Ofwat to evaluate a funding mechanism for Industrial Emissions Directive costs

Ofwat has issued a data request to English water companies to enable it to assess whether to provide funding and/or an uncertainty mechanism to allow the recovery of some implementation costs for compliance with the Industrial Emissions Directive (IED) as part of PR24.

Compliance is demanded by December 2024. The Environment Agency clarified this with water companies in July 2019 ahead of final PR19 determinations but according to Water UK figures, industry wide compliance costs have risen substantially to £2bn since the publication of a September 2022 document specifying the required standards. A number of companies have approached Ofwat for funding.

The data request will help Ofwat assess the situation. It asks each company for details of its sites to which the IED applies; a breakdown of cost incurred to date and forecast cost to achieve full compliance; an indication of whether a request for additional funding will be made as part of PR24; and other information to ensure costs are not double counted under other allowances such as bio resources base costs or net zero expenditure.

Under the IED, large industrial facilities undertaking specific types of activity are required to use best available techniques to reduce emissions to air, water and land.