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

Section 1: Background, aims and options

Background to policy issue

Currently, SEPA’s regulatory duties fall under different regulatory regimes, introduced over a number of years that implement various national and international commitments and EU Directives. This created a tapestry of requirements for regulated business to navigate and for SEPA to operate under, also creating arbitrary differences in how different sectors are regulated despite similarities in environmental risk profiles.

The Environmental Authorisations (Scotland) Regulations were introduced in 2018 and sought to address this issue by providing an integrated authorisation framework for environmental regulation. Initially, only the technical provision for the regulation of radioactive substances activities was included, with the intention to bring in the other regulatory regimes over time.

The 2025 Regulations make the outstanding changes foreseen for the 2018 Regulations. The amendments mean that all four areas of SEPA’s main regulatory regimes – on radioactive substances, water, waste management and industrial activities (PPC) – are captured in one piece of legislation and subject to the same regulatory framework. The effect of this is a simplified, streamlined regime for both the regulator and operators to whom the regulations apply. This will give continuity, increased clarity and transparency for regulated business, efficiencies for the regulator, and deliver environmental benefits. Businesses in Scotland will be clearer on what is required to meet their regulatory obligations and achieve compliance.

These amendments include changes to the regulation of sewage sludge (and other waste applied to land for purposes of soil improvement) activities and extend environmental regulation to incorporate carbon capture, utilisation and storage (CCUS), non-waste anaerobic digestion (AD), and certain electricity generation activities not in scope of current regulation.

Purpose/ aim of action and desired effect

The integrated authorisation framework is a key component of the joint Scottish Government-SEPA programme of policy, legislative and operational improvements. Overall, the integrated authorisation framework will provide a simpler, more risk-based, proportionate system of environmental regulation. It enables SEPA to deliver proportionate, joined-up, outcome focussed regulation, whilst reducing the regulatory burden for operators.

The individual amendments that this final BRIA concerns are new activities that will enter into law as part of the transition from the previous regulatory regimes, and separately, changes to the regulation of the use of sewage sludge and other waste added to land for soil improvement. These new activities do not directly contribute to this streamlining of regulation; the primary aim of introducing the new activities is to bring them into SEPA’s sphere of regulation and improve environmental protection, for the benefit of local communities across Scotland and to give certainty to regulated business. The introduction of new provisions for small generators will also mean that Scotland is more closely aligned with the rest of the UK. Including these new activities as part of the wider amendment of the 2018 Regulations is the most straightforward way to do this in a timely manner.

Options (considered so far/ still open)

Option 1: Do Nothing (“de minimis”)

Application of sewage sludge (and other waste) to land

No change is made to the way the application of sewage sludge (and other waste) to land is regulated, and the new activities are not brought into scope of SEPA’s regulation.

Recommendations from the Government’s 2015 review of sewage sludge legislation and guidance would not be taken forward.

This would perpetuate the potential for communities to encounter adverse impacts from a sub-optimal regulatory framework for these activities. Application of sewage sludge to land is currently subject to ‘passive’ regulation where operators must abide by certain rules but there are limited enforcement options, limited cost recovery for SEPA and no system for checking that those who spread sewage sludge are ‘fit and proper’ to do this work.

Carbon Capture, Utilisation and Storage

Carbon capture, utilisation and storage would continue to only be regulated as an activity where carbon dioxide is produced as a result of an industrial emissions activity and then geologically stored.

Carbon capture, utilisation and storage technologies are essential if Scotland is to progress its just transition and meet its net zero commitments. Without the inclusion of this new activity, it is likely this developing area would be inadequately regulated compared with other industrial operations of a similar scale that are regulated, just as work is gathering pace to develop and deploy these technologies as part of Scotland’s approach to meeting these commitments. Without regulation there will be no level playing field for business and potential environmental risks to air and water quality and from noise will not be appropriately managed.

Non-waste Anaerobic Digestion

Non-waste anaerobic digestion would remain outwith SEPA’s regulatory scope.

This would mean an activity with similar environmental risks to analogous regulated activities (anaerobic digestion with waste feedstocks) would continue to be unregulated, with continuing unchecked potential impacts on communities and the environment. Non-waste anaerobic digestion has been growing in Scotland recently and may continue to do so in the future.

Electricity Generators

Aggregations of electricity generators which combine to 1MWth or more at a single site would be unregulated, while single generators of this size are covered by regulation.

The approach to regulating emissions from electricity generators would remain skewed, as multiple generators at a single site aggregating to 1 MWth would remain unregulated in contrast to single generators with a rated thermal input equal to or greater than 1MW, with the potential for local air quality impacts not adequately addressed through regulation. Additionally, operators would lack further incentive to move to more environmentally sustainable forms of generation as part of their planned replacement equipment procurement strategies^[2].

SEPA could attempt to address some of these issues by producing sector-specific guidance, but there is no guarantee operators would act on this in the absence of regulation. This would not consolidate the current approach to regulation into a single integrated authorisation framework and would be unlikely to result in the same improvements for air quality.

Option 2: Include the new activities and the changes to the way the application of sewage sludge (and other waste) to land is regulated, amended according to stakeholder engagement

Option 2 represents the changes being introduced by the 2025 Regulations and entails the following. Please see also Section 2 (Engagement and Information gathering) for summaries of the evidence used in deriving this option.

Application of sewage sludge (and other waste) to land

These changes will result in new requirements, for example preventing application of untreated sewage to land and tightening soil protection, that protect the environment and the use of agricultural land following application of sewage sludge will be subject to authorisation (by way of general binding rules). The 2025 Regulations will allow SEPA to regulate all aspects of sewage sludge use on agricultural land, including odour. From investigations into this industry we anticipate this will impact on approximately six producers of sewage sludge for application to land in Scotland, and on sludge haulage and spreading contractors across Scotland.

The 2025 Regulations will move the entire system of managing the application of sewage sludge (and other waste) to land into the integrated authorisation framework. This requires operators to be ‘fit and proper’ to carry out the activity and be subject to conditions necessary to protect the environment.

Alongside new requirements in relation to the application of sewage sludge and other waste to land, this option simplifies and integrates the overall regulation of this activity. The new regime enables each operator who applies waste to land to choose to be authorised under a single permit, rather than requiring a separate exemption to be registered for each site at which they spread waste, thereby reducing administration costs and resources.

These amendments also introduce other changes to the current regulatory requirements for the application of sewage sludge, or any waste, to land. The 2025 Regulations will prevent the application of untreated sewage sludge to land, tighten the soil protection values and monitoring requirements, and put relevant parts of the safe sludge matrix on a statutory footing.

This option also addresses the need for various clarifications (on definitions, nitrogen addition), and removes the default requirement for total nitrogen soil sampling in Schedule 18, following stakeholder feedback from the public consultation.

Carbon Capture, Utilisation and Storage

The approach will mean that any activity for the capture of carbon dioxide from any source, whether related to an industrial emissions or other emissions activity (as defined in the 2018 Regulations once amended) regulated by SEPA or otherwise, is an activity requiring an authorisation under the 2025 Regulations. The types of activity that would require an authorisation are:

• Carbon dioxide removal (CDR) technologies such as Direct Air Capture
• Carbon capture and utilisation plant
• Carbon capture plant for the purpose of storing carbon dioxide.

This is a developing industry. We have little information on the current scale of the sector, or potential new entrants over the next few years and quantitative information is not available.

Under current legislation (PPC) carbon capture for geological storage arising from an installation otherwise regulated under the PPC Regulations is an activity requiring a permit, in line with the requirements of the Industrial Emissions Directive. This means that in order to be regulated, the carbon capture plant:

• must be located at an installation already carrying out another industrial activity listed in the PPC Regulations
• must capture carbon dioxide from a point source
• must capture carbon dioxide for the purpose of geological storage.

The role of carbon capture is evolving, and many types of carbon capture technology will not fit these definitions and would therefore be uncontrolled.

This new regulated activity will provide a level playing field and ensure potential environmental risks to air and water quality and from noise are appropriately managed. The level of authorisation, through permit or registration, will be proportionate to the risk to the environment which is important given the developing nature of the sector.

This option clarifies that activities in scope of regulation are those that are carried out in a technical unit for the capture of carbon dioxide for the purposes of utilisation or storage, addressing comments raised by stakeholders in the public consultation.

Non-waste Anaerobic Digestion

The approach is for these activities to be brought into scope of regulation so that the activity is treated in the same manner as the anaerobic digestion of waste. This is important to mitigate pollution (e.g. odour impacts on local communities and leakage from storage tanks into the water environment) and provide a level playing field across the anaerobic digestion sector as a whole.

Anaerobic digestion processes biomass (plant and animal materials) into methane or biogas for heating and power. The environmental risk from anaerobic digestors that use non-waste biomass as feedstock is similar to those that use waste feedstock, which are currently regulated.

Anaerobic digestion is important to the circular economy and net zero. Bringing non-waste anaerobic digestion into the Regulations will provide a level playing field for all operators of anaerobic digestion plant, whether waste or non-waste, and ensure that regulation is appropriate, proportionate and equitable based on risk to the environment. In the consultation, a capacity threshold of 100 tonnes/day was included, below which SEPA would require registration of such activities, and above which a permit would be required.

To address stakeholder comments from the public consultation, this option clarifies that it applies to non-waste materials and associated feedstock and digestate handling and storage.

Electricity Generators

The 2025 Regulations will amend the 2018 Regulations to apply regulatory controls on electricity generators such that any combustion plant that generates electricity and aggregates to 1 MWth or more at the same location are in scope. This will include any generator which supplies electricity, either to the grid or for independent production and use at site of generation. Bringing this into regulation will enable the consistent application of appropriate controls on the emissions to air across the UK. Air pollutants resulting from combustion plant which can impact on human health and the environment include oxides of nitrogen (NOx), sulphur dioxide (SO2), and dust.

Generators can be used in arrays to supply power and as back up to power supplied from the grid. Some may be operated intermittently to supply the grid to balance electricity supply and demand in real time. Importantly, standby generation is relied upon by island communities to provide additional peak supply and contingency in the event of subsea cable faults or power outages when the distribution network is being improved or maintained.

This option subjects plant that aggregate to 1 MWth or more on a single site to similar controls as those that have been in place for specified generators in England and Wales since 2018, via the Environmental Permitting (England and Wales) Regulations 2016. This brings the operation of these generating plant up to modern emissions standards. For island communities, and with reference to operators’ Environmental Management Strategies (EMS; see also the SSEN Hebrides and Orkney whole system uncertainty mechanism), over time this should involve the upgrading of electrical distribution networks and/or facilitate the greater use of renewable/low carbon technologies to displace the current fossil fuel power plant.

In the public consultation stakeholders identified that certain exclusions are required from this Regulation, and this option incorporates these as set out below.

• any combustion plant operated for the sole purpose of maintaining power supply at a site during an on-site emergency
• generators with a defined nuclear safety role under a nuclear site licence issued by the Office for Nuclear Regulation .
• any combustion plant operated for the purpose of testing if used for 50 hours or less per year
• any combustion plant that is mobile unless it is connected to (i) an [electricity] transmission system or distribution system (and where this is not being used for emergency community supply continuity) or (ii) other apparatus, equipment or appliances at a site and performing a function that could be performed by plant that is not mobile (where “mobile” means combustion plant designed to move or to be moved whether on roads or other land)

We are also aware that complying with the Regulations, as drafted for purposes of consultation and presented under option 3, could place additional costs and burdens on electricity providers on islands that rely on existing fossil fuel generators as back-up power in the event of subsea cable faults and related emergency /security of supply situations.

However, funding for these operators that relates to security of supply on the islands, where required to comply with regulations or demonstrated to be economic and efficient, is recovered from electricity customers across the UK, so we do not expect necessary changes that are agreed with the UK energy regulator Ofgem to impact island communities disproportionately. This is discussed further in section 3 (Costs, impacts and benefits). In the 2025 Regulations we have included two specific derogations to allow the planned (for maintenance) and unplanned use of island electricity generators that would not comply with the Regulations to continue until their use can be discontinued.

Option 3: Implement the proposals as initially drafted

Option 3 represents the proposals as included in the Scottish Government public consultation on the Regulations that was live from 15 December 2023 for 12 weeks. Aside from clarifications and revised definitions as noted above, this option would mean that the scope of CCUS regulation could be interpreted to extend further than a technical unit for the capture of carbon dioxide for the purposes of utilisation or storage (i.e. the scope of this Regulation was not clearly defined). For sewage sludge, it would still be necessary for operators to submit total nitrogen information from soil sampling. But the main implication of option 3 is that all generators would be captured by the Regulations (those exceptions listed under option 2 would not apply).

We consider this option not to be a realistic proposal in light of the consultation responses and Scottish Government’s commitments following these, and so is not discussed further in this BRIA.

Sectors/ Groups affected

The 2025 Regulations will impact the following stakeholder groups:

• Businesses - already regulated and currently unregulated
  • For sewage sludge (and other waste) application to land this will directly impact approximately six public and private sector operators that produce, treat, handle, store and spread sewage sludge. These businesses are currently only subject to passive regulation and will incur application and subsistence fees for new permits, they will also see some increases in administration associated with new permits and they will need to undergo a ‘fit and proper person’ test. The main affected operators include Scottish Water and other operators of PFI contracts such as Northumbrian Water, Veolia and Scottish Power, all of which are large companies. There are expected to be reductions in administration costs for other (non sewage) waste to land operators who will be able to choose to operate with a single permit rather than multiple registrations for different sites. These savings may be passed onto private sector producers of waste which is spread to land, including whisky distillers. There will be a level regulatory playing field for all applications of waste to land which will particularly benefit those who apply non-sewage waste to land, but the simplified permitting framework will benefit all.
  • For CCUS, operators who plan to develop these technologies will be affected (compared with the current narrow regulatory position on these activities). Potential operators of carbon capture technologies, where not already associated with a PPC permit, will require an authorisation. Operators who are already permitted at PPC sites will benefit from a level regulatory playing field. Operators who are currently unregulated will require an authorisation and, depending on the scale of their activity, may incur permit application costs, subsistence fees and some additional administration. Given that this sector is currently undeveloped we know very little about the types, size or location of businesses who will get involved in CCUS.
  • For non-waste anaerobic digestion this will directly impact private sector operators that use non-waste material in their digestors. Some of these businesses will currently be regulated because they already use waste materials in digestors but others who solely use non-waste materials will currently be unregulated. Impacted operators will incur charges for new authorisations and increases in administration. SEPA estimates that between 10 and 20 plants currently operating in Scotland are likely to be affected in this way. The proposals may also indirectly impact suppliers of non-waste anaerobic materials for digestate, these are likely to be farmers who grow biomass crops. Some of these growers may operate their own non-waste AD plant and some will supply biomass to AD operators. Biomass crops may be grown exclusively or as a break in a farming food or fodder crop rotation.
  • For electricity generation, primarily affected will be Scottish and Southern Electric (SSE plc) and private organisations that use generators for on or off site power. Exemptions from the Regulations are proposed for situations where electricity supply is essential for emergency back up and for human welfare or health and safety reasons. This will avoid disproportionate impacts on communities in the Scottish Islands where generators can be used to provide contingency power in the event of supply outages from the mainland, and at nuclear sites where generators can be essential for safety. Businesses mostly likely to be impacted are therefore those who operate electricity plant to supply on site power or to the grid, including for peak lopping (“top up power” during periods of high demand), but also some Combined Heat and Power (CHP) operators on AD plant, domestic and industrial CHP users that are not covered by the Medium Combustion Plant Directive already, landfill engines, and engines participating in the electricity supply market.
• The regulator
  • SEPA will expand the range of activities it “actively” regulates. SEPA will not incur any additional costs as it is able to recover the cost of any additional regulation through charging. SEPA will also see improvements in the efficiency of its regulatory systems through the operation of a single regime rather than multiple regulatory regimes and a levelling of the regulatory playing field. These efficiency improvements will take some time to bed in but will include rationalisation and coordination of site inspections and improved efficiency of electronic systems.
• Scottish Government
  • Will enact the legislation
• Other public bodies including Local Authorities, NatureScot and statutory consultees – improvements in the clarity and objectives of regulation and simplified processes, for example consultation processes, are likely to benefit other statutory bodies, reducing administration and delivering efficiency improvements.
• Consumers of products produced by affected businesses – see indirect impacts described above (under businesses). Unlikely to be significant.
• Communities – local to regulated businesses
  • Communities local to regulated businesses will benefit from improvements to the local environment in all the proposed scenarios, these improvements include reductions in odour from sewage sludge application to land and anaerobic digestors, reductions in water pollution from land run off and digestors. There will be reassurance for communities local to carbon capture sites that the operations will give rise to minimal environmental impacts. There may also be reductions in odour and air quality impacts from large electricity generator arrays. It should be noted that for existing island generation plant that continues to operate under the derogations in the Regulations, these benefits will not be realised until replacement of these assets has been completed according to the power company’s investment plan.