Consultation on modernising environmental permitting for industry

Industrial installation permitting covers a huge range of areas, from oil refineries to dry cleaners. Under the EPRs framework, regulatory effort should be proportionate to the level of environmental risk, impacts and operator performance. Regulators concentrate on higher risk activities to achieve the desired environmental outcomes and to make the most effective use of resources. 2023's post implementation review found the EPRs to be functioning effectively but also identified opportunities to improve the flexibility of how the EPRs are operated, for example, to streamline the process of implementing exemptions and registrations. This is why Defra and Welsh Government jointly consulted on proposals to streamline the process for setting, amending and revoking exemptions from the requirement to hold a permit for regulated facilities where the concept of exemptions already exist (which does not include industrial installations) earlier this year.  

We are considering similar proposals for industrial permitting as the EPRs can currently place excessive requirements on certain industrial activities and limit regulators’ flexibility to make sensible, risk-based decisions on the appropriate level of regulatory control. This issue is exacerbated by the fact that the legislation is over a decade old and was not designed with emerging growth industries in mind. For example, the EPRs currently require that hydrogen production facilities of any size require a permit, despite the emergence of small-scale modular ‘green’ hydrogen production units, which are arguably less necessary to permit because of their low risk. The EA is using the tools currently at its disposal, including standard rules permits for low impact installations, to streamline permitting requirements where possible for low-risk activities, however we would like to consider going further.  

Our proposal is two-fold, firstly we are considering the case for amendments to the EPRs to streamline or remove permitting for certain low-risk technologies like small-scale green hydrogen production or small backup generators where we currently have sufficient information on risk (outlined further down in this section). This is not about wholesale deregulation, as permitting for most industrial activities remains essential given the significant pollution impacts. Instead, it is about ensuring that regulation is proportionate to risk and does not inhibit the rollout of technologies which deliver significant overall health and environmental benefits.    

Secondly, we are considering the case for moving to a more tiered system of permitting (as already exists for other sectors regulated by the EPRs), by giving the EA flexibility to make sensible, risk-based decisions moving forward on whether certain activities should, instead of being permitted, instead be: 

• registered (also known as registered exempt), meaning that operators must register their facility with the regulator and agree to comply with conditions set by the regulator or in legislation 

• non-registered exempt, meaning that they must comply with conditions set by the regulator or in legislation, but are not required to register their facility with the regulator 

Regulators have the usual powers of inspection and monitoring with regards to registrations and exemptions and can revoke the registration or exemption in situations where an operator fails to comply with the requirements of the exemption. 

This change could significantly increase the adaptability of permitting and the ability of regulators to make risk-based judgements, taking into account the overall environmental benefits of a technology. This change would be crucial in allowing regulation to adapt to emerging technologies, for example, future generators of hydrogen and carbon capture process which might result in no environmental impacts in normal operation and where permitting is not required. 

Using registration approaches in low-risk sectors would also significantly speed up approval timelines and reduce costs on industry. Bespoke installation permits can typically take 9-12 months to be issued and standard rules permits currently take roughly 70 days on average – registration-based approaches would remove the majority of this waiting time, therefore lowering costs to business. 

Further policy work is required on this proposal, and on safeguards to ensure the power is used appropriately by regulators, however we would generally seek to align the approach with the recent consultation on exemptions process reform for water discharge, groundwater, waste operations and flood risk classes of regulated facility. That consultation proposed a new power for regulators to create, amend, or remove exemptions, subject to the following safeguards: 

• regulators could only create new exemptions or registrations for ‘low-risk’ activities 

• regulators would have to consult before using the power 

• regulators would not be able to use the power in a way that contravenes the applicable objectives and criteria in the EPRs 

• existing powers for ministerial intervention through directions and guidance will be retained and used where appropriate 

• if necessary, limits could be placed on the number of exemptions or registrations at a particular site 

Specifically for industrial installations, we also need to consider how this power would be used for local authority regulated industries. It would be administratively complex and potentially geographically distorting for each local authority to have this power, so it could either rest with Defra or with the EA. As set out in the proposal in Chapter 2 on ‘a more dynamic approach to setting BAT’, we believe that the EA could be well suited to carry out this kind of technical role, however bespoke arrangements would need to be developed around EA engagement and consultation with local authorities, and for funding EA to carry out this function.