Executive Summary
Around 50 000 large-scale industrial installations are covered by the Industrial Emissions
Directive (IED), at the core of which lies an obligation for Member States’ authorities to prepare
an environmental permit for a given industrial site, based on the sector’s best available techniques
and upholding a holistic approach to pollution prevention. Industrial installations falling under the
current IED scope account for 20% of the EU’s air emissions, 20% of emissions to water and 40%
of the greenhouse gases emissions1
. The recent evaluation of the Directive showed that there
was room for beefing up the requirements needed to bring forward the industrial transformation
of those heavily polluting industries, underpinned by a more effective application of the “polluterpays” principle. A need for a more ambitious and solid framework driving down the emissions to
air and addressing circularity and resource use was identified2
.
The Industrial Emissions Directive has the potential to drive improvements in production
processes, playing a central piece in the industrial transformation puzzle. To do so, it must be
framed as one of the small number of industrial transformation pieces of legislation in a toolbox
addressing: products (ecodesign of sustainable products regulation with knock on effects on other
product-specific regulations, as well as the corporate sustainability legislations), processes (IED)
and market mechanisms (EU ETS, CBAM, GPP). The IED revision comes in a timely manner to
address resource overconsumption and restore regenerative patterns, when the global consumption of materials such as biomass, fossil fuels, metals and minerals is expected to double
in the next 40 years and waste generation is expected to increase by 70% by 20503
.
CAN Europe welcomes the awaited revision proposal and recognizes the effort to include much
needed new aspects in the revised text, especially regarding circular economy and resource use.
We however emphasize the lack of clarity on key elements that will truly deliver on the holistic
value chain transformation of industry, rooting in resource preservation, health protection,
inclusivity and regenerative patterns. We singled out four elements of the proposed revision that
will enable a transformation of industry within the planetary boundaries, provided that the
European Parliament and the Council step up the level of ambition from the Commission’s
proposal. Those key elements are revolving around:
● The inclusion of mandatory environmental performance levels in permits, ramping up the
industry’s contribution to circular practices and lowering resource use (raw materials,
energy, water) in production processes.
● The existence of a precise and binding transformation pathway at plant level with interim
milestones, end-goal and indicators compatible with EU overarching climate, zeropollution and circular economy targets.
● The implementation of the polluter pays principle, achieved through emissions limit values
at installation level for relevant pollutants.
● An enhanced framework allowing civil society to better access information regarding
industry environmental pollutions, with harmonized reporting throughout Member States,
allowing comparison between sites.
1. Driving industry’s contribution to circularity and lowering its demand for resources
The evaluation of the IED showed that it had a limited impact on circularity, resource consumption
and on industry decarbonisation4
. Heavy-industries however, do not have a neutral impact on the
consumption of resources and nature: European heavy-industries (namely petrochemicals, steel
and cement) use more than 680 million tonnes of their key inputs of iron ore, coking coal, naphtha
and limestone – some 1.5 tonnes of inputs per European5
. Along with releasing massive amount
of CO2 into the atmosphere, resource overconsumption pressures our ecosystems, where
already 90% of biodiversity loss and water stress are coming from resource extraction and
processing of materials, fuels and food6
. A considerable amount of raw materials, water and
energy will furthermore be needed in industrial processes through the currently planned
technology-shift.
Decarbonisation of the steel industry through “breakthrough” technologies
It is estimated that decarbonising the steel sector in Europe will require 165 TWh of renewable
electricity and 5.5 million tonnes of green hydrogen per year by 2050 to substitute the current
coal-based production by a less-carbon intensive one based on green hydrogen, direct reduced
iron and electric arc furnaces. Such a production, without reflecting on the material efficiency and
quantities of steel needed in a well-being economy, would amount to 400 TWh of annual electricity
demand, 4 times the current consumption of this energy-intensive sector7
.
The direct reduction of iron with hydrogen – the technology expected to replace the coal-based
blast furnace route – will still rely on further extraction of virgin materials, namely iron ore8
, in a
move to replace the current amount of conventional primary production by “greener” one.
Although this decarbonisation route helps in achieving EU climate neutrality by putting an end to
a massive use of coking coal, the main source of steelmaking CO2 emissions – it does nothing
to reduce emissions from raw materials processing and does not avoid habitat destruction9
–.
The IED contains several key policy levers to ensure that transformation of industry occurs on a
time frame consistent with EU environmental and climate targets, whilst also decoupling overall
resource consumption (water, electricity, raw materials) and biodiversity loss from production, in
a compatible way with the planetary boundaries10
.
We therefore welcome the Commission’s proposal to include the efficient use of resources and
water, including through reuse, and the overall lifecycle environmental performance of the supply
chain as a guiding principle to operate industrial installations. The inclusion by the Commission
of such principle in amended article 11 delivers the right signal for industry and public authorities
to enhance material efficiency at installation level as it can deliver up to one quarter of greenhouse
gas cuts needed in a 1.5° scenario11
.
Until now, the permits regulating industrial plants’ operations only established binding emission
limit values for given process-related pollutants, based on the best available techniques12 of the sector, without any mandatory and harmonised indicators to monitor resource consumption, the
part of recycled content used in the process or the part of waste or by-products actually reused
or recycled. The Commission’s proposal to introduce a mandatory “Environmental Management
System” (EMS) aligned with the conclusions on the best available techniques to be made public
is a promising way forward to address resource, energy and water use in industry.
However, further clarifications will have to be developed to ensure that the performance indicators
used to update or establish the BAT conclusions (and especially the mandatory BAT associated
environmental performance levels – BATAEPLs) are ambitious enough and adapted to drive
industry towards a less resource-intensive model, delivering on both the Zero Pollution Action
Plan and the Circular Economy Action Plan. So associated environmental performance levels
should at least contain the resource use in the process (water, energy, raw materials), the part of
recycled materials used, the amount of waste generated and their treatment mode, and indicators
on the carbon/material footprints of the production. Monitoring this latter element and having the
best available techniques reflecting on the best carbon/material footprint of one sector is
prominent to deliver a timely synergy with EU Commission proposal on the Ecodesign of
Sustainable Products Regulation (ESPR), thus allowing synergy and efficiency between different
legislative tools to decouple resource consumption and biodiversity loss from business models.
European Parliament and Council take the opportunity of the IED revision to help the EU reaching
the target laid down in the Circular Economy Action Plan to reduce the EU’s carbon footprint and
double its circular and material use rate by 2030.
Lowering resource consumption with the IED in the steel sector
Blast-furnaces, steelmaking’s most polluting assets, used to produce steel from virgin materials,
are not in technical capacity to use more than 20-30% scrap steel for the most efficient ones. On
the other hand, an electric arc furnace (EAF) is able to run 100% on scrap, or with a high mix of
scrap and direct reduced iron. Furthermore, a higher share of scrap in EAFs not only reduces use
of virgin materials, it also lowers the quantities needed of fossil gas or of green hydrogen, both of
which are the main feedstocks and energy carriers in virgin materials-based steelmaking13
.
Including among the environmental performance limit values, quantitative binding circularity
metrics such as the amount of recycled materials and the ratio of raw materials in the final output
will help ensuring that process changes in the steel sector do not result in an unreasonable growth
of the need for hydrogen or fossil gas for scrap melting. Most importantly, deriving the BATAEPLs
on circularity and monitoring those metrics at plant level (in permits and for instance in the
transformation plans as part of a wider and planned contribution to a circular economy) can pave
the way to further industrial synergies between the steel sector and the scrap/waste sector, or
even with end-users of steel. A Sandbag14 report mentions that an optimised use of scrap in the
steel sector, which will bring about resource savings as well as lower CO2 emissions, does not
rely so much on new breakthrough technologies than on improved measures relating to scrap segregation and enhanced assessment of the scrap quality for which “technologies are available
and inexpensive”.
The increased electrification of processes and of products (e.g. electric vehicles, digitalisation)
will not lower the pressure on natural ecosystems due to the increased demand (sometimes more
than a thousand percent) for metals until 205015 with all the subsequent environmental hazards
that this entails. Even though the talks around raw materials’ increased demand are revolving
around addressing Europe’s strategic dependencies towards non-EU countries mainly through a
security of supply approach, it is of the utmost importance that the impacts of extractive industry
are mitigated. We therefore welcome the inclusion of non-energy minerals mining in the scope of
the industrial emission directive, to ensure that a potential re-shoring of extractive industry in
Europe is carried out in a regulatory framework that promotes pollution prevention. However, we
insist that the priority shall be put on urban mining rather than on virgin materials mining to avoid
reproducing overconsumption patterns, thereby jeopardising ecosystems and the existence of
local communities16
.
CAN Europe therefore calls on the European Parliament and the Council to:
● Maintain the proposed inclusion of binding environmental performance limit values
in permits, derived from the best available techniques. Environmental performance
indicators retained for the limit values should at least include a minimum ratio for the
consumption of raw materials and secondary raw materials, energy and water per quantity
produced, as well as on the amount of waste generated per output and its downstream
treatment. Those material efficiency requirements should be completed with elements of
carbon/material footprint, to consider the overall lifecycle assessment of the supply chain
and ensure synergies with other legislative files (namely the Ecodesign Regulation).
● Include precise performance indicators in transformation plans to measure a
plant’s contribution to EU circular economy and climate-neutrality goals for the
period 2030-2050. Transformation plans will at least include minimal requirements on
material reuse, or recycled content included in production, as well as energy and water
use with intermediary milestones, paving the way to a holistic industrial transformation.
● Keep the scope extension to extractive industries.
● Revise sectoral Best Available Techniques Reference Documents (BREFs) and the
conclusions on the Best Available Techniques (BAT-C) to systematically include
binding associated environmental performance levels (BATAEPLs).
2. Laying down a clear pathway for industrial transformation
Industry needs a clear pathway to achieve a transformation in its use and pressure on resources
and energy, thereby mitigating negative impacts on biodiversity, land-use and human rights
alongside greenhouse gases emissions. So far, sectoral transformation roadmaps (stemming
from the European Climate Law) or transition pathways for energy-intensive industries planned
(through the Industrial Forum) have been on hold for the past year or have not yet been adopted.
This situation does not de-risk investments in the urgent transformation of processes for heavyindustry, and leads industrials into adopting voluntary pledges for their transformation without
accountability in the future, thereby postponing the transition towards a climate neutral and
regenerative production model.
Against this background, CAN Europe welcomes the introduction of transformation plans (TP) in
the revised text. However, in their proposed design they still comprise a certain number of
shortcomings. European Parliament and the Council will need to improve TPs to enable their
significant potential to drive industrial transformation forward. To begin with, more clarity will have
to be brought to the scope of those plans “The transformation plan shall contain information on
how the installation will transform itself during the 2030-2050 period in order to contribute to the
emergence of a sustainable, clean, circular and climate-neutral economy by 2050”. If the need for
industry to contribute to EU environmental and climate targets is clearly establish, more precisions
will be needed especially in order to assess if the site through its transformation plan is on track
to contribute to a sustainable, clean, circular and climate-neutral economy by 2050.
Consequently, a list of indicators to allow such assessment have to be laid down in the text of the
Directive, to give vision for industry on how to prepare the reporting and to ensure a reliable
transformation pathway.
The Commission’s proposal states that transformation plans will have to be drawn up by 30 June
2030 at the earliest, but only for some energy-intensive industries. For other sectors the current
proposal could lead to transformation plans not needed before 2034. In both cases, the new
requirements are too far in time to deliver the needed transformations and bears the risk to not
deliver on the EU climate and sustainability goals. A document supposed to describe a
contribution during a 20-year-time period cannot possibly be drafted and ready after the
beginning of the said period, without any mechanism to revise and enforce it.
Example of the need for a quicker roll-out of the transformation plans: the steel sector
This sector would be targeted in priority by the transformation plan obligation and has inherent
characteristics illustrating why a transformation plan cannot wait another 8 years to be up and
running. The sector’s most polluting assets (the coal-based blast-furnaces) have a long
operational lifetime, estimated to 17 years and 70% of them will reach the end of their
operational life before 203017. A clear transition pathway will need to be decided (implemented
and enforced) with subsequent investment already this decade, to not fail to deliver on the EU
climate neutrality target for 2050 and avoid locking-in polluting technologies (and in that matter, not only the coal-based blast furnaces but also including the so-called “breakthrough
technologies” using fossil gas as a transition fuel).
There is no alternative than for industry to prevent pollution and reduce its impact on the climate.
It therefore requires a binding regulatory framework with clearly defined targets. This principle
should consequently apply to transformation plans, especially as in some industry sectors (staying
with the example of the steel sector), all industries using the most polluting technologies (blast
furnaces) have published a non-binding decarbonisation strategy for 2050, and in most cases
with interim targets for 2030. Evaluating whether measures taken in those self-established plans
are sufficient to deliver on EU climate targets and compelling industries to respect a clear pathway
that works for climate, biodiversity and social justice is therefore a key aim the IED revision should
strive for. As a direct consequence, audits carried out on transformation plans should not be
limited to ensuring they respect the format decided by the Commission (which will be known much
too late in a proposed implementing act suggested by 2028 at the earliest) but should also assess
whether the quality of the data contained in the TPs is a sufficient basis for industry’s
contribution to at least the EU climate neutrality goal. Once the plans are approved, measures
described for the transformation of the installation could also be reflected in the permits
overtime, with a view to committing industry to following the established transformation pathway.
Furthermore, transformation plans could increase heavy industries’ level of preparedness by
reflecting on industry’s material efficiency, virgin raw and secondary raw materials consumption
as well as energy needs. Having transformation plans as a cornerstone of the IED would
accompany industry along its transformation in capturing (and lowering) the strategic
dependencies linked with raw materials sourcing (with gradual uptake of secondary raw materials)
and reducing the energy consumption from fossil fuels (to the benefit of renewables) to enhance
the resilience capacity of the sector towards external shocks.
Transforming the steel sector value chain
In parallel of the development of mandatory environmental performance limit values in the best
available techniques and their subsequent inclusion in permits, transformation plans should
monitor the amount of primary (e.g. iron ore) and secondary (scrap) raw materials used, energy,
water used in order to facilitate the synergy with the Ecodesign of Sustainable Products
Regulation and the carbon footprint of steel products. At installation level, the evolution of such
metrics would be planned in order for a plant to contribute to EU circular economy, climate and
zero pollution targets, as such granular level enables best to consider process-specific aspects,
ensures the participation of installation-based staff (likely to have the highest process knowledge)
and allows to consider the local impacts of an industrial activity, in the spirit of the IED.
Planning ahead the contribution of a steel plant to EU’s wider environmental goal over several
decades might also provide the timely incentive to build synergy between the sector and local
businesses (e.g. recycling, repair, etc.) involved in the scrap metal activities.
Moreover, as the technologies that will be used to transform the steel sector are already known
(green hydrogen direct reduced iron and electric arc furnaces) and will soon launched commercial
scaled up production (within the next 3 years), transformation plans might be a solid and flexible reference point to anticipate the necessary re-/upskilling of the workforce at plant level along
before rolling out those technologies onsite.
In the case of iron and steel sector, having a specific frequency to update the plans doubled with
an enforcement mechanism would also help reducing (or even avoiding) the period during which
fossil gas will be used as a bridge before green hydrogen is available at industrial scale.
CAN Europe therefore calls on the European Parliament and the Council to:
● Set in the text of the revised Directive, instead of waiting for a delegated act by 2028,
clear indicators that plans should contain, allowing an harmonised assessment as
to whether the industry is on track to contribute to a clean, sustainable, circular and
climate-neutral economy by 2050. Minimum indicators should align at least with EU
climate-neutrality goals, the Zero Pollution Action Plan, the Circular Economy Action Plan
and draw a trajectory to lower emissions to air, soil, water and reduce the pressure on
resources (raw materials, energy, water) and land.
● Ensure the plans are drawn up by 2025 or within a 2-year-transposition period to
reflect on heavy industry investment cycles and the need to start the assets transformation
already this decade.
● Ensure a timely revision of plans and appropriate assessment frequency not only to
check the content of the plans, but to audit the quality of data reported, ensuring that a
site is on track to contribute to EU overarching goals. It would also be a way to identify
barriers to be lifted to enable holistic transformation of the industry.
● Define milestones and end-targets for the transformation plans, to guide the
industry in its transformation as well as effective mechanism for their
enforceability, to ensure industries’ walk the talk on their transformation.
3. Finalise the implementation of the integrated approach to pollution prevention
Since 2005 the main EU tool for industry decarbonisation has been the Emissions Trading System
(ETS), a market-based mechanism in which most carbon-intensive industries were allowed to
purchase and trade greenhouse gases allowances matching their emission levels. This tool was
unfortunately unsuccessful in driving down the greenhouse gases emissions of the industry, which
remained on a flat curve for the past decade mainly due to a market entailing more allowances
than the actual CO2 emissions, and those “rides” being allocated for free to industry18, fearing an
alleged risk of carbon leakage.
However, to achieve EU climate neutrality goals, industrial processes (and above all those falling
under the IED) have to undergo a transformation and start the much-awaited reduction of their
greenhouse gases (GHG) emissions already this decade. In its current setting, the IED contains
a legal barrier to establish GHG emission limit values in environmental permits at installation level (article 9 (1)) for plants covered by the ETS and to make energy efficiency requirements binding
for those installations (article 9(2)), thus missing the point of the Directive as an integrated
approach to pollution, through pollution prevention following a command and control principle.
Moreover, even though the IED covers 5 times more industrial sites than the ETS, the authorities
have not made use of the opportunity to set up GHG emission limit values via permits for
industries not falling under the ETS. With its unique integrated approach to pollution prevention
at site level, the revised IED is the best vehicle to see emissions limit values for all pollutants,
greenhouse gases included. The benefits of such an inclusion would be threefold: upholding the
combined approach to pollution of the IED, fostering the complementarity between the ETS
(giving a price to CO2 pollution) and the IED (reducing the pollution at the source) and making
use of all the policy levers available to achieve EU’s overarching targets, as described in the
Green Deal Communication.
In the steel sector for instance, having GHG emission limit values would gradually guide the
industry towards the necessary phase out of the coal-based blast furnaces, whose operational
lifetime cannot be extended if the EU wants to deliver on its climate-neutrality target19
.
Furthermore, the proposal sets forth an obligation for the Commission to analyse the synergies
between the Industrial Emissions Directive and the EU carbon market (ETS) “by 2028, and every
five years thereafter”. Postponing unnecessarily the combined effect of two important elements
for the industry transformation is delaying climate action and contradicts the EU’s adopted
strategies and targets. Indeed, since the first version of the IED was adopted, the awareness of
the urgency to mitigate climate change consequences grew. For instance, the Green Deal, EU’s
landmark strategy to “transform the EU into a fair and prosperous society, with a modern,
resource-efficient and competitive economy where there are no net emissions of greenhouse
gases in 2050 and where economic growth is decoupled from resource use” was published.
The ongoing revisions of the ETS and of the IED are therefore a golden opportunity to work on
both synergies already, allowing the IED to consider implementing limit values for all pollutants,
including GHG at installation levels for all industries, taking into consideration the secured wins
for climate already reached under the ETS revision.
An obvious link between the two key legislative files lies in the transformation pathway that
industry needs to take to contribute to EU climate targets. In that sense, policy-makers could
already discuss the integration of CO2 emissions in the decarbonisation trajectory for a given
industry in a transformation plan (see part 2). It would reflect on the conditions to receive free
allocations under the revised Emissions Trading System, as industry cannot keep on not bearing
the cost for its pollution and shall commit in a clear and compelling transformation pathway.
CAN Europe therefore calls on the European Parliament and the Council to:
● Delete the separation between the IED and the ETS (by deleting article 9(1)) to allow
permit writers to set emission limit values for greenhouse gases at plant level
● Establish ambitious GHG emissions limit values aligned with EU climate targets
and compatible with a gradual CO2 reduction trajectory depending on techniques and
technologies available or planned on being scaled up (electrification, fuel switch, circular
practices). In the steel sector for example, every emission limit value for greenhouse
gases will match the imperative for blast furnaces to be decommissioned before the next
relining decision. It will provide a planned phase out pathway and reduce pollution at the
source compliant with the IED approach.
● Keep the deletion of article 9(2) making energy efficiency requirements mandatory
● Ensure that transformation plans include emission levels reduction trajectory for
greenhouse gases, are enforceable, and drafted no later than the 2025 (or as soon as
2-year-transposition period expires)
4. Provide greater access to information for citizens
CAN Europe welcomes the wider possibilities given to the public to access information concerning
an installation subject to the IED provisions. Only a transparent and large access to decisions and
figures concerning the plant’s functioning and subsequent local impact can ensure social
acceptance of activities. Public participation ahead of decision-making concerning their local
environment and health should be granted in all cases. The unrestricted publication of permits as
well as EMS and permit summaries is going in the good direction for the public to exert their
scrutiny. Further detail and requirements are needed to ensure that provisions can be effectively
implemented, e.g. ensuring an EU harmonised way that authorities have the sufficient resources
and capacity to make available all the information in due time, and to ensure that data is published
(especially on emission measurements) so as to be understandable by the general public. A time
element should also be introduced in the revision for the online publication of permits, their
summary as well as different site monitoring results. Ensuring that those are made available in
due time would facilitate the participation of the public and local communities.
Sharing information on the pollution emitted at installation level is strongly connected to the PRTR
revision. In this regard we are standing by our asks provided in the joint civil society statement on
the revision of the EU IED and the E-PRTR, published on 17 February 2022, especially submitted
under issue number five20. In essence, we believe that a EU-wide, user-friendly database
centralising the harmonised reported data of the pollution generated/the resources and energy
used by installation can allow citizens to have a timely access to data from industrial installations,
as well as to overcome the language barrier and to compare it with other EU industrial installations
in a few clicks.