Appendix H Page 1. Harmonising differences in definitions of solvent consumption between IPPC and SE Directives (scenario 2.4).

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1 Appendix H Page 1 Introduction This appendix provides some of the detailed calculations supporting the quantitative analyses reported in the main report, particularly in relation to the detailed description of the problems identified (Section 4) and the potential implications of the streamlining scenarios (Section 7). Supporting information is provided on the following issues: The additional cost burden associated with multiple permitting regimes (as compared to having a single permit incorporating IPPC, sector Directives and other legislation) (this relates to scenarios 2.3 and 4). Harmonising differences in definitions of solvent consumption between IPPC and SE Directives (scenario 2.4). Single versus multiple permitting regimes Supporting information for problem definition background There is no requirement in the IPPC Directive stating whether the permit for an installation should be issued as one integrated permit or different environmental media can be covered by individual permits. Whilst Article 7 requires co-ordination between authorities in fulfilling the functions related to the IPPC Directive itself (where there is more than one competent authority), there is no requirement to issue a combined permit for the IPPC and other sector/media specific Directives. It would seem most effective to include emissions to air, water, soil in one permit and that is what most Member States have done. Institutional constraints, for example where different authorities have responsibility for different environmental media, means there are separate permits for water discharges or waste management in some Member States and for some Directives. There is another example of where multiple permits may be issued for IPPC installations: If a given installation comprises different activities they might be subject to individual permits (related to different Directives - this is closely linked to the issue of definitions). How installation or plant is defined can lead to a site being subject to multiple permits. As the issue of different definitions across directives is address elsewhere, this type of multiple permitting is not included in the assessment in this section. Several industry sources have indicated through the case studies and trade-association responses to questionnaires that there are situations where a site needs multiple permits; see the section on detailed problem definition for specific references. Multiple permits seem to exist for the following situations, where the IPPC permit is combined one or more of the following permits: Seveso II installations; EU ETS; Water discharges; Waste management.

2 Appendix H Page 2 In many Member States, any new installation needs a planning or construction permit before the building of the installation can be initiated. As this is separate from operational permits like IPPC, it is not relevant to consider planning or construction permits as potentially being integrated with the IPPC permits (the issue of interactions between the EIA and IPPC Directives is discussed elsewhere in this report). There are several reasons for why separate permits exist for the directives or media listed above: Institutional setup in the Member States (e.g. in Germany each of Länder has responsibility for water while the IPPC is a federal matter) Historical development of systems based on permitting by individual environmental media (e.g. the case in the UK). The responses given by the member state authorities on the issue differ widely. There are advantages and disadvantages of combined permitting and most of those currently using multiple permits argue that it does not constitute a major problem. The main advantages of going to a single permit system include: Time and cost saving in preparing applications as some elements are common; Clarity and consistency about what is covered within a given installation. Single regulator with associated administrative burdens. Disadvantages of a single permit include: With only one permit, the process of application and granting the permit will take longer; some installations may begin operating before the permit is finally issued or may have to delay commencing operations; The permit is likely to be more complicated: Public participation it may be difficult to analyse and respond to the extensive amount of documentation that will be required; More frequent amendments of the permit are likely to be necessary, due in part for the potentially different time periods for reviewing different permits. On the balance, single permits should give cost savings due to less duplication of work in all phases of the permitting process. Assessments of cost and benefit undertaken in relation to a number of member state initiatives all point to costs savings as the resulting benefit 1. In the subsequent section, we have included an estimate of the scale of the problem. In should be mentioned that: 1 See EC (2006) Streamlining and simplification of environment related regulation for companies, Final report from the BEST Project Expert Group, May 2006.

3 Appendix H Page 3 The issue of multiple or single permits is not caused by any requirement in any of the EU directives but follows from institutional or historical reasons in each member state; It is probably a decreasing problem. There are initiatives in several member states on streamlining their permitting system. There are studies (see box I1) that suggest the magnitude of the potential savings going from a multiple to a single permit system. It is therefore worth making an assessment of the size of such savings. This can be seen as an attempt to quantify the impact of the recommendation from the BEST project 2, where it is suggested that a single permit system is best practise. Based on the information obtained we have estimated the potential cost savings as follows: Estimate a potential saving per permit that it being integrated into the IPPC permit; Estimate the number of installations with multiple permits; and Estimate how much of this potential can be realised through either modifications to existing directives to promote a single permit (Scenario 2) or through changing to a single directive (Scenario 3 and 4) Box Description of the UK Environmental Permitting Programme The Environmental Permitting and Compliance programme has the objective of streamlining the permitting and compliance system in England and Wales. The elements of the programme that are described here comprise an assessment of alternative options of simplifying the waste management licensing (WML) system. The most comprehensive option is an integration of the waste management licensing and the Pollution Prevention and Control (PPC) permitting system. The PPC legislation implements the IPPC directive into UK legislation. The regulatory impact assessment of the programme has estimated savings at about 11m per year of integration of the PPC and WML in England and Wales. $8m per year is estimated as the direct savings to the affected industries while the permitting authority, the Environment Agency will see savings of about 3m per year. The following sources have indicated that multiple permits exist and that a change to a single permit system would be beneficial: 2 EC (2006) Streamlining and simplification of environment related regulation for companies, Final report from the BEST Project Expert Group, May 2006.

4 Appendix H Page 4 Table Data source for existence of problem/issue Member State Case study/ questionnaire/other source Issue Hungary Case study Two installations with multiple permits. UK Caste Cement case study Separate permits for IPPC, landfill and EU ETS. Administrative savings not quantified. Industry associations Drax power station case study Government initiative on streamlining permitting Cérame-Unie Eurometaux Separate permits for IPPC and EU ETS. Overlap in auditing of the two permits as auditing time is double from 6 to days. UK government initiative to bring waste management licensing and PPC into one system, see text box. Installations need multiple permits in Germany (waste and water), UK and Spain. In Spain the permitting process is cumbersome. There are multiple permit systems in Spain and Italy according to Eurometaux. EC initiative BEST project Lists use of single permits as part of best practice in permitting. There is no quantification of the extent to which single permit is current used in EU. Source: Questionnaire response and case study reports Different views on the pros and cons of a single permit system have been expressed through the questionnaires and the case studies. The main advantages or disadvantages are mentioned above. Overall, the conclusion from the questionnaire answers and the existence of a number of member states initiatives aiming at such streamlining (documented in the BEST project) points to the single permit system being the most cost-effective. Depending on the current situation each member state would have to assess different options for moving towards a single permit system. Two different routes can be taken. One is to consolidate all existing permits into one single permit. The other is a more gradual change where permits are integrated as they become due for renewal. There is an Austrian initiative to consolidate all existing permits into one 3. Many existing permits are outdated and there are conflicting requirements in some of the permits. Therefore, an active consolidation process sems the best approach moving forward. Alternatively, the merging of permits could be gradually introduces. When any existing permits expiries, it will not be renewed but the relevant conditions will be incorporated in the single permit. It is important to mention that the majority of initiatives described in the BEST project are addressing all installations that require permits. Given that the number of installations below the IPPC thresholds is very large and therefore entails large permitting costs, there is likely to be significant savings by streamlining the requirement for those installations. 3 EC (2006, ibid), see page 76.

5 Appendix H Page 5 The most detailed study identified of the actual costs and saving potential is a RIA done as part of the UK Permitting Programme of Streamlining the permitting and compliance system. The main objective of that programme is to integrate the waste management licence system into the Pollution Prevention and Control system. The costs and benefits of such integration have been estimated. Regarding the magnitude of the problem of multiple permits, the responses from the member states on the questionnaire do not agree with the case study findings in all cases. For example, the UK reply states that IPPC installations are covered by one permit. However, that does not necessarily cover water discharge consents and waste management licences (at present) and the UK government initiative has assessed the potential savings of integrating the waste management permitting process with the IPPC permitting. Similarly, the UK-based case studies indicate that the GHG-ET Directive is generally administered under a separate permit. It is difficult to estimate the current use of multiple permits across the EU. We have assumed that if multiple permits are used then it potentially affects all installations with the specific type of emission or activity. This might overestimate the extent of multiple permits. On the other hand, there are likely to be multiple permits in some of member states where we have not undertaken any case study or questionnaire survey and where neither of the other sources present this information. In several of questionnaire responses it is stated that a single integrated permit is used; however, that might still not cover waste management licences or EU ETS permits (as with the current situation in the UK). The majority of the replies do not mention the EU ETS and whether separate permits have been issued. The fact that the EU ETS became effective in 2005 when far from all installations had an IPPC permit must imply that separate permits have been used at least for some installations (i.e. some installations will have an EU ETS permit but not an IPPC one). We have therefore assumed that EU ETS is generally covered by separate permit. The sectors are not equally affected by the existence of multiple permits. The assumptions, about which sectors are likely to discharge wastewater, undertake waste management or be covered by the EU ETS or the Seveso directives, are shown below. Table Sectors with potentially multiple permits Member States Water discharge permit Waste management permit EU ETS permit Seveso permit Energy Industries 85% 100% 50% 13% Production and processing of metals 25% 47% 38% 0% Mineral industry 25% 50% 99% 0% Chemical industry 10% 0% 50% 100% Waste Management 5% 100% 6% 32% Other activities 10% 74% 2% 0% All industries 17% 64% 22% 18% Source: Entec estimates

6 Appendix H Page 6 Based on these assumptions the total number of installation affected by possible multiple permitting is estimated. Data on the number of installations covered by IPPC in each of member states is taken from the result of IPPC Implementation study 4. There is a high degree of uncertainty about the exact number of installations. The estimated range is presented in the below table. Table Number of installations with multiple permits Member States Water discharge permit Waste management permit/licence EU ETS permit Seveso permit Low estimate High estimate Best estimate (average) % relative to total number of installations ( 38k) 9% 12% 19% 1% Source: Entec estimates The total potential savings an indication of the magnitude of the problem can be estimated based on the number of installations multiplied by the average saving when integrating each of the four separate permits into the IPPC permit. There is limited data on the costs related to issuing and sustaining each of permits. The best data for understanding the potential savings is that included in the regulatory impact assessment of the UK Environmental Permitting Programme 5. Here it is estimated that the integration will achieve savings that are around 15% of the total waste management costs. The average cost per waste licence is estimated at 15,000 per installation per year including the costs for the competent authority. We assume that savings are about 15% of the costs associated with each type of permit (issuing and sustaining) when integrating that permit with the IPPC permit. This is based on the above mentioned UK programme where the savings are abour 15% of the current costs. The savings per installation will then be about This is a rough estimate and the uncertainty is high; therefore a range of +/- 50% is used. In total, the savings is estimated in the range from 1000 to 3000 per installation. This is the savings of integrating the waste management licenses with the IPPC permits. The savings for the merging of any of the other three types of separate permits have estimated by relating them to the savings of the waste management permit. It is assumed that the saving 4 5 Entec (2006) Assessment of the Implementation by the Member States of the IPPC Directive, Draft Final Report for the EC DG Environment, Draft Final Report, October DEFRA (2006): Consultation on options for creating a streamlined environmental permitting and compliance system.

7 Appendix H Page 7 potential for integrating water discharge permit is similar to that of the waste management license/permit. For the EU ETS, a similar assumption has been made. For the Seveso II directive on the other hand, the permit conditions have more focus on safety and therefore differ from what is covered in the IPPC permit. This would suggest that the saving potential is less than for the other permit types. The savings have been assumed to be 50% of the savings from integration of the waste permit. Below the assumptions on the cost saving potentials are summarised. Here, the costs savings have been weighted with the differences in cost levels across the member states. It is implicitly assumed that the resource effort is similar across member states, i.e. that the man hours used by industry or the regulator are the same. Whilst this is probably not the case, no data have been identified to support any differentiation. Table Data source for existence of problem/issue Type of permit Cost savings per installation Weighted EU average in per year Low High Water discharge permits 640 3,210 Waste management permits or licences 690 3,450 EU ETS permits 650 3,230 Seveso permits 500 2,000 Source: Entec estimates The average saving from integration of the EU ETS permits is slightly larger due the assumption that this potential exists across the majority of member states. For the water and waste permits there are more installation in member states will lower cost level than the average EU cost level. Using the average unit cost savings and the number of installations a total potential cost saving can be estimated. There is a high degree of uncertainty attached to both the number of installation and the average cost per installation reflected in estimated range of potential cost savings.

8 Appendix H Page 8 Table Data source for existence of problem/issue Type of permit Total cost saving potential in m per year Low High Water discharge permits Waste management permits or licences EU ETS permits Seveso permits Total potential Source: Entec estimates The total potential is estimated in the range of 12 to 60 million. A perspective on this saving potential can be given by comparing it to the total costs of permitting under IPPC and the separate media/directive permits identified. The total annualised cost per installation was estimated at 15k for the waste management permits. This cost includes the issuing and sustaining the permit. For the IPPC permits the UK study suggests slightly higher costs. For the IPPC permitting system, the annualised costs amount to 28k for the direct industry costs and to about 4k for the regulator s annual costs per installation. 6 The direct industry costs include monitoring and reporting. In total the IPPC permitting costs can be estimated at 32k per installation. The weighted average across the member states is about 28k per installation. The total number of IPPC installations is about 38,000. The total costs of IPPC permitting can therefore be estimated at the order of 900m per year. It means that the potential savings amounts to about 3% (range of 1% - 6%) of the total permitting costs. A number of member states have initiated or are about to initiate streamlinging activities. These initiatives typically include all installations requiring permits. An example from Sweden has estimated net savings of about 10 million by changing the requirement for 1200 installations. Instead of requiring a permit (at a cost about 30k each) they would only be subject to notification requirement (at a cost of about 2k). The saving would be in the order of 10 million annually. Even larger savings have been identified in the Netherlands. Here savings have been identified in the order of 300 million. This large saving is mainly from reducing the number of installations covered by a permit requirement from 100,000 to about 60,000. For the 40,000 installations the permit is replaced by general binding rules. These examples show higher cost savings than for the IPPC installations. A driver for streamlining of the permitting systems will therefore be the overall savings rather than the specific impacts on the IPPC installations. 6 DEFRA (2006): Consultation on options for creating a streamlined environmental permitting and compliance system.

9 Appendix H Page 9 Harmonising differences in definitions of solvent consumption between IPPC and SE Directives The effect of taking certain low solvent consumption installations out of control under the IPPC regime and placing them under the SE Directive only has been estimated as follows: The costs of permitting under the two regimes based on UK costs for the subsistence charge under the IPPC regime (Part A installations) and under the SE Directive (regulated for air pollution control Part B installations) have been used. These represent full cost recovery for the regulators: - 1,008 per year for Part B installations (for medium risk sites) based on The local enforcing authorities air pollution fees and charges scheme (England) An estimated 3,608 per year for a Part A installation. Charges are based on the results of the OPRA risk assessment process and it has been assumed that a typical installation could have an OPRA score of This is multiplied by 88 per point. This is based on Pollution Prevention and Control EP OPRA based charging scheme and guidance 2006/07, Environment Agency for England and Wales. - The difference between the two represents the potential cost saving in the regulator s effort and is approximately 2,600 per installation per year ( 3,800 at an exchange rate of 1 = It is assumed that 200 to 400 installations would be affected (see main report). This gives a total saving of 0.75 to 1.5 million per year, with a relatively high level of uncertainty (assumed to be between 50% higher than the cost for a SE Directive installation as a lower bound and up to 50% more than the above estimate as a higher bound) giving 0.2 to 2.3 million per year. The time inputs for the regulators associated with the above are estimated based on UK hourly labour cost of 24.7, plus 30% overheads are thus 162 hours for Part A installations and 45 hours for Part B installations. It was assumed that the time spent by the operator would be approximately the same as that spent by the regulator. Based on an EU-25 average labour cost of 27.6 per hour, the above time inputs were scaled up for the assumed 200 to 400 installations affected to give estimated savings of 0.65 to 1.3 million per year ( 0.1 to 1.9 million per year taking into account uncertainty in a simular manner to the operators costs). 7 Scores as follows: Complexity 2, Air emissions 3, Off-site waste 1, Location 10, Operator performance 25, Compliance 0.

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