By Paul Davies, Michael Green and Kristof Ferenczi
The Industrial Emissions Directive (IED) is the main EU instrument that regulates emissions from industrial installations (including power stations) and came into force on 6 January 2011.
Its objective is to achieve a high level of protection for the environment and human health by reducing harmful industrial emissions. It creates an obligation for all plants to operate using Best Available Techniques (BAT) and to be issued with a permit setting emission limits in line with BAT. Regular sector-based discussions then take place to update BAT to reflect new technology.
As such, by the end of April 2017, the reference document on Best Available Techniques for large combustion plants (BREF) will be subject to approval by a special commission set up by member states under the provisions of Article 75 of the Directive on Integrated Pollution Prevention and Control (IPPC Directive).
BREF sets out the environmental performance standards for large industrial plants (including coal and lignite plants), aiming to offer an integrated approach which will result in an “improved environmental performance across the European Union”. This updated BREF will be legally binding under the IED and these new standards are expected to be in force in 2020, by which time plant operators must be compliant.
Countries that are heavily reliant on coal for their power (such as Germany, Poland, the UK, Bulgaria, Greece and the Czech Republic) are campaigning to weaken the draft environmental performance standards of the BREF.
By way of example, Bulgaria has offered various reasons as to why it cannot adhere to the more stringent requirements. According to initial estimates of the coal power plants, they will require over 1 billion BGN of investments in order to meet these new standards.
The Maritza East Complex was used as a key example – this plant provides 40% of the electricity in Bulgaria. Any restrictions were said to potentially impact the plant viability and therefore affect the 10,000 employees based there as well as the 110,00 people employed in associated industries. Other wider risks were also flagged: the effect on the security of energy supplies, potentially losing economy competitiveness, deindustrialisation and depopulation. Bulgaria is requesting a meeting with the EU Commissioner for Environment, Climate and Energy to ascertain what changes can be made to the BREF in terms of new emission levels for sulphur dioxide, nitrogen oxide and mercury. It plans to insist on the adoption of separate rates for Bulgaria and to encourage other countries to join in its arguments. The EU Commission press officer for the Environment has flagged that there is scope for Bulgaria to be given more time to meet the new standards. A derogation can be granted to certain plants by a national competent authority (although such a derogation must be reported to the Commission). However, the plant must comply with the existing terms of the IED. For example, the desulphurisation rates set out in Article 31(1) of the IED will continue to apply as a minimum requirement even if a plant is granted a derogation.
In conclusion, despite the concerns flagged by the above member states, it remains to be seen how these specific concerns will be addressed or even incorporated into the draft BREF. The substantive effect BREF will have on the operation of power plants, in particular coal plants across the EU is difficult to predict. In particular, it is not clear if individual plant operators will invest the time and money to bring their plants in line with more stringent standards or simply decide that it is not economically or technically viable. Once the BREF is in final form, perhaps its implications as well as its wider impact on the use of fossil fuels across the EU will become clearer.
Kristof Ferenczi is a partner at law firm Kinstellar.
The post was prepared with the assistance of Ei Nge Htut from the London office of Latham & Watkins.
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