Innovation through regulation

Aidan Turnbull of consultancy Environ provides an industry perspective on the role of environmental regulation in stimulating innovation and cleaner technologies

The DTI’s innovation report, published in December 2003, identified three key areas where regulation could stimulate innovation and cleaner technologies through outcome-based regulation: integrated pollution prevention and control (IPPC), eco-design of electrical appliances and vehicle emissions. The DTI is examining how regulation design and
implementation can secure environmental outcomes in a way that promotes innovation and business opportunities.

Nine months on, experience in the surface engineering industry provides evidence of the Environment Agency adopting a more flexible approach to IPPC regulation. The club approach to IPPC led by the Surface Engineering Association (SEA) and Environ was actively supported by the Agency and has assisted 44 companies to write their own IPPC applications. By focusing on an outcomes-based approach, the Agency enabled the club to have a strong influence on IPPC sector guidance. This provided much greater opportunities for companies to apply cleaner technologies and techniques in their IPPC applications.

Demonstrating BAT

In principle, IPPC encourages innovative approaches to cost-effective pollution control because it requires operators to demonstrate use of Best Available Techniques (BAT) to control releases rather than specifying compliance with limit values. BAT guidance for each sector is developed through an EU-wide information exchange process, culminating with BAT reference documents (BREFs).

In practice, there is some doubt over the extent to which the potential for innovation under IPPC has been realised. In many sectors, its effect so far has been to pull up the performance of the laggards, rather than to encourage the leading companies to develop more innovative solutions.

Indeed, there is some evidence that the BAT guidance process can act as a barrier to innovation. Larger equipment suppliers with vested interests can dominate the process and tend to want their techniques adopted as BAT. Development of innovative technologies and techniques is often carried out by SMEs which may not be able to afford the time to input into the BAT development process and attend meetings.
The timescale involved in developing BAT guidance means that it is often not able to keep pace with latest developments or is available too late for companies to use. In the surface treatment sector, whose application window was from 1 May to 31 July 2004, the consultation draft sector guidance was published in February and was essentially unchanged from interim sector guidance which was published in November 2001. The draft BREF document was published in April 2004 and the final version is due out later this year. The final version of the sector guidance was published in July and contains significant amendments to the BAT recommendations which were identified through the IPPC club. These amendments have subsequently fed back into the development of the BREF.

IPPC’s capacity to stimulate innovation also hinges on the regulator’s approach to applications. Emphasis on outcomes gives operators greater flexibility to demonstrate how his techniques prevent or minimise pollution. In contrast, the application templates developed for parts of the food and drink industry adopted a techniques-based approach which focused on a prescriptive comparison between operator’s techniques and BAT.

Club approach

Surface treatment facilities where the aggregate treatment volume is over 30 m3 were required to submit an application for an IPPC permit between 1 May and 31 July. Typical consultancy costs to prepare an individual IPPC permit application in this sector are £14-40,000. However, the majority of companies in this sector are small (20-50 people) with similar processing units and environmental impacts. The SEA and Environ responded by providing a low-cost club approach (£4,200/company) to assist operators in writing applications based on a model IPPC application and a series of structured workshops.

A model IPPC application was developed, including an Application Site Report and Site Protection and Monitoring Programme to meet H7 requirements. These documents were reviewed and approved by the Environment Agency and provided to club companies at the start of the workshops. Exeter electroplating company South West Metal Finishing was selected to act as the model because it carries out a wide range of activities including manual and automatic lines, anodising, chemical brightening and solvent degreasing. This enabled Environ to explore the cost and benefits of a wide range of technology options.

The findings from the model application were discussed in detail in six structured workshops. The workshops also included presentations from suppliers to enable companies to benefit from latest developments. Agency IPPC inspectors attended each workshop to discuss how BAT applied to the wide range of processes found in the surface treatment sector, and to provide advice on the application process.

The primary objective

Throughout the workshops, the Agency emphasised that the primary objective of IPPC is for the operator to demonstrate a sound understanding of the installation’s environmental impacts and to provide a BAT justification based on the particular circumstances at the site. The sector guidance contains indicative BAT which should be considered in the application, but the operator can use his knowledge of the combination of processes onsite to justify the use of more appropriate techniques.
In this sector, the majority of affected companies have less than 50 employees and have had little time to comment on earlier drafts of the sector guidance. Instead, the BAT guidance was influenced by a relatively small group of individuals who did not represent a balanced view of the industry. As a result, the BAT techniques discussed in some parts of the consultation draft issued in April were not necessarily appropriate for large parts of the sector.

With 44 members, the IPPC club represents about 40% of the final number of companies likely to submit applications in the sector. The workshop approach enabled companies to discuss their experiences and suggestions directly with the Agency. As a result the club had a strong influence on the sector guidance and provided much greater opportunities for companies to apply cleaner technologies and techniques.

A good example of this is the indicative rinse water ratios in the consultation draft sector guidance, which were based on data provided by equipment suppliers in the mid-90s. For the majority of installations these figures are far too high and represent a waste of water. Another example is the emphasis on counter-flow rinsing throughout the draft, almost to the point of exclusion of the use of ion exchange systems to recirculate rinse waters, despite the fact that in practice this alternative technique is used by about 40% of the sector. At some anodising sites, ion exchange systems are required in order to meet customer quality requirements.
The workshops highlighted that environmental regulators such as the US EPA already specify use of surfactants as an alternative environmental control technique in regulatory permits. The HSE attended the workshops and confirmed its use as an acceptable control technique under COSHH. Indeed, it now intends to promote greater use of surfactants.

The future

An application for part funding from the DTI to assist development of the innovative aspects of this club was declined. However, given the significant benefits
to the surface engineering industry that this club has achieved it is hoped that the DTI would consider funding applications for other club approaches to regulation in a more favourable light.

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