The IED requires member states to establish a permitting regime for industrial installations within their national legal framework. Installations undertaking specific activities outlined in Annex I of the Directive must adhere to permitting criteria such as: 

• emissions limits imposed on polluting substances, such as sulphur dioxide and oxides of nitrogen; 

• emissions monitoring requirements; 

• protection of soil and groundwater and monitoring and management of all waste (as defined in the Waste Framework Directive); 

• measures to minimise long-distance or transboundary pollution. 

Installations must also adhere to general principles, which include taking appropriate preventive measures against pollution, adhering to best available techniques, causing no significant pollution and using energy efficiently.

While the IED sets limits on polluting emissions from industrial installations, it only plays a partial role in regulating greenhouse gas (GHG) emissions. Many GHGs from industry are outside the IED’s scope; they are instead regulated under the ETS Directive. Two major GHGs – carbon dioxide and methane – are not considered pollutants under the IED. Nonetheless, the IED sets limits on GHGs not covered by the ETS like nitrous oxide and hydrofluorocarbons. 

Under the directive, where non-compliance with the emission limits occurs, member states must establish penalties that are effective, proportionate and dissuasive. The 2023 revised text (see below) specifies that penalties for the most serious infringements should be at least 3% of the operator’s annual turnover in the European Union.

Aside from setting limits on pollutant emissions, the IED also includes requirements on environmental inspections and public rights to participate in decision-making, such as decisions on rule-setting and permit-granting. 

Which emissions are regulated under the IED? 

 The IED regulates emissions of polluting substances to air, water and land. These substances are outlined in Annex II of the directive and include, when emitted to air, sulphur dioxide and other sulphur compounds, oxides of nitrogen and other nitrogen compounds, carbon monoxide, volatile organic compounds, chlorine and its compounds, and fluorine and its compounds. When emitted to water, polluting emissions include substances such as organohalogen and organophosphorus compounds, persistent hydrocarbons, cyanides, metals, and biocides. Land pollutants are not defined within the text of the IED. 

The IED covers some industrial installations that also fall within the scope of the EU Emissions Trading System (ETS). Article 9 of the IED stipulates that any greenhouse gas emissions regulated under ETS shall be exempt from GHG-specific emission limits under the IED. Nonetheless, certain GHGs are regulated through the IED – such as nitrous oxide (N2O), sulphur hexafluoride (SF6), hydrofluorocarbons (HFCs) and perfluorocarbons (PFCs).

While the ETS incentivises emissions reductions through a carbon market mechanism, the IED sets performance-based limits. Some stakeholders have called for the IED to directly integrate GHG emissions limits, e.g. to address weaknesses in the ETS (in the case of CO2). The IED has been seen as a potentially more comprehensive instrument for regulating GHGs, given that polluters under the scope of the current IED emit 40% of the EU’s GHGs. While the need for better alignment of the IED with the European Green Deal objectives has been recognised by the EU, the revised text delays such an amendment until the next IED revision in 2028, by which point a report assessing IED-ETS alignment will have been submitted by the Commission.  

Revision of the Directive 

 In April 2022, the Commission published a proposal to revise and modernise the Directive, with aims to improve its effectiveness and to facilitate alignment with the European Green Deal. The proposed revisions included tighter emissions limits, expanded coverage of intensive farming facilities – alongside other relevant industrial activities – namely more pig and poultry farms, and the inclusion of cattle farms.

On 12 April 2024, a revised Industrial Emissions Directive was adopted by the Council. The scope includes lower size thresholds at which intensive poultry and pig farms become subject to the Directive but excludes cattle. The revised text notes that by 2026, the Commission must comprehensively assess emissions from livestock rearing, especially cattle rearing, and submit a report and possibly a legislative proposal.

The revised Directive also established an Innovation Centre for Industrial Transformation and Emissions (INCITE). The role of INCITE is to scan for and identify innovative industrial techniques that have potential applications in decarbonisation and depollution and promote their research, financing and permitting. These insights will also contribute to writing BREFs. 

The IED’s role in governing CDR 

 Developments in the IED have some relevance for the carbon dioxide removal (CDR) policy regime, though perhaps indirectly. Strengthened rules for sectors like agriculture (in the form of lower size thresholds) bring new emitters into scope. Even if CO2 and methane are not regulated by the IED directly, the new rules widen the net for entities in hard-to-abate sectors that must now manage their GHG emissions more carefully. However, the move to exclude highly emitting cattle rearing demonstrates the political sensitivity of new regulation in the agricultural sector.

The establishment of INCITE with its remit to “chart a path” for industrial decarbonisation could lead to greater exploration of the role of CDR techniques in industrial settings and may provide an additional institutional mandate to support their implementation in sectors where they demonstrate potential.

The IED also includes specific provisions for geological storage of CO2, requiring member states to ensure that any combustion facilities over a threshold size (300 MW) built after 2009 assess the suitability of sites for the retrofit of CO2 transport and storage facilities. While biomass incineration is in the scope of the IED, it has so far had minimal impact on the deployment of carbon capture and storage in the European Union and in turn on the uptake of power BECCS.