The Environmental Authorisations (Scotland) Amendment Regulations 2025 Final Business and Regulatory Impact Assessment

Executive summary

Issue and why it needs to be addressed

The Scottish Environment Protection Agency (SEPA) regulates business and operators to protect and improve Scotland’s environment. SEPA’s regulation falls under four main regulatory regimes – water, waste, radioactive substances and industrial emissions. These regimes were developed over a number of years, largely as a result of initiatives and subsequent Directives in the European Union, which were then transposed into Scots law. Because this legislation was developed at the EU level and subsequently transposed independently and over a very broad timeframe, it is fragmented and unaligned in terms of both the legislation itself and its operation. This is unnecessary, and causes inefficiencies and a lack of transparency for SEPA and for those whom it regulates. To address this, the Scottish Government and SEPA developed an integrated authorisation framework (IAF) policy which would bring SEPA’s regulatory duties into a single piece of legislation, with common procedures, simplifying processes for SEPA and those whom it regulates, and maintaining current standards.

The first step to realising this IAF were the Environmental Authorisations (Scotland) Regulations 2018 (“the 2018 Regulations”) which set out the common procedures for environment regulation and the technical provisions for the regulation of radioactive substances activities. To provide business with certainty and time to adjust to the changes in regulation the IAF would necessarily bring, and to ensure manageable workloads for SEPA, the 2018 Regulations did not include technical provision for the other regimes. The introduction of the other regimes has been in the planning since those regulations entered into force; the Environmental Authorisations (Scotland) Amendment Regulations 2025 (“the 2025 Regulations”) bring the other three regulatory regimes into the IAF provided by the 2018 Regulations, alongside some other changes to correct deficiencies or update regulation that have been identified over the years.

As part of these legislative changes, new activities are being brought into the sphere of regulation that will affect businesses and their obligations.

Intended outcomes

The 2025 Regulations represent the final part of putting in place an integrated authorisation framework for the regulation of environmental activities in Scotland under which SEPA can regulate in a more efficient way. Those that are regulated will also see benefits in terms of efficiencies and clarity over their obligations. In parallel SEPA are reviewing their charging schemes so that regulated operators pay a fair fee for SEPA’s work to protect and improve Scotland’s environment when it comes to the risks those activities may pose for the environment.

The main changes introduced by the 2025 Regulations that will impact business are as follows:

Changes to the way the application of sewage sludge (and other waste for the purposes of soil recovery) to land is regulated

Following a review in 2016, these changes include incorporating relevant parts of the “Safe Sludge Matrix” into law, adding a “Fit and Proper Person” test for authorised persons, establishing a single regulatory system for organic waste to land activities, and tightening regulatory powers for SEPA.

Widening the scope of regulation for carbon capture, utilisation and storage (CCUS) activities

Regulation of these activities only covered capture and geological storage of carbon dioxide streams at industrial sites that already had a permit under the Pollution Prevention and Control (Scotland) Regulations 2012. With these changes CCUS activities above certain thresholds will be regulated regardless of whether the site already has a permit to operate, and activities in scope are widened to include use activities as well as storage. These changes are necessary to ensure regulation is fair and to recognise increased activity in this sector as a result of decarbonisation goals as part of a just transition.

Introducing regulation for the non-waste Anaerobic Digestion (AD) sector

Anaerobic digestion that uses various feedstocks identified as wastes has been regulated for a number of years because of its potential to impact the water environment and cause nuisance issues (odour). The 2025 Regulations introduce regulation for anaerobic digestion that use bio-based feedstocks not defined as waste (for example crops grown specifically for this purpose). This activity carries the same risks for the environment as waste AD does, and is becoming a significant part of the AD sector in Scotland. The 2025 Regulations will ensure there is a level regulatory playing field for those operating AD in Scotland and ensure all AD activities are conducted in ways that do not impact the environment.

Introducing regulation for small electricity generators at a single site, where they aggregate to One MW thermal input or more

Diesel and heavy fuel oil generators are used for various purposes throughout Scotland industrially. The transposition of the EU Medium Combustion Plant Directive (MCPD) by the Pollution Prevention and Control (Scotland) Regulations 2012 (with which the 2025 Regulations align) means that by 1 January 2029 all generators with a thermal input of 1 – 50 MW require to be permitted (or, in the case of the 2025 Regulations, authorised) and all will need to meet certain air quality derived emission limit values (ELVs) from 1 January 2030. This has been a phased process, commencing with larger generators, and moving to small generators with rated thermal inputs equal to or greater than 1 and less than or equal to 5 megawatts. To avoid a loophole in this scheduled Regulation, the 2025 Regulations introduce obligations for smaller generators that aggregate to 1 MW thermal input or more at a single site, because the environmental impact of such generator arrays is very similar to that of single, larger generators captured by the MCPD. Under the 2025 Regulations, such generator arrays will need to meet ELVs set by SEPA under the authorisation regime to protect air quality, in line with the requirements for larger individual generators.

Options

This BRIA considers two options – “do nothing” (option 1) and “Include the new activities, amended according to stakeholder engagement” (option 2). A third option, to implement changes proposed prior to consultation, was discounted in light of the outcome of the public consultation. We consider the changes covered by option 2 are the only realistic way to progress the objectives of the IAF.

Sectors affected

The new activities brought into scope of environmental regulation by the 2025 Regulations affect the following stakeholder groups: public and private sector operators that produce, treat, handle, store and spread sewage sludge, including Scottish Water and other operators of PFI contracts such as Northumbrian Water, Veolia and Scottish Power; operators that plan to develop and implement CCUS technologies (little is known about the shape and size of this sector yet, as it is in development); private sector operators that use non-waste material in their digestors and their suppliers (including farmers and whisky distillers); Scottish and Southern Electric (SSE) and private organisations that use generators.

Engagement completed, ongoing and planned

Completed engagement has included Scottish Government and SEPA specific engagement with affected sector representatives and policy leads with Scottish Government, Agencies of government and our counterparts in England and Wales, COSLA, the UK energy regulator Ofgem, and separate public consultations run by Scottish Government (Dec 2023 – Mar 2024) and SEPA-led engagement sessions (Jan – Apr 2024).

Anticipated impacts (intended and unintended, positive and negative) and mitigating actions

The 2025 Regulations’ new activities will bring additional costs for business. These will include direct costs (e.g. fees payable to SEPA) as well as indirect costs (e.g. investment to bring facilities up to compliance standards). It was not possible to get a full picture of these costs for this BRIA across all of the new activities. Where this is the case, a qualitative approach has been taken. The public and sectoral engagement has been instrumental in informing this discussion.

The 2025 Regulations’ new activities will bring benefits for the environment and the people of Scotland. They will bring a better regulatory approach to sewage sludge, and include the regulation of the other activities that can pollute water or cause poor air quality, as well as cause nuisance issues.

One specific consideration that stakeholder engagement brought to light was the potential adverse impact on island communities and their security of electricity supply. Island communities are reliant on mainland power via subsea cables, so when there are problems with these cables, or maintenance of cables is required, islands’ electricity supply must be maintained by the use of electricity generators. To prevent island communities being disproportionately impacted by the 2025 Regulations, specific derogations exempt the continued use of these generators from the requirements until end 2039 in the case of unplanned mainland power outages, and end 2033 for planned power outages, by which time we are confident that investment will mean air quality objectives can be met and remaining island generation brought into compliance.

Enforcement/ compliance

SEPA will enforce the Environmental Authorisations (Scotland) Regulations 2018 as amended by the 2025 Regulations. A phased approach is being taken to their implementation to allow business time to adjust, and SEPA time to set up the internal systems it needs to regulate effectively and efficiently.

Recommendations/ implementation plans

The option that the 2025 Regulations represent has been developed following extensive stakeholder engagement. The do nothing option (1) does not meet the objectives of the integrated authorisation framework the EASR 2018 represents and the associated environmental benefits. Scottish Ministers are content to progress the 2025 Regulations as drafted, informed by the extensive engagement with stakeholders

The following schedule has been agreed to phase in the new activities once the 2025 Regulations enter into force.

Evaluation and monitoring of implementation/ review of BRIA

The integrated authorisation framework will be amended from time to time in line with advances in technology and as need arises. When this happens, this BRIA will be revisited as needed.