Integrated Pollution Prevention and Control (IPPC) Final Consultation Paper

ANNEX 2: REGULATORY AND ENVIRONMENTAL IMPACT ASSESSMENT

1. Title:

Regulatory and Environmental Impact Assessment for the Pollution Prevention and Control Regulations 1999.

2. Purpose and intended effect

2.i Objective

The objective of the regulations is

(I) to transpose EC Directive 96/61 on Integrated Pollution Prevention and Control (IPPC) into legislation; and

(ii) in doing so, to maintain a coherent regulatory framework for the control of industrial pollution generally.

The draft regulations therefore replace Part I of the Environmental Protection Act 1990 relating to Integrated Pollution Control (IPC) and Local Air Pollution Control (LAPC) to set up a single framework. Under this framework, there will as before be a regime of integrated permitting (IPPC) and one for the permitting of air emissions (LAPC).

2.ii Issues

The implementation issues considered by this Regulatory and Environmental Appraisal are:

- fees and charges for permits;

- the handling of applications by operators to make changes to their installations;

- the frequency of permit reviews;

- the use of standard application forms and standard permit conditions;

- the treatment of the IPPC Directive’s requirement for site remediation;

- the treatment of the Directive’s requirement that energy should be used efficiently; and

- the handling of installations which are presently regulated under IPC, but are not required by the Directive to be regulated under IPPC.

Risk Assessment

Failure to implement the IPPC Directive in a timely and adequate fashion would carry the risk of infringement proceedings from the European Commission, and ultimately fines. Failure to implement in a manner which preserves the coherence of the pollution framework as a whole would carry a risk of confusion to regulated industry, regulators and the public alike, and of additional cost to the two former parties.

Options

The following options have been considered:

(1) retaining a requirement for public consultation in respect of all significant changes to installations, or retaining it only for changes which will lead to negative consequences for the environment or which are otherwise contentious;

(2) retaining the present statutory requirement for permits to be reviewed no less frequently than every four years, or introducing flexibility for permit reviews to take place at longer intervals where appropriate;

(3) continuing to rely entirely on ad hoc permit applications and customised, site by site decision making, or introducing scope for standardised application forms and standard permit conditions;

(4) reliance on financial security against potential future site remediation liabilities, or on the use of site condition reports on application for a permit and on application for its surrender;

(5) retention of the existing IPC regime alongside the modified IPPC regime for those 440 processes which are presently regulated under IPC, but do not fall within the scope of the Directive. Alternatively, regulating these processes under the modified IPPC regime, or deregulating them from integrated pollution control altogether.

Charging options are still under development, and the Government is not in a position to present detailed information at this time. However, the Government expects that charges for permits issued under the proposed IPPC regime will be broadly similar in amount to those presently imposed for IPC permits, albeit somewhat higher. Some of the options considered in this appraisal have implications for the scale of charges. Where this is the case, this is stated.

Issues of Equity and Fairness

An issue arises with the treatment of those installations currently regulated under IPC, but to which the Directive does not apply. The Government considers that the pollution potential of these installations does not differ from that of installations to which IPPC must be applied, and it is therefore fair and equitable to regulate them in the same way as those installations.

Benefits

Benefits and indications of compliance costs are set out in a table at the end of this appraisal. Principal benefits arising from the Government’s proposals are:

(1) decision times reduced from 4 months to 3 in the case of uncontentious significant changes which it is accepted will lead to an environmental improvement. This is of unquantifiable benefit to industry where there is a need to bring new products to market quickly;

(2) scope for less frequent permit reviews for industry, with savings in industrial and regulator manpower costs, and also greater stability in operating conditions for industry. It avoids the expense of carrying out reviews when there have been no developments in technology and no conditions to update. At the margin, less frequent reviews will provide scope for subsistence charges for permits to be lower;

(3) scope for a reduction in manpower costs to industry and in decision times from the use of standard application forms, which should minimise the extent to which further information has to be sought before decisions can be made. This should, in turn, reduce delays. Scope for savings in regulator manpower from the use of standard permit conditions, with consequent scope for permit charges to be lower;

(4) There is an additional burden on operators imposed by the Directive’s requirement to ensure sites are left in a satisfactory state, but the proposed system of site reports means there is no need for industry to make financial provision against the general site remediation obligation imposed by the IPPC Directive;

(5) minimisation of confusion costs, and actual costs, which would result from the retention of IPC alongside IPPC for a small number of processes;

(6) savings in carbon dioxide emissions arising from the introduction of energy efficiency measures. These have been estimated at 0.5 - 3 million tonnes of carbon per year by 2010.

Compliance Costs

I sectors affected

The industries affected by the draft regulations are in the following sectors:

- fuel production and combustion;

- metal production and processing;

- mineral industries;

- the chemical industry;

- waste management installations (predominantly landfill and incineration)

- pulp and paper manufacturing;

- plants for the pre-treatment of dyeing of textiles;

- plants for the tanning of hides or skins;

- slaughterhouses;

- food and drink processing plants;

- plants for the disposal or recycling of animal carcases;

- intensive pig and poultry installations;

- installations for the surface treatment of substances;

- installations for the production of carbon or graphite.

In many cases, a threshold or thresholds apply. For instance, only large combustion plant with a rated capacity of 50 Megawatts thermal is to be subject to IPPC. Plant of this type between 20 and 50 Megawatts will, as at present, be subject to local air pollution control. Plant below this threshold will remain unregulated. For the purposes of this appraisal, the relevant threshold should be taken to be that in Annex I of the IPPC Directive, or that (or those) in the Environmental Protection (Prescribed Processes and Substances) Regulations (SI1991/472 as amended)) as appropriate.

It is estimated that a total of 5,600 installations are covered by the IPPC Directive, and a further 440 by IPC. 11,500 further installations are covered by Local Air Pollution Control and, under the draft regulations, will remain subject to that regime. These installations will benefit from the changes outlined above (eg quicker decision times) but are not expected to incur any significant compliance costs. In particular, upgrading requirements are not expected to change as a result of the change in terminology from "BATNEEC" to "best available techniques".

ii compliance costs

Compliance costs will arise in the following areas:

- costs associated with applying for a permit;

- charges payable on application for a permit and for its subsistence or surrender;

- costs of complying with the conditions of a permit.

Manpower and other internal company resources are required to put together an application for a permit. An unpublished study of IPC authorisations carried out for DETR in 1995 found that, on average, IPC applications had taken 22 person weeks of effort. Because industries will be able to make extensive use of existing permit information, IPPC applications should be considerably less burdensome than the initial IPC applications, although probably more burdensome than the work involved in reviewing and updating permits under IPC as a wide range of factors (eg noise and energy efficiency) will now have to be considered. Consideration of noise and energy efficiency should add no more than one person-week to the preparation time of even the most complex application. Many of the non-IPC installations which fall to be regulated under IPPC are relatively simple ones. Costs of preparing an application will be reduced the greater the reliance which it is possible to place upon standard application forms and standard permit conditions.

The proposed requirement to report on site conditions will add to the cost of preparing a permit application. Costs should range from £1 - 200 for a simple desk study, to several tens of thousands of pounds where a detailed site investigation is required. This is expenditure brought forward, as similar investigations would have been required at some point under the new Contaminated Land regime.

Permit charges are likely to be in a similar range to those made for LAPC, IPC and Waste Management Licensing, which currently range (for applications) from £120 for small waste oil burners to £80,000 for a large power station. There may be upward pressure as a result of the additional IPPC considerations of noise and energy efficiency along with the potential for cost savings from features such as standard application forms and less frequent permit reviews.

Costs of compliance with permit conditions are both potentially the most significant and also the hardest to estimate. At the extremes, measures to reduce emissions can lead to savings in cost - especially where waste reduction is concerned - or can cost hundreds of millions of pounds.

The energy efficiency measures required to generate carbon savings of 3 million tonnes/year by 2010 have estimated investment costs of £2 billion, but would yield annual cost savings of £650m.

Bringing the 440 installations currently regulated under IPC, but to which the Directive does not apply, into the IPPC regime will impose costs for site reports and energy efficiency measures on these plants. Site reports would have been required anyway at some stage, so the cost relates to the bringing forward of the expenditure under the contaminated land regime. With energy efficiency, investment costs should also generate a financial payback. Measures to reduce noise should be similar to those which would have been required anyway under existing statutory nuisance provisions.

Consultation with Small Business - the "litmus test"

The small businesses chosen to discuss the proposals with were; a cadmium plater currently regulated under IPC, a foundry currently regulated under LAPC but which is caught by the Directive, two pig farmers which will be new to the regulatory regime and a tanning and leather finishing business, which will remain regulated under LAPC.

In general, the better regulation issues identified in the RIA were welcomed by the consultees as a positive step which would benefit business, particularly for example by allowing permit review periods to coincide with investment cycles. The implementation issues such as waste minimisation and energy efficiency were accepted as making good business sense and as long as the requirements were applied with a common sense approach in some instances, cost savings could be achieved within a relatively short payback period. The major area of concern was the obligation for site restoration and the potential for high costs associated with remediation. It was however accepted by the sites currently regulated under IPC and LAPC that the preparation of these reports was useful when purchasing and selling sites and one of the consultees was already carrying out a site condition report.

Results of Consultation

Three consultations have been carried out so far on the Government’s proposals. Consultees generally expressed themselves in favour of the options chosen by the Government as described in this appraisal. However, a significant number of regulators felt that public consultation should have been retained in respect of significant changes which improve the environment.

Summary and Recommendation

Summary Table of Costs, Benefits and Effects on Charges

Following consideration of the costs and benefits, and support from consultees in favour of the above options, it is recommended that these proposals are taken forward for implementation.

Enforcement, Sanctions, Monitoring and Review

The draft regulations will be enforced by the Environment Agency, in respect of most IPPC installations in England and Wales, and by local authorities, in respect of approximately 1500 of the 6000 installations. Local authorities in England and Wales will continue to enforce local air pollution control for some 11,500 installations. SEPA will be the enforcing authority in respect of all installations in Scotland. The present penalties of a fine or a period of imprisonment will be retained.

The regulations will be monitored on an ongoing basis and reviewed after five years.