOCs), the combination of the 2004 EU25 emission levels reported in EPER (European Pollutant Emission Register)[19] and the externality cost factors used in the Thematic Strategy on air pollution gives a total annual damage cost estimate of €53-164 billion[20] (see Annex 4 for derivation). These costs cover human health impacts and crop damage but not other environmental costs (e.g. damage to biodiversity). Moreover, IPPC installations are emitting a great many more pollutants to air, water and land, as well as having other types of impacts which are not included in this estimation.

Industrial emissions have generally been reduced over the past 10 to 20 years as highlighted in Annex 4 (for instance by about 35% for NOx and 55% for SO2 between 1990 and 2000). However, as indicated in section 1.1, industrial emissions need to be further reduced to achieve current and forthcoming environmental objectives under the NEC Directive and the Thematic Strategies.

Illustration: in the field of air pollution, the following reductions of industrial emissions in 2020 (compared to the Member States' projected 2020 emissions through implementation of current legislation) have been estimated as cost-efficient within a package of measures to meet the targets of the Thematic Strategy on Air Pollution: -48 % for SO2, -50% for NOx, -43% for dust and -16% for VOC. More information on the outcome of the RAINS model can be found in Annex 5.

It should be noted that this modelling does not yet take into account of the agreement of the European Council on energy and climate change. The effects of this policy are being assessed in the context of the preparation of the upcoming Commission's Package on Energy and Climate Change (to be adopted in 2008) and of the revision of the NEC Directive. However, based on preliminary calculations, the above conclusions and the order of magnitude of the emission reductions needed to meet the Thematic Strategy targets would not change substantially.

The further prevention and control of environmental impacts of industrial activities is therefore essential to ensure a high level of health and environmental protection regarding both local and trans-boundary impacts[21].

C urrent EU legal framework on industrial emissions

The current EU legal framework on industrial emissions comprises the IPPC Directive and several “sectoral Directives”, namely the Large Combustion Plants (LCP)[22], Waste Incineration (WI)[23], Solvents Emissions (SE)[24] and Titanium Dioxide (TiO2) Directives[25] (this body of legislation will be called "industrial emissions legislation" in this document since they lay down the main requirements for the permitting and control of industrial installations).

This legislation is based on Article 175 EC since its primary objective is the protection of the environment.

In addition, the IPPC Directive interacts with a number of other pieces of legislation affecting industrial activities, in particular:

- measures setting overall targets, objectives and policy context, in particular the National Emission Ceilings (NEC) Directive, the Air Quality legislation, the Water Framework Directive and Water Quality Standards, the Waste legislation and the Habitats Directive;

- other measures directly concerned with industrial emissions: the Environmental Impact Assessment Directive, the Control of Major Accident Hazards ("Seveso II") Directive, the Landfill Directive and the EU Greenhouse Gas Emission Trading Directive.

The interaction between the IPPC Directive and these pieces of legislation is further assessed in section 6.1.

The IPPC Directive

The main objective of the IPPC Directive is to ensure a high level of environmental protection with regard to the operation of the industrial activities listed in its Annex I covering the following main sectors: energy industries, metal production and processing, mineral industry, chemical industry, waste management, intensive livestock farming, etc.

The IPPC Directive came into force on 30 October 1996. New installations, and existing installations which are subject to "substantial changes", were required to meet the requirements of the IPPC Directive as of 30 October 1999. The Directive sets the compliance deadline for existing installations at 30 October 2007, therefore allowing eight years of transition.

The IPPC Directive sets general principles for the operation of installations concerned as well as requirements for granting permits and ensuring public participation. The Directive is based on two key principles:

- an integrated approach: permits must include conditions to prevent and control all environmental impacts taking into account the whole environmental performance of the installations, covering in particular emissions to air, water and land, generation of waste, use of raw materials, energy efficiency, noise, prevention of accidents, odours and restoration of the site upon closure;

- Best Available Techniques (BAT) : the IPPC Directive places BAT, as defined in the Directive, as the central element of permitting (see section 4.1).

IPPC and the "sectoral" Directives on industrial emissions

The sectoral Directives (LCP, SE, WI, TiO2) regulate the emissions (generally to air and water) of installations from certain industrial sectors. These Directives define in particular specific requirements (generally emission limit values and monitoring provisions) for certain pollutants for the installations concerned. For the installations covered both by the IPPC Directive and by the sectoral Directives, the latter set only the minimum requirements which however apply without prejudice to the IPPC Directive. This means that the IPPC Directive may require stricter or additional conditions than would apply under the sectoral Directives alone (see section 4.2).

Best Available Techniques ( BAT) and role of the BREFs

Definition of Best Available Techniques (BAT): in summary, BAT are defined in the IPPC Directive as established techniques (including the technologies used for the design, operation and maintenance) which are the most effective in achieving a high level of protection of the environment as a whole and which are developed on a scale that allows implementation in the relevant sector under economically and technically viable conditions taking into account the costs and advantages.

The implementation of BAT is the central element of permitting of IPPC installations. According to the IPPC Directive, the permit conditions "shall be based on the best available techniques, without prescribing the use of any technique or specific technology, but taking into account the technical characteristics of the installation concerned, its geographical location and the local environmental conditions"[26]. It is further stated that "it is for the Member States to determine how the technical characteristics of the installation concerned, its geographical location and the local environmental conditions can, where appropriate, be taken into consideration"[27] .

It should be noted that in the legal interpretation of the Commission the two elements are not of equal weight with the BAT requirement coming first and the "local factors" as a secondary consideration and limited to specific circumstances.

In addition, in order to identify and determine at EU level what is considered BAT for a particular sector, the Commission organizes a very inclusive exchange of information among Member States and other stakeholders on BAT, associated monitoring and their future development. The resulting documents are the 31 so-called BAT Reference Documents (BREFs) which are adopted by the Commission.[28] The BREFs are based on a consensus between technical experts from Member States and from industrial and environmental NGOs. In the rare cases where no technical agreement can be reached on certain specific issues, the diverging views are recorded in the documents.

The BREFs provide an interpretation of what should be considered BAT for a particular sector (EU-wide) often expressed as associated emission levels. With this, the BREFs provide a central reference point that should be fully taken into account by Member States and permitting authorities when they determine BAT in the context of their own practical application of the Directive.

While the BREFs are not binding documents, Member States have only limited discretion to apply permit conditions that deviate from those that would correspond to the application of BAT. This discretion is limited to the local factors[29] mentioned above. Thus, while it is clear that there is some flexibility in the context of the current legislation, this flexibility should only be used within limits in order to avoid undermining the objectives of the Directive.

Fundamentally, this means that conditions different from the normal application of BAT should be limited to the specific local factors mentioned in the Directive . Such a deviation should in addition be permitted only if determined on the basis of an assessment of costs and benefits, as was noted in the previous interpretation made by the Commission[30].

GENERAL PROBLEM DEFINITION AND OBJECTIVES

General problem definition

The extensive analysis carried out as part of the IPPC review process led to the identification of five main problems or issues to be addressed.

These problems relate to:

- insufficient implementation of BAT leading to limited progress in the prevention and reduction of industrial emissions and to distortion of competition due to large differences in environmental standards

- limitations with regard to compliance, enforcement and environmental improvement that hinder environmental effectiveness and the stimulation of innovation

- unnecessary administrative burdens due to the complexity and incoherence of parts of the current legal framework

- insufficient scope and unclear provisions of the current IPPC Directive that could hinder the Thematic Strategies' objectives to be met

- a constraint on the use of more flexible instruments such as NOx and SO2 emission trading systems.

Objectives

The overall objective remains the prevention and control of pollution and its impacts arising from industrial activities to achieve a high level of protection of human health and the environment. This should be achieved in the most cost-effective and efficient way whilst ensuring the reduction of unnecessary administrative burdens.

This policy must be part of a European emission reduction strategy that addresses all emission sources, establishes the links with related policy areas such as climate change and energy and achieves its objective in a cost-effective way, in particular through improvements corresponding to BAT.

The future policy on industrial emissions should also contribute to the overall objective of the Lisbon Strategy "to promote the development of approaches and technologies that allow the EU to make the structural changes needed for long term sustainability".[31] This policy should eliminate or at least reduce distortion of competition due to different levels of stringency for permitting and control across specific sectors within the EU.

Finally, the legislation on industrial emissions should be clear, coherent and easy to use for those who implement this legislation with any unnecessary administrative burden removed in order to achieve the objective of better regulation and simplification.

In relation to achieving the overall objective, the option of abandoning the integrated BAT-based permit approach was considered and rejected at an early stage for the following reasons.

No evidence was received during the whole review process and previous series of consultation in 2003 and 2005 (see above section 1.2) to suggest that there were benefits from deviating from the BAT approach as a whole. On the contrary, the information collected[32] and the Impact Assessment confirmed that the approach is environmentally and economically sound (see in particular section 4).

To achieve the overall objective, five main specific objectives have been identified, corresponding to the five problem areas identified above.

1. Increase the effectiveness of the legislation by supporting Member States in implementing BAT-based permitting

2. Further increase the effectiveness by strengthening provisions on enforcement and environmental improvement, while stimulating innovation

3. Cutting all identified unnecessary administrative burden and simplifying current legislation

4. Better contribute to the objectives of the Thematic Strategies by amending, where cost-effective, the current scope and provisions of the IPPC Directive

5. Facilitate possible future use of IPPC-compatible market based instruments such as a emission trading scheme for NOx/SO2

Structure of the report

The report is further structured along five main chapters focusing on the five specific problems and objectives identified above. It presents, in a clear and structured way, the wide range of options and issues assessed while keeping the overall coherence of the impact assessment. In particular, the synergies and linkages between the various problems, objectives and options have been carefully assessed throughout the whole impact assessment. A summary table with all the options considered can also be found in Annex 1.

SUPPORT MEMBER STATES IN IMPLEMENTING BAT-BASED PERMITTING

Problem definition

The description of the problem definition is based on the extensive collection and in-depth assessment of information from Member States' experience on the application of the IPPC Directive over the past years (see section 1).

Throughout the review process, it has been confirmed that permits issued under the IPPC Directive often are not based on BAT as described in the BREFs. This results in a lower uptake of BAT than expected from a proper implementation of the Directive and to a large variation of permit conditions across the EU.

A second main concern is the finding that deviations from BAT are generally not clearly determined on the basis of the criteria set out in the Directive (technical characteristics, geographical location and local environmental conditions while ensuring a high level of environmental protection). Overall, there is a lack of transparency in how the flexibility of the Directive is being used.

Illustration : A detailed evaluation[33] of the actual implementation of the Directive was carried out through a thorough analysis of various case studies. In particular, an analysis of 30 specific installations (which had been granted a permit by the authorities on the basis of the IPPC Directive), located in 12 Member States and covering 6 industrial sectors was carried out.

Permit conditions and in particular Emission Limit Values (ELVs) were compared against the BAT conclusions of the BREFs. Overall, out of the 30 permits assessed, nearly half contained conditions not based on BAT. In some of the case studies, significant differences were seen between the permit conditions and the performance corresponding to BAT (varying from a factor 2 up to 500 for certain pollutants even when considering only the less demanding end of the range of emission levels associated with BAT as laid down in the BREFs). In addition, the deviations from BAT as determined in the BREFs were not generally justified on the basis of the factors laid down in the Directive.

Examples of permit conditions not based on BAT: - a paper mill with no permit conditions for release to water while the corresponding BREF determines a number of BAT on water discharges. - two non ferrous metal plants without emission limit values and monitoring requirements on dioxins emissions while the corresponding BREF sets a range of performance associated with BAT - a non ferrous metal plant with an emission limit value for SO2 at 800 mg/m3 while the corresponding BREF sets a range of performance associated with BAT between 50 and 200 mg/m3 - a chemicals plant with an emission limit value for benzene at 2500 mg/m3 while the corresponding BREF sets a performance associated with BAT at 5 mg/m3

Similar problems were found where general binding rules have been set, replacing individual permit conditions for certain requirements. A detailed analysis[34] of 16 general binding rules applied in the Member States to implement the IPPC Directive was carried out showing that about half of these were not in line with the BAT conclusions of the BREFs. It has not been possible however, in the context of this specific study to assess whether the permits granted for specific installations contain stricter conditions than these general binding rules.

Certain Member States have carried out internal assessments leading to similar conclusions. For instance, investigations carried out by the VROM Inspection and Inspection of Transport, Public Works and Water Management in the Netherlands revealed that only between 54 and 77% of the IPPC permits issued were based (or will be based by 31 October 2007) on BAT as determined in the BREFs[35].

Finally, the fact finding exercise[36] has also demonstrated that a number of Member States frequently apply the minimum emission limit values (ELVs) set out in the Directives on Large Combustion Plants, Waste Incineration, Solvents and/or Titanium Dioxide Directives as default requirements rather than determining BAT-based permit conditions as required by the IPPC Directive. This practice is not in line with the legal requirements. As presented further in section 4.2, this is mainly a problem for large combustion plants for which the minimum ELVs of the LCP Directive are far from BAT associated emission levels and therefore fail to harness the benefits of applying BAT.

Evolution of the problem in the future

During the consultation of stakeholders, this analysis on the current shortcomings on BAT implementation has been largely supported. Some stakeholders have suggested that the BREFs were too recent to allow a precise and full assessment of implementation and that a higher uptake of BAT could be expected in the future following a longer period of implementation of the IPPC Directive, taking for instance into account the investment cycle for the installation of new technologies. However, this was not supported by the actual implementation practice[37] based in particular on BREFs adopted in 2001 and by the modelling work carried out on the estimations and assumptions of future emissions.

Estimations were established with Member States on future projected emissions resulting from the application of permit conditions in certain sectors covered by the IPPC Directive. All the modelling work carried out (see below some illustrations) has highlighted large differences for the sectors analysed between BAT performance as set in the BREFs and the estimated future levels of emissions under the implementation of the IPPC Directive.

Other external policy factors, such as related to Climate Change, might have an effect on the structure of certain sectors, on the use of certain fuels (eg reduced use of coal and increased use of renewables in the energy mix) and therefore on the levels of overall emissions (see in particular analysis in section 4.1). However, these factors as such would not have impacts on the level of BAT uptake in specific installations.

This means that after the deadline for full implementation of the IPPC Directive (30 October 2007), there is no basis to expect the uptake of BAT to increase significantly if no further actions are taken in the context of the legislation on industrial emissions.

Outcome of modelling work for the LCP sector:

Work[38] has been carried out using the RAINS model. The so-called "national baseline scenario" (level of emissions under the implementation of the current IPPC and LCP Directives according to information from Member States' experts) was compared with two "IPPC scenarios" (representing the ends of the BAT ranges of the LCP BREF). The projected emissions of SO2 and NOx under the IPPC scenarios were clearly below those predicted under the national estimations. The gaps in emissions in 2020 without BAT application vary between 0,5 and 1 million tonnes for SO2 (-10 to -25% compared to overall national SO2 projections) and between 0,4 and 0,9 million tonnes for NOx (-5 to -15% compared to overall national NOx projections). More information can be found in section 4.2 and Annex 7 .

Outcome of modelling work for the agricultural sector

For the agricultural sector, the same approach was followed for NH3 emissions. A study[39] using the RAINS model shows the significant role of IPPC legislation to achieve emission reductions to meet the objectives set in the Thematic Strategy on Air Pollution. The full application of BAT conclusions from the BREF on intensive livestock farming was compared for the year 2020 against the national projections revealing about 40 percent difference (representing about 130 kt NH3) in achieved reductions.

If these shortfalls in implementation continue, the achievement of the environmental objectives set out in other policies (e.g. air and water quality) will be undermined. In particular, the health and environmental objectives of the Thematic Strategy on Air Pollution could not be met by most of the Member States, with continued resulting excessive health, environmental and economic damage.

The RAINS model, used in the context of the review process to assess if current Member States' projections are sufficient to reach the 2020 targets of the Thematic Strategy on Air Pollution, clearly indicates that this is not the case. Instead, IPPC air emissions estimated by Member States for 2020 will have to be cut significantly (-48 % for SO2, -50% for NOx, -43% for dust and -16% for VOC; see also section 2.1 and Annex 5)[40].

Drivers of the problem

There are three drivers: (1) the role of the BREFs in permitting and their unclear status in the Directive (2) the interaction between sectoral ELVs set at EU level and BAT; and (3) the status and functioning of the process to elaborate and review the BREFs.

Role of the BREFs

Drivers of the problem

One key driver identified for the problem of limited BAT implementation is the fact that competent authorities do not take sufficient account of the BREFs and their BAT conclusions in setting permit conditions.

Based on the data collected and the consultation with stakeholders, this is largely due to the current status of the BREFs in the Directive and the way the flexibility allowed for in the Directive is being interpreted and applied. Compared to the situation when the BREFs started to be developed (around 1997), clear and detailed conclusions do now exist in the BREFs with regard to what is considered BAT at EU level.

Despite the Commission's view that the BREFs are the central reference point for the determination of BAT (see section 2.3) and that deviation from BAT can only be allowed in certain cases and must be objectively determined in accordance with limited factors, the Directive does not provide the sufficient legal clarity on these points.

As a result, a number of competent authorities and operators take a different legal interpretation of the provision on BAT-based permitting and a lenient approach to BAT implementation clearly focussing more on local considerations.

In addition, competent authorities often do not realize that the BREF's conclusions are the results of an extensive exchange of information with stakeholders (including costs and economic considerations) and have been agreed amongst experts at EU level[41].

Description of options

Options considered on the role of the BREFs [all options are mutually exclusive]

Business As Usual |

Keep the current legal status of the BREFs while clarifying their role (option 1) |

Require that ELVs are normally set within or stricter than the BAT Associated Emission Levels determined in the BREFs and that the reasons for possible deviation due to certain local factors have to be documented (option 2) |

Require that ELVs are set within or stricter than the BAT Associated Emission Levels determined in the BREFs and remove the flexibility for taking certain local factors into consideration (option 3) |

Under option 1, the current status of the BREFs would be kept but clarified in the IPPC Directive, in particular by providing a definition of the BREFs and a clearer reference to the BREFs in the determination of BAT. The current possible use of local considerations would remain as in the current Directive.

Under option 2, the current requirements for use of the BREFs would be strengthened by making clear that the BREFs are the reference for setting permit conditions based on BAT. ELVs would have to be set within or stricter than the BAT Associated Emission Levels determined in the BREFs. Deviation from this rule could be granted by competent authorities in specific cases on the basis of an assessment of the environmental and economic costs and benefits taking into account the 3 factors (the technical characteristics of the installation concerned, the local environmental conditions and its geographical location) laid down in the Directive.

In addition, the reasons for such deviation and the conditions imposed would need to be documented and included as part of the information on the permitting decision which must already be provided to the public. As foreseen in the current IPPC Directive, ELVs could be supplemented or replaced by equivalent parameters or technical measures[42].

Under option 3, no flexibility would be provided to take into account local considerations and ELVs would have to be set at least within the ranges of BAT Associated Emission Levels as determined in the BREFs.

Analysis of impacts

Results of options

Option 1 would clarify the reference to the BREFs in the Directive but would not lead to legal changes on their status or the use of local factors. This option would therefore not create an additional burden on the competent authorities, but would also not create new incentives for competent authorities to change significantly their behaviour compared to the business as usual option.

Under option 2 , the changes of the current requirements would be expected to have a greater effect in changing the behaviour of competent authorities, leading to more consistent consideration of the BREFs in permitting. The Directive would clarify that the BREFs provide the principal source of reference for determining BAT. Discretion would however be left to competent authorities at two levels. Firstly, the BREFs generally determine ranges of techniques and performance associated with BAT rather than a single performance standard. Secondly, a certain level of flexibility to deviate from the conclusions of the BREFs would remain in specific cases, but competent authorities would have to give the reasons for their decisions.

Under option 2 , authorities are therefore likely to implement more closely the conclusions of the BREFs but would maintain a certain flexibility for specific cases. The operators are also likely to consider more thoroughly the BREFs in their permit applications. Overall, option 2 is expected to result in a significantly higher uptake of BAT than under business as usual and option 1.

Under option 3 , very little discretion would be left to competent authorities, resulting in a stricter use of the BREFs and higher BAT implementation than under options 1 and 2. The process of producing the BREFs is likely to be affected since it would be more difficult to agree with stakeholders on BAT conclusions in the BREFs.

The main environmental, economic and social impacts of options 1 to 3 are linked to the extent to which these options would lead to a higher level of BAT implementation.

The analysis presented below on the impacts of the implementation of BAT will not be repeated in the report but will be referred to at various places when relevant.

Environmental impacts

Environmental impacts of BAT implementation

The uptake of BAT as set in the BREFs would provide significant environmental benefits in installations that do not yet operate according to this level of performance. In view of the large number of sectors covered by the IPPC Directive and the numerous environmental issues raised in the process of BAT determination, it is not practical to estimate quantitatively all environmental impacts for the installations covered by the Directive.

However, as illustrated below, data have been collected to carry out the analysis for certain key sectors and pollutants. Where possible, the reductions of emissions have been monetised using the methodology and conclusions of the Thematic Strategy on Air Pollution. In addition, reductions of transboundary emissions can have positive impacts on the environment of third countries as illustrated in the Thematic Strategy on Air Pollution or through the implementation of the Water Framework Directive[43].

Illustration 1 : A study[44] from the European Environment Agency carried out a comparison for the LCP sector between the emissions data reported under EPER (2004) and the impacts of applying BAT as determined in the BREF on LCP. As presented in Annex 7, for all the pollutants considered, the gaps between the level of emissions and what could be achieved through BAT introduction in the whole sector are very significant (overall NOx and SO2 emissions would be reduced by a factor 2 to 5).

Illustration 2 : Specific modelling work was also carried out in the context of the application of NOx abatement techniques in the cement sector[45]. Moving towards BAT in this sector (as defined in the BREF) would lead to significant benefits. The reduction of emissions compared to the baseline scenario (no policy change) ranges between 29 and 57 ktonnes per year[46], even based on the modest assumption that up to 40% of all installations in this sector would implement BAT. Based on the monetary value of NOx emissions reductions, the monetised benefits are between around € 330 and 660 million per year whereas the economic costs of the techniques are estimated between € 15 to 30 million per year.

Illustration 3 : The same approach was followed for large coal power plants[47]. Assuming increases in the uptake of BAT from 5 to 40% in BAT compared to the current situation, the associated reductions in emissions would be around 30 to 260 ktonnes per year for NOx (with valued benefits of € 100 to 2,200 million per year at abatement costs of € 75-600 million per year) and 0.3 to 8 ktonnes per year for dust (with valued benefits of € 7 to 600 million per year at abatement costs of € 2 to 160 million per year). Emissions of mercury would be reduced by 0.1 to 2 tonnes per year across the EU.

Illustration 4 : The environmental benefits expected from BAT implementation concern not only emissions to air but overall environmental impacts due to the integrated approach of BAT. For instance, review of the implementation of the IPPC Directive in the United Kingdom[48] has shown significant reduction of emissions to air and water from the implementation of BAT-based permitting as well as important improvements in the use of resources.

It should also be underlined that the efficient use of energy is one of the key aspects to be considered in the determination of BAT. A higher uptake of BAT will have a beneficial impact on the reduction of CO2 emissions since installations regulated under BAT-based permit conditions have to use their energy more efficiently.

The interaction between the IPPC Directive and the EU Greenhouse Gas Emission Trading Directive (GHG ETD) has been clarified through an amendment of the IPPC Directive (article 9(3)) in 2003.

As a result, IPPC permits can not contain emission limit values for greenhouse gases covered by the GHG ETD (currently only CO2). However, the requirement to use the energy efficiently has not been removed from the determination of BAT (energy efficiency goes beyond the direct emissions of CO2 of a particular installation) and remains a key objective of the IPPC Directive.

Environmental impacts of the options considered

It is expected that option 1 would lead to limited positive environmental impacts compared to the business as usual option since no significant change of behaviour is expected from competent authorities.

Option 2 is expected to lead to significant positive environmental impacts due to a higher uptake of BAT.

The environmental benefits from the implementation of BAT are expected to be the highest under option 3 since no discretion would be left to deviate from BAT. However, under option 3, the lack of flexibility could lead to negative environmental impacts for specific installations where the consideration of local factors could be justified from an environmental point of view due, for instance, to the specific cross-media effects of certain techniques.

Negative effects might also result if having no room to deviate from the BREFs' conclusions meant that the BAT conclusions of the BREFs themselves could only be agreed at a less ambitious level.

Economic impacts

Economic impacts of BAT implementation

The main economic impacts of BAT implementation can be summarized as follows: (1) generally higher compliance costs for operators (2) potentially more efficient production (3) impacts on competitiveness between operators within and outside the EU and (4) impacts on the development of EU eco-industries.

Compliance costs

Compliance costs vary considerably between operators according to the sectors considered and the specific improvements required to implement BAT compared to the situation prior to IPPC implementation[49]. The uptake of BAT by operators results in compliance costs which can be, in certain cases, important[50].

The way BAT is defined in the Directive and determined through the BREF process provides that conclusions on what is considered BAT are economically viable for the industrial sector concerned with a balance between the likely costs and the benefits . These issues are addressed in the determination of BAT in the BREFs. Guidelines have been developed in a specific BREF on economics and cross-media effects to further support the determination of BAT in the sectoral BREFs from a methodological point of view.

Impacts on production efficiency

Some economic benefits can also be achieved from BAT implementation[51], for instance through waste prevention, more effective use of resources such as water or raw material, increased energy efficiency or labour productivity. These benefits are also often reported in the sectoral BREFs.

Impacts on competitiveness

In view of the large number and types of sectors covered by the IPPC Directive, the impacts of BAT on competitiveness have been assessed in particular through a literature review and two main studies[52] which focussed upon some of the most exposed sectors to competitive pressures both within and outside the EU.

In the analysis carried out (see below in the box and in Annex 6), no significant negative impacts on competitiveness and trade with third countries due to the uptake of BAT were found in the large majority of the sub-sectors analysed. In all cases, no long term impacts on growth were identified. Similar levels of stringency and regulatory quality across the EU have been found to provide a more level playing field between operators.

Two specific studies have been carried out to assess the impacts on competitiveness of the application of BAT. A first study[53] considered 3 sectors (pulp and paper, non-ferrous metals and cement) and found hardly any negative impacts on competitiveness (including on SMEs). This study carried out in 2001 was based on the assumption that BAT, as set out in the BREFs, would be implemented. The study however pointed out that possible impacts would depend on the type and pace of IPPC implementation, stressing the importance of the timing of BAT investments.

A follow-up study[54] was carried out in 2006 and analysed 2 sectors (domestic glass and electric steel making) based on sectoral surveys and questionnaires/interviews of operators and authorities. No significant impact of IPPC implementation on competitiveness was identified in the large majority of the sub-sectors analysed[55]. Some short-term impacts were identified for certain sub-sectors which face a high degree of price competition from non-EU competitors and important jumps in the stringency of regulation (where pre-IPPC regimes were very lenient). However, no long term impacts on growth were identified. The costs of BAT implementation were found to be only one small factor compared to other issues such as labour costs, raw material or energy costs. The study also reported information showing that competitive distortions can result from different levels of stringencies and regulatory quality.

According to literature [56], environmental costs have a marginal impact on the delocalisation of industrial activities and the related loss of jobs[57]. Absolute environmental costs[58] increased by 3% between 1995 and 2002 while manufacturing production grew by 25%. The costs of environmental protection therefore decreased from 2,1% to 1,8% of gross value added between 1995 and 2002. For industrial sectors for which the implementation of the IPPC Directive leads to a high share of the total environmental costs, the total environmental costs represent 1% of the gross value added in 2005 for the textile and leather sector, 1,5% for the pulp, paper and printing sectors and 3% for the chemicals and plastics production sectors.

Impacts on the development of EU eco-industries

A higher uptake of BAT would have positive impacts on the development and employment of EU eco-industry, already a larger employer than the car industry[59]. It is likely to have particular effects on innovation, by providing an EU market for advanced emission reduction technologies, stimulating R&D by reducing the risks of returns on investments and increasing likely rewards in that industry sector. A strong domestic market for eco-industry would open up opportunities for EU firms' to be successful in an ever growing export market for eco-technology and services.

Evidence suggests that substantial competitive benefits in this sector accrue to the first movers who supply resource-efficient technologies to meet standards in one market that are subsequently adopted by other countries[60]. There is evidence that as countries develop they increasingly tackle environmental problems[61]. For instance, the market for pollution control technologies is growing fast in China, offering opportunities for technologies that have been developed in Europe[62] and contributing to the reduction of emissions in third countries. Due to increasing environmental pressures from expanding global production and adoption of higher standards as income increase, the global market for eco-technology has been predicted to exceed €500bn by 2010[63] and €2000bn by 2020[64].

Success in this global market would provide and secure large numbers of jobs, the extent of which is indicated by the following illustration which highlights the market of environmental technologies for the control of air pollution (which concern largely the implementation of the IPPC Directive and related legislation).

Illustration [65]: With about € 16 billion of turnover in 2004, the air pollution control sector represents around 10% of the total European eco-industry (which has € 227 billion turnover, around 2.2% of total EU GDP) and 180,000 jobs. The growth in the wider pollution management sector has led to a substantial increase of jobs (from 1,45 to 1,85 million between 1999 and 2004). The air pollution control sector is the largest export sector of the EU eco-industry with € 2.9 billion annual sales. Four countries (DE, UK, BE and FR) represent 75% of the total exports. The most development opportunities are in Asia (especially in China). The main drivers for the development of the environmental technologies in this sector have been legal requirements.

Furthermore, according to the information collected under ETAP[66], the promotion of process-integrated rather than end-of-pipe technologies (as underlined in the principles of the IPPC Directive, the BAT concept and the BREFs’ conclusions) should lead to productivity improvements[67]. This effect would increase in line with the innovative capacity of the eco-industries.

Economic impacts of the options considered

The impacts on compliance costs of options 1 to 3 depend on their effects on BAT uptake. As presented above, option 1 is expected to have limited impacts compared to options 2 and 3. The compliance costs are expected to be the highest for option 3, and higher for option 2 than for option 1.

Under the business as usual option, not using the full potential of BAT would hamper the stimulation and uptake of environmental and innovative technologies reducing the potential for economic growth and employment in the eco-industry sector.

The functioning of the internal market would not be improved, leading to distortions of competition within a sector across the EU due to important differences in permit conditions.

Options 2 and 3 would have more positive impacts on the level playing field between installations across the EU. As underlined above, no significant impacts on competitiveness are expected from BAT implementation, in particular if the time needed to introduce BAT is taken into account for determining specific permit conditions.

Not allowing the possibility to deviate from the BAT conclusions of the BREFs (option 3) could in rare cases lead some specific installations to have to meet disproportionately high costs to implement certain BAT where an assessment could show that these costs are higher than the environmental benefits to be achieved. This could be the case where, for example, an installation is already operating close to BAT-based levels of performance but using a different technique, and would have to make a very large investment to implement BAT for a very small benefit.

The positive economic impacts of BAT implementation on production efficiency and the EU eco-industry would apply to a larger extent for options 2 and 3.

No additional significant administrative costs for operators (in particular related to permit application, monitoring of emissions and reporting to the competent authorities) are expected from the options considered since no major new information obligations on operators would be added compared to the business as usual.

A clarification of the role of the BREFs (all 3 options) would reduce the administrative burden on Member States since this will reduce the risk of misinterpretation and the need to provide guidelines at the level of each Member State.

As regards the possible requirement to document the use of local considerations in permitting (option 2), the impact on administrative costs for competent authorities would be minor. A requirement already exists in the IPPC Directive for competent authorities to make available to the public "the reasons and considerations" [68] on which the decision to set permit conditions is based.

Option 2 would simply make it explicit that this should include specific information on how the BREFs and the local factors have been considered. The additional administrative costs for competent authorities would be less than € 0.5 million per year for the EU as a whole.

Options 2 and 3 would also provide a good use of the important administrative resources spent on the development of the BREFs. The total administrative costs (for the Commission, Member States and other stakeholders) for developing the BREFs are estimated between € 150 and 300 million[69] during the period 1997 to 2007.

Social impacts

Social impacts of BAT implementation

A higher deployment of BAT and the associated environmental benefits would have benefits for human health as a result of reduced exposure to industrial emissions in particular to air, water and soil. As illustrated for certain sectors (see under the environmental impacts section), the monetised heath benefits of these reductions are expected to be much higher (up to a factor of 10 - 20) than the compliance costs.

Furthermore, evidence exists about the distributional effects of the reduction of pollution, which tends to disproportionately affect the less affluent. The reduction of industrial emissions has therefore positive impacts on the less affluent groups of the population contributing to a higher social cohesion.

In addition, a higher uptake of BAT would have positive impacts on health and safety at work since the prevention of accidents is one of the key issues taken into account in the determination of BAT.

In general, environmental regulation is either neutral or slightly positive for employment for the economy as a whole. For industrial sectors covered by BAT-based permitting, employment effects are also very likely to be negligible or slightly positive: – as described above, there appear to be no significant negative external competitiveness effects, partly because the costs of applying BAT are usually a small percentage of gross value added. BAT, as described in the BREFs, has already been assessed to be economically viable for the sector – therefore, for sectors as a whole, there would be no employment effects.

Where certain installations have not yet implemented BAT, they will need to incur the costs which other firms in their sector have already incurred. Where these are also the least efficient installations there may be negative impacts on employment as production shifts to more efficient installations in the sector. Employment effects between installations are likely to balance out. Regions which have already implemented BAT may gain at the expense of those which have delayed.

The analysis of the distributional effects is more specifically carried out for some specific sectors (see for instance in section 4.2 and section 7) and information on the regional repartition of installations in the EU can be found in Annex 4.

Social impacts of the options considered

As indicated above, the main social impacts of the options considered are linked to their effects on BAT implementation as presented above and will not be repeated here.

The additional positive social impacts of options 2 and 3 are to bring more transparency in the permitting of installations and increase the confidence of the public in the permitting regime.

Comparison of options

The comparison of the options is mainly linked to the extent to which they would lead to a higher level of BAT implementation.

Previous analysis under the Air Thematic Strategy and additional recent assessment of sector and company based data has shown that the environmental impacts as well as the reduction of health impacts linked to a higher uptake of BAT are positive and outweigh any economic impacts. For instance, the RAINS modelling has shown that measures to implement BAT in IPPC installations are not only needed to achieve set objectives under the Air Thematic Strategy but are cost-effective as part of a package of measures that include both mobile and stationary sources.

Positive impacts on the development of EU eco-industry are also expected. No significant impacts on competitiveness, social impacts or detrimental long-term effects on economic growth have been identified from a higher uptake of BAT as set in the BREFs with the possibility of some flexibility in well-founded and documented cases (option 2). Instead the analysis shows that a more unified application of BAT would help reducing distortion of competition in industry sectors covered by the IPPC Directive. However, fully binding BREFs (option 3) with no flexibility could lead to negative environmental impacts for specific installations or in rare cases to compliance costs higher than the environmental benefits to be achieved.

The policy option to be chosen both in terms of environmental and cost considerations is therefore to firm up the concept of BAT without making the BREFs entirely binding. Option 2 is therefore recommended.

Use of sectoral Emission Limit Values (ELVs) versus BAT

Drivers of the problem

As described earlier, although it is clear from the legislation that the provisions of the sectoral Directives have to be applied without prejudice to the IPPC Directive, there is evidence that in many cases the sectoral ELVs are applied as the default 'rule' instead of BAT as set out in the IPPC Directive. This practice is not in line with the legal requirements and fails to harness the benefits of implementing BAT (it lags behind the ambition level of BAT). There are 3 main causes to this problem.

Firstly, the interaction between the IPPC and the sectoral Directive is not well understood by many competent authorities and operators. This issue is more specifically addressed in section 6.1 relating to inconsistencies between legislation.

Secondly, the existing minimum ELVs of the sectoral Directives were set at a time when BAT for the sectors involved had not been determined at EU level and the BREF process had not been completed. As a result, a number of these minimum requirements (in particular for the LCPs and the TiO2 sector) are far from BAT.

Finally, minimum requirements can currently only be revised or set through the EU co-decision process. This is necessarily a lengthy process, especially given the technical details involved and does not encourage adjustments to technological progress towards BAT on a regular basis. For example, standards for LCPs were first set in 1988 and not updated until 2001.

Similarly, ELVs for municipal waste incineration plants were adopted in 1989 and updated in 2000. The requirements for the authorisation of TiO2 installations were established in 1978 which were complemented by emission limit values in 1992. These were never updated.

As a result, application of the current minimum requirements by competent authorities can hold back the progress in the deployment of BAT.

Description of options

Options considered on the use of sectoral ELVs versus BAT [options 2 and 3 can be combined and are mutually exclusive with option 1]

Business As Usual |

Remove ELVs from sectoral Directives for IPPC installations (option 1) |

Strengthen existing minimum sectoral ELVs to align them with BAT in those sectors (LCPs, certain cement kilns co-incinerating waste, titanium dioxide) where the uptake of BAT is particularly low (option 2) |

Establish a mechanism through Comitology procedure to adapt to scientific and technical progress non-essential technical requirements (option 3) |

Under option 1, the installations concerned would only be subject to the requirements of the IPPC Directive and the sectoral ELVs would be repealed. fsfs

Under option 2, the current minimum sectoral requirements would be strengthened based on the BAT conclusions of the BREFs for the sectors where sectoral ELVs are far from BAT and the uptake of BAT is low. An analysis[70] was carried out for the 4 sectoral Directives (WI, LCP, TiO2 and SE) concerned. Compared to the LCP and TiO2 sectors, most of the current minimum requirements set in the WI and SE Directives are relatively close to BAT as determined in the BREFs.

The strengthening of the overall provisions of these Directives has therefore not been considered further in this impact assessment. However, in the context of the review of the WI Directive (for the purpose of implementing Article 14 of this Directive), an assessment[71] was carried out on the alignment of NOx ELVs for co-incineration of waste in existing and new cement kilns, taking into account the BAT conclusions from the BREF on Cement and Lime production.

In the LCP installations, the uptake of BAT is generally low and for both the LCPs and the TiO2 sector the emission limit values (ELVs) of the sectoral Directives are far from the emissions levels associated with BAT. These two activities are therefore subject to further analysis under this option. In addition, LCPs are very large emitters of key air pollutants requiring drastic emission reduction to achieve the objectives of the Air Thematic Strategy.

Under option 3, a mechanism for technical adaptation through a Regulatory Comitology procedure with the scrutiny of the European Parliament would be set up to adapt non-essential technical minimum requirements (in particular emissions monitoring and assessment of compliance with sectoral minimum emission limit values). Such adaptation would be based on the analysis of environmental, economic and social impacts. The process would also include an appropriate involvement of stakeholders.

Analysis of impacts

Business as usual

The problem of incorrect implementation of the IPPC Directive in correlation with the sectoral Directives would continue under the business as usual option. Keeping EU-wide sectoral ELVs which are far from the BAT ranges may be interpreted as a signal to apply them as the default ELVs and thus will not create an incentive for competent authorities to base permit conditions on BAT.

Option 1: Remove ELVs from sectoral Directives for IPPC installations

Results of option 1

This option has been considered to assess whether the removal of sectoral ELVs would indeed result in a higher uptake of BAT at the installations concerned (in particular LCPs). There is sufficient evidence to suggest that this is unlikely[72] since shortcomings in BAT implementation are also frequent in sectors which are not covered by sectoral minimum requirements. Other drivers have proven to have a much stronger impact on the (lack of) deployment of BAT (see section 4.1 on the role of the BREFs as well as section 6.1 on a possible combined Directive).

Therefore, the main direct result of repealing the requirements of the sectoral Directives will not be to improve the performance of the installations in these sectors towards BAT but rather to remove the "safety net" (minimum requirements) that these ELVs play in limiting the currently practiced flexibility.

As underlined previously (see section 4.1), the analysis of the actual implementation practices has revealed that the flexibility allowed for in the IPPC Directive can be misused and lead to the setting of permit conditions which are far from BAT.

Even though the revised Directive would limit such flexibility and strengthen the role of the BREFs in the permitting process as described in section 4.1, and even when taking into account the potential benefits of strengthening the inspection and permit review provisions (see chapter 5), this would not sufficiently ensure that BAT levels would be achieved quickly.

This would be especially problematic for the large combustion plants, as in these installations the current performance is far away from BAT levels and they are important for achieving the objectives of the Air Thematic Strategy. In addition, the removal of the current "safety net" would leave open the risk of having higher levels of emissions for certain installations compared to the business as usual scenario, for instance when permits are reviewed or updated due to substantial changes in operation.

Environmental impacts of option 1

The environmental impacts of removing the sectoral ELVs are likely to be negative compared to business as usual due to the removal of the "safety net" by allowing higher emission levels. The installations covered by the sectoral ELVs, in particular the LCPs, contribute over 90% to the overall industrial emissions of the key air pollutants SO2 and NOx. (see Annex 4 on industrial emissions data and Annex 5 related to the scenarios run under the RAINS model). Higher emissions would result in large environmental and health impacts and would bring the levels of the emissions further away from the current and future NEC objectives.

Economic impacts of option 1

Option 1 could lead to some cost savings for operators which would not be required to install or maintain certain abatement techniques. There will be no reduction of administrative costs under this option since the installations concerned would remain under the scope of the IPPC Directive and therefore be subject to the same permitting regime. By removing the current "safety net", the differences in permit conditions would become even wider and lead to a less level playing field than under the “business as usual” option.

Social impacts of option 1

The public could be affected by increased health impacts due to less stringent operating conditions in certain installations. Removing the current EU-wide minimum requirements would reduce the degree of confidence of the public on the setting of conditions for large emitters of pollutants of high concern, for instance dioxins, SO2, NOx and dust. No specific impact on employment is expected from this option.

Option 2: Align particular existing minimum sectoral ELVs with BAT

Align minimum requirements of the LCP Directive with BAT

Description of option 2 (LCPs)

The IPPC Directive covers combustion installations with a rated thermal input exceeding 50 MW. The LCP Directive sets limitations to the emissions to air of SO2, NOx and dust of combustion plants, the rated thermal input of which is equal to or greater than 50 MW. All of the large combustion plants covered by the LCP Directive are also covered by the IPPC Directive.

In many cases the emission limit values set in the LCP Directive are much higher than the range of emission levels associated with the application of BAT as defined in the LCP BREF, as is illustrated in Annex 7 (for existing plants). This means that installations having such permit conditions are allowed to have much higher emissions than could be achieved with the application of BAT.

The LCP BREF lists techniques which can be applied to reach emission levels associated with BAT (without prescribing any of them specifically). These techniques are well established and widely available on the market.

Under this option, the minimum emission limit values for SO2, NOx and dust for large combustion plants would be brought in line with BAT (upper end of the emission level ranges) as currently defined in the LCP BREF. In accordance with the conclusions of the BREF, a distinction would be made between existing plants (being those having a permit or having applied for a permit at the time the new ELVs come into force) and new plants to reflect the technological evolution.

The new ELVs would apply from 2016 on, in order to allow a certain alignment of the installation of new abatement measures with the companies' investment cycles, while ensuring that the resulting environmental benefits are not delayed. This date coincides with the entering into force of the new emission limit value for NOx for solid fuel fired combustion plants above 500 MW from the LCP Directive. By that time a new BREF will have been published for the LCPs, reflecting further developments of BAT.

In order to assess the environmental as well as the economic impacts of aligning the future LCP ELVs with BAT, several studies have been performed[73].

Environmental impacts of option 2 (LCPs)

This option will achieve very large environmental benefits. This is due to the very significant contribution of LCPs to the overall emissions of especially SO2, NOx and particulate matter (about 90% of total industrial emissions), which also means that a large extent of emission reductions is needed to meet the objectives set in the Thematic Strategy on Air Pollution. This complete uptake of BAT and the consequent emission reduction could not be ensured when relying solely on the BAT-based permit approach as that still includes some flexibility for competent authorities to take local factors into consideration.

One study[74] looked at the theoretical emission reduction potential of applying BAT in large combustion plants as compared to the current situation. The results clearly indicate that the 2004 EPER emissions of SO2 and NOx[75] of the installations assessed in the study (covering 450 facilities) were 2 to 5 times higher than the calculated BAT associated emissions for all fuel types.

This highlights that the uptake of BAT in these LCPs was at that time still very incomplete. It also shows the very significant potential for emission reduction by applying BAT in this sector. Compared to 2004, the emissions of SO2 and NOx would be reduced between 60% and 87% and between 80% and 97%, respectively, if all assessed plants would perform within the BAT ranges. By far the largest reductions would be achieved at coal- and lignite-fired plants.

Another study[76] looked forward towards 2020 to assess how the full implementation of BAT for LCPs compares to the implementation of current legislation as projected by Member States and how BAT implementation may contribute to the objectives set within the Thematic Strategy on Air Pollution.

Analysis using the RAINS model has shown that scenarios based on the implementation of BAT as described in the LCP BREF would lead to a significant additional reduction of the emissions of SO2, NOx and dust in 2020 compared to the ongoing implementation of legislation (as projected by Member States under the so-called National Projections Baseline)[77]. For the large combustion plants, this reduction would be 19 - 35% for SO2, 14 - 30 % for NOx and 24 - 32 % for dust.

This confirms that Member States do not assume a full implementation of BAT as described in the BREF under the current legislation framework. However, the emission reductions achieved by full implementation of BAT would be the main element to help closing the gap between the 2020 baseline and the targets corresponding to the TSAP objectives. As can be seen in Annex 7, the gap related to the LCPs would be reduced by 39-74% for SO2 and by 27–61% for NOx (upper and lower range of BAT, respectively).

A more detailed description of the National Projections baseline and the outcome of this study are included in Annex 7.

In addition, the monetized health impacts in 2020 resulting from these emission reductions were assessed[78]. This showed that implementing the BAT scenarios would bring significant additional benefits, compared to the baseline under the National Projections scenario. In 2020, these benefits may be around 9 - 30 bn euros/year when emissions are at the upper end of the BAT range and even 20 - 65 bn euros/year when the emissions would reach the lower end of the BAT range[79]. The benefits of reduced impacts on ecosystems could not be quantified. The details of this analysis are summarized in Annex 7.

The environmental benefits of achieving the BAT associated emission range as compared to applying the ELVs from the LCP Directive were also estimated for a selection of individual combustion installations[80]. In addition, the emission limit values included in the IPPC permits issued (if any) for these combustion plants were assessed.

The results of this assessment, based on some 43 case studies from different sectors (power plants, combined heat and power, petroleum refineries, iron and steel) confirm the significance of the overall environmental benefits from achieving the BAT emission levels. These benefits are much higher (1,3 times for NOx, about 2 times for SO2 and 3,5 times for dust when taking the upper end of the BAT range (less strict)) than the benefits from reaching the sectoral ELVs of the LCP Directive. It was also confirmed that IPPC permits for installations in this sector are more often based on the LCP Directive's emission limit values than on BAT as defined in the LCP BREF, with 90% of the case study plants having permitted emission limit values that allow emissions above the BREF's upper end of the BAT range.

Although the analysis has focused mainly on the pollutants which are regulated in the LCP Directive (SO2, NOx, dust), it should be stressed that additional environmental benefits will result from this option, such as a reduction of the emissions of heavy metals (especially mercury) and of organic pollutants (PAH, dioxins...). It has not been possible to quantify these additional benefits.

Economic impacts of option 2 (LCPs)

The RAINS analysis mentioned before[81] showed that the compliance costs of the BAT scenarios would lead to additional costs compared to the National Projections baseline of around 0.8 - 2.6 bn euros for SO2, 1.3 - 3.7 bn euros for NOx and 0.01 - 0.2 bn euros for dust (upper – lower end of the BAT range).

As an important part of all large combustion plants, and in particular the largest ones, belongs to the power generation sector, it is relevant to assess the potential impact of this option on the electricity price. As illustrated in Annex 7, the average increase of electricity prices as compared to the National Projections baseline due to applying BAT in the power sector would not be significant (about 0,6 – 2,6 % in 2020).

In practice, an important element determining the compliance costs is the way companies are able to fit the necessary environmental investments into their investment cycles. This is particularly important for the LCPs as these are large scale installations, for which the required abatement equipment will have a high capital cost. In such cases, unforeseen short term investments may be difficult to cope with.

To allow such an alignment, a transition period for implementing the new emission limit values until 2016 would be applied. By then further developments of the BAT may be expected, decreasing the costs and allowing to reduce the emissions down to or even beyond the lower range of the BAT as currently defined in the BREF.

Finally, this option will lead to a much more level playing field for the sectors concerned (mainly electricity generation, petroleum refineries, and iron and steel) by narrowing the range over which emission limit values can be set. In the context of the liberalisation of the energy market, this option would also avoid unacceptable distortion of competition linked to very different levels of environmental standards currently applied in the electricity generation sector.

Social impacts of option 2 (LCPs)

The main social impact of strengthening the emission limit values would be the beneficial health impacts as discussed under the environmental impacts section. With the most deprived sectors of society suffering disproportionately from the economic and environmental impacts of air pollution, this measure would have a particularly strong benefit for the poorest members of society.

Ensuring the uptake of BAT in installations with such a significant share of the overall and industrial emissions of SO2, NOx and dust, will certainly increase the confidence of the public in the regulation of industrial emissions.

No negative impacts on the employment for the sectors concerned have been identified. Furthermore, the emission reductions would trigger growth of the eco-industry by creating a need for new and more cost-effective abatement measures that allows future success in international markets, creating lead markets and sustained employment growth.

Aligning the NOx minimum emission limit values for co-incineration of waste in existing cement kilns with those for new kilns and with BAT

Description of option 2 (NO x in cement kilns)

The current minimum requirements set in the WI Directive are in general relatively close to BAT. However, in the case of cement kilns co-incinerating waste, the limit values set out in the Directive are different for "new" (500 mg/Nm3) and "existing" plants (800 mg/Nm3)[82]. The BREF for the Cement and Lime sector published in 2000 considers BAT associated NOx emission levels for cement kilns to be in the range of 200-500 mg/Nm3.

The review clause of the WI Directive (Article 14) requires an assessment of the economic and technical feasibility for existing cement kilns co-incinerating waste of respecting the NOx emission limit value for new cement kilns and a proposal, as appropriate, for revision of the related provisions of the Directive.

Under this option the NOx limit value for existing cement kilns co-incinerating waste would therefore be updated to 500 mg/Nm³ to bring it in line with the current BREF and in accordance with the provisions of the review clause of the WI Directive.

Data[83] has been gathered and assessed as to the technical feasibility and the environmental, economic and social impacts of introducing a stricter limit value. It has been found that it is technically feasible for existing plants to respect a limit value of 500 mg/Nm3, as proven for example by a number of plants in Sweden and Germany operating successfully for several years with emission levels below 500 mg/Nm3 by applying SNCR.

Environmental impacts of option 2 (NO x in cement kilns)

The measure could bring significant environmental benefits. Assuming application of the stricter limit value from 2010 onwards, it is estimated that NOx emissions from these sources could be reduced annually by about 75,000 to 100,000 tonnes per year in addition to business as usual. Such a reduction would have positive effects on air quality, water and soil quality and health. The health and environmental benefits from such a reduction have been estimated at about 200 to 400 million euros per year in addition to business as usual.

Economic impacts of option 2 (NO x in cement kilns)

The economic impacts of this option have been assessed assuming application of the stricter limit value for existing cement kilns co-incinerating waste after 2010. The additional annual costs compared to business as usual would then about € 30 to 45 million per year, taking into account investments and operational costs.

Social impacts of option 2 (NOx in cement kilns)

The main social impact would be the health benefits of reducing emissions, which have been calculated together with the environmental benefits (see above). The measure could also increase public confidence in the co-incineration of waste, due to the stricter limit value.

The labour market effects are expected to be low, but could occur in small installations due to relatively high impact of investments and increased operation costs.

Align the minimum requirements of the TiO2 Directive with BAT

Description of option 2 (TiO 2 sector)

Presently there are 18 TiO2 producing installations in the EU. The environmental damage from this sector, related to dust and SO2 emissions only, is estimated to range between €54 and 157 million a year[84].

The TiO2 producing installations use either the sulphate process, the chloride process or both for their production. Directive 92/112/EEC[85] sets out limit values for emissions into air and water for these installations, which apply without prejudice to the requirements of the IPPC Directive. The BREF on Large Volume Inorganic Chemicals – Solids and other Industry includes BAT conclusions for this sector, as well as emission levels associated with BAT.

As the sectoral Directive dates from 1992, the limit values set out by it are often far from BAT as specified in the BREF (see Table 13 in Annex 10). As a consequence, this option looks at updating the current sectoral emission limit values in order for them to act as an effective "safety net" and to bring them in line with the current BAT.

In order to evaluate the impact of this option, data have been gathered and assessed concerning the current permit conditions, emission levels and abatement measures within the sector. Data was collected mainly through questionnaires to Member States and industry and through a specific study[86] (see quantitative data presented hereafter).

From the data available, it appears that with regard to SO2 emissions to air and sulphate emissions into water, a number of titanium dioxide producing installations do not perform within the BAT ranges. Current dust emissions in several installations are not in line with BAT levels. The level of chloride emissions from installations, where data is available, is in line with BAT levels.[87]

Environmental impacts of option 2 (TiO 2 sector)

Setting the sectoral emission limit values at the upper end (less stringent) of the BAT ranges would have beneficial environmental impacts in case of installations which do not perform according to BAT. The following annual emission reductions have been estimated[88]: 2.304 tonnes for SO2, 64 tonnes for dust and 69.125 tonnes for sulphate.

The corresponding yearly monetized benefits in terms of health impacts have been estimated as follows: € 17,3 to 50 million for SO2 emission reductions and € 2,5 to 7,4 million for dust emission reductions.

Setting the sectoral emission limit values at the more stringent end of the BAT range would lead to more environmental benefits since the majority of the installations do not currently perform according to these levels. The following yearly emission reductions have been estimated: 2.747 tonnes for SO2, 286 tonnes for dust and 252.176 tonnes for sulphate.

The corresponding yearly monetized benefits in terms of health impacts have been estimated as follows for the air pollutants: € 20,6 to 59,6 million for SO2 emission reductions and € 10,6 to 31,1 million for dust reduction.

Economic impacts of option 2 (TiO 2 sector)

The economic impacts of setting the ELVs at the upper end of the BAT ranges will mostly relate to the measures needed to reduce SO2 emissions into air and sulphate into water. For sulphate, this would mean an additional cost of about 4,4 million/year for the industry. For SO2 emissions, yearly costs have been estimated at € 9,6 million. As regards dust emission, this reduction would mean an additional €1,8 million/year investment for producers. For chloride emissions, no additional investment would be necessary.

Setting the emission limit values at the lower end of the BAT means higher costs for titanium dioxide producers. Reducing the emissions would result in an estimated yearly cost of at least €12 to13 million in the case of sulphate, €18,7 million for SO2 emissions and € 6,4 million for dust emissions.

No additional administrative costs are foreseen.

Social impacts of option 2 (TiO 2 sector)

The main social impact of strengthening the emission limit values would be the beneficial health impacts from reducing the emissions (see above).

According to the titanium dioxide industry the main impact on employment could relate to the setting dust emissions at the stricter end of the BAT (not the preferred option). Otherwise, no impact on employment is expected.

Option 3: Establish a mechanism for technical adaptation through Comitology procedure to update non-essential technical minimum requirements if necessary

Results of option 3

Currently, only the Waste Incineration Directive includes the possibility to adapt through a Comitology procedure the provisions on the monitoring and control of emissions. Under the other sectoral Directives, such technical requirements can only be amended through the EU co-decision procedure, which is a long process and not necessarily suited to incorporate technological and scientific developments. The current technical requirements were set nearly 10 years ago (or longer for the TiO2 Directives). Since then, the BREFs have established conclusions on what is considered BAT at EU level, including issues on the monitoring of emissions.

The Regulatory Comitology procedure would be more flexible and has recently been used in other legislative processes (see in particular the REACH Regulation and the proposed new Directive on waste where minimum standards could be adopted for certain waste treatment operations). This procedure would include an appropriate involvement of stakeholders.

The same Committee would also be used for setting reporting requirements from Member States to the Commission to assess the progress in the implementation of legislation (see section section 6.3). A closer and more effective interaction would thus be ensured between the reporting on implementation and the possible amendment of requirements on the monitoring and control of emissions in order to improve the quality of the data collected.

Overall, the system of updating non-essential technical requirements through Comitology would be faster and more appropriate to adapt to technological and scientific progress in the respective areas.

Environmental impacts of option 3

The environmental impacts of this option would be positive compared to the business as usual option since the updating of non-essential technical requirements would be carried out in a faster and more coherent way. The analysis of the environmental impacts of the potential specific proposals in the context of the Comitology procedure would depend upon the individual measures proposed.

Economic impacts of option 3

The amendment of the non-essential technical requirements of the legislation could require investments or additional operating costs but the economic impacts will depend on the specific amendments proposed which will be assessed on a case-by-case basis.

Social impacts of option 3

The European Parliament would be kept fully involved through the use of a Committee procedure with scrutiny. A stronger interface between the information on actual implementation and the assessment of the need for updating non-essential technical requirements would improve the transparency of the decision-making process. The social impacts of each potential measure would be assessed on a case-by-case basis.

Comparison of options

As illustrated in the calculation performed in section 4.1 on the implementation of BAT, the monetised (negative) impacts on human health of the increased level of emissions resulting from removing the sectoral ELVs would be much higher than the economic savings for operators. Therefore option 1 is not recommended.

For option 2, the economic costs of achieving BAT for the LCPs are outweighed many times by the environmental benefits (even without including the ecosystem impacts), with an estimated benefit to cost ratio of 4.4 - 13.9 (upper end of the BAT range) and 3.2 - 10.1 (lower end of the BAT range).

Lowering the emissions from LCPs to the BAT levels would strongly contribute to closing the current g