Environment | UK Regulatory Outlook March 2026

Increased relief for energy intensive industries 

The Energy-Intensive Industry Electricity Support Payments and Levy (Amendment) Regulations will come into effect on 1 April 2026, offering increased relief to energy-intensive industries under the network charging compensation scheme. The level of relief available under the scheme will be increased from the current level of 60% to 90% of network charging costs.  

The regulations will also extend the application window for the scheme from one to two months, allowing applicants more time to apply for available compensation. This extension will be available from 30 June 2026.  

The amendments to the scheme follow the government's consultation in 2025, with the response to this consultation being discussed in the November edition of the Regulatory Outlook.  

Updated waste separation requirements for recycling in Wales 

Amended waste separation requirements will come into effect in Wales on 6 April 2026. The Waste Separation Requirements (Wales) (Amendment) Regulations 2026 will expand the duty on businesses and public sector bodies to separate unsold small waste electrical and electronic equipment (sWEEE) to a duty to separate all sWEEE. The amended regulations also remove expanded polypropylene from the plastic recyclable waste stream.  

The amended regulations are accompanied by the Welsh government's final amended code of practice for the separate collection of waste, which offers guidance on the separation requirements.  

UK ETS auction reserve price amended 

On 4 March 2026 the Greenhouse Gas Emissions Trading Scheme (Auctioning) Regulations 2026 were made, amending the regulations governing the auctioning of UK emissions allowances in the UK Emissions Trading Scheme (UK ETS). The amendments come into force on 8 April 2026 and are accompanied by an explanatory memorandum. 

The amended regulations have the effect of increasing the minimum price at which UK emission allowances can be sold at auction from £22 to £28 per tonne of carbon dioxide equivalent. They also introduce a mechanism for annual inflation-based adjustments which will come into effect from 1 January 2027.  

Additionally on UK ETS, the Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2026 came into force on 11 March 2026, implementing proposals on free allocation and carbon leakage. The amendments will phase out annual free allocation over the 2027-30 allocation period for industrial installations covered by the UK Carbon Border Adjustment Mechanism, among other changes which help to clarify provisions on free allocation.  

First restrictions introduced under UK REACH 

The first restrictions under UK REACH (the UK's chemicals regulatory framework) were made on 2 March 2026 and will come into effect on 1 April 2026.  

The restrictions relate to lead in ammunition and are aligned with UK REACH's role in restricting the sale or use of dangerous substances that pose an unacceptable risk to human health or the environment.  

The restrictions limit the placing on the market and use of lead shot containing lead in a concentration equal to or greater than 1% by weight. They also restrict placing projectiles with a concentration of lead equal to or greater than 3% by weight on the market, as well as use of such projectiles.  

Earlier this year, the government published its new approach to the UK REACH Candidate List of substances of very high concern (SVHCs), aiming to encourage more SVHCs to be substituted by less hazardous substances. See products section for more details. 

Government publishes new guidance on litter offences and updates the litter code of practice 

The Department for Environment, Food and Rural Affairs (Defra) has published draft statutory guidance on enforcement, alongside a draft of the fourth statutory code of practice on litter and refuse, to assist local authorities with their duties and powers in relation to litter. The updated code of practice includes clearer explanations and updated legislative references, and sets out the recovery times for restoring local environmental standards for litter and refuse.  

Defra's new enforcement guidance includes detail on issuing fixed penalty notices for littering or for the unauthorised distribution of free printed materials. Both this enforcement guidance and the new code of practice are expected to be confirmed as statutory guidance on 6 April 2026. 

Draft regulations on mandatory digital waste tracking introduced in Wales 

The Welsh government has set out the draft Digital Waste Tracking (Wales) Regulations 2026 before the Welsh Parliament, with the regulations due to come into force on 1 October 2026. Other UK nations will introduce similar regulations shortly.  

The regulations introduce the first phase of digital waste tracking in Wales, in which operators of sites controlling waste under an environmental permit will be required to upload information about the waste to the digital system. This new system replaces the current requirements to use waste transfer notes and hazardous waste consignment notes.  

Government proposes broadening the compensatory measures available for offshore wind in England, Wales and Northern Ireland 

Draft regulations expanding the compensatory measures available for unavoidable adverse impacts of offshore wind developments in Marine Protected Areas (MPAs) have been laid before Parliament. They place a duty on the appropriate authority to secure "appropriate" compensatory measures where any such adverse impact has occurred. Appropriate measures are those which benefit UK MPAs in a way that is reasonably proportionate to the potential damage caused by the offshore wind development.  

Defra has published a policy summary to accompany the new regulations, including a proposed three-tiered compensation hierarchy for offshore wind projects. Compensatory measures must be selected in accordance with this hierarchy, as follows:  

• Measures that benefit the impacted feature.
• Measures that benefit a similar feature.
• Measures that benefit the wider UK MPA network.  

Government publishes the final UK Sustainability Reporting Standards: UK SRS 1 and UK SRS 2 

The Department for Business and Trade has published the final UK Sustainability Reporting Standards (UK SRS), taking into account the feedback from its consultation on them. Examples of the amendments made following the consultation include:  

• The transitional relief that permitted delayed reporting in the first year has been removed from the standards.
• The requirement from UK SRS S2 to use the Global Industry Classification Standard has been removed.
• A mechanism for financial institutions to explain why they have been unable to comply with the financed emissions disclosure requirements has been added.
• Changes to the reliefs within UK SRS S1 and UK SRS S2 relating to reporting on non-climate matters and Scope 3 GHG emissions. 

Welsh Parliament has passed the Environment (Principles, Governance and Biodiversity Targets) (Wales) Bill 

The Welsh Parliament has passed a new bill establishing the environmental principles of precaution, prevention, rectification at source, and polluter pays in Welsh law. It will also establish an independent body (the Office of Environmental Governance) to oversee the implementation of environmental law in Wales, and will introduce new duties on Welsh ministers to set biodiversity targets. The bill was passed on 24 February 2026, with the next stage being to submit it for royal assent.  

Consistent with the long-term sustainability objectives for Wales, the Welsh government published a set of sustainable investment principles for natural resources earlier this year. These aim to guide funding for tackling biodiversity loss and supporting nature recovery, and increase funding for nature recovery across sectors.  

Environment Agency publishes response to consultation on proposals to amend standard rules permits  

The Environment Agency (EA) published its response to its October 2025 consultation on proposals to amend standard rules permits under the Environmental Permitting (EP) regime to reflect new decarbonisation readiness (DR) requirements. The new requirements stipulate that operators of new and substantially refurbished combustion plants must include a DR report in their EP applications, and that plants must be built in a way that allows for future decarbonisation.  

The new amendments to EP rules mean that operators must keep a site-specific DR report, which is to be reviewed and updated at least every two years, and provide a copy of this to the EA on request. They also ensure that carbon capture readiness and hydrogen conversion readiness conditions under the regime are met.  

Welsh government publishes a strategic priorities and objectives statement for water regulation transition in Wales 

Following its green paper on water governance in Wales, discussed in our February edition, the Welsh government has issued a strategic priorities and objectives statement (SPS) to Ofwat, setting out its strategic priorities and objectives for Ofwat during the Welsh transition to new water regulatory frameworks in England and Wales.  

The SPS outlines what support is needed from Ofwat during the period between the publication of the SPS and establishment of a new integrated regulator, and for the period after the legislation is passed to establish a Welsh economic regulator for water. It sets out the need for Ofwat to continue to provide economic regulation for Wales during the transition period to ensure continuity of oversight, and the requirement that it facilitates the transition from the creation of a dedicated Welsh economic regulator for water to the point it becomes fully operational.  

Draft regulations on a deposit return scheme for drinks containers in Wales laid before Senedd Cymru 

From 1 October 2027, anyone supplied with specified drink containers will be obliged to pay a deposit which is refundable on the return of the container. This will apply to single-use and reusable containers from 150ml to three litres made from polyethylene terephthalate plastic, glass, aluminium and steel. The draft regulations governing this scheme will also set out a framework for enforcement, exemptions and the appeals procedure.  

The Welsh Deposit Return for Drinks Containers Regulations are aligned with other such regulations across the UK. However, the Welsh regulations differ from those of other nations, as glass containers are not caught by the regulations in England and Northern Ireland, but are covered under the Welsh ones.  

Government implements change to Climate Change Levy for hydrogen 

Since 2001, the Climate Change Levy (CCL) has encouraged businesses and the wider public sector to be energy efficient by placing a tax on the supply of energy. However, the evolution of the wider energy landscape since it was introduced means that the applicability of CCL must continue to develop.  

The Climate Change Levy (Fuel Use and Recycling Processes) (Amendment) Regulations 2026 (SI 2026/280) (CCL Amendment Regulations) aim to do just that and came into force on 12 March 2026. They were introduced in response to the government's consultation, which concluded in November 2025. 

The CCL Amendment Regulations mean that electricity which is used in the production of hydrogen through electrolysis, and natural gas which is used partly as fuel and partly as a carbon dioxide source for producing sodium bicarbonate, will now be considered "non-fuel uses" and therefore exempt from the levy. The government's hope is that the simplification of CCL in this sector will ensure that it does not act as a barrier to low-carbon electrolytic hydrogen production.  

Proposals to amend UK ETS for CCS Pipelines 

The UK Emissions Trading Scheme (UK ETS) Authority has published a consultation on streamlining the regulatory requirements for cross boundary carbon capture storage (CCS) pipelines, which closes on 4 June 2026. 

The consultation recognises that CCS pipelines may need to cross territorial (and therefore regulatory) boundaries in the UK before reaching their permanent geological storage sites, and that this process can be complex, burdensome and costly. The current regulatory framework could see up to five different regulators involved in permitting CCS pipelines.  

The consultation looks at streamlining across two separate areas of regulation: onshore and offshore.  

For onshore regulation, the consultation considers two options: 

• determining a single onshore regulator for CCS pipelines (with reference to either the central control room, the location of the operator's registered office or the jurisdiction through which a majority of the pipeline passes); or
• jointly conferring regulatory functions where the various regulators determine a 'lead regulator' to exercise their joint functions.  

For offshore regulation, the consultation considers the following: 

• The onshore regulator remains the regulator up to the offshore storage site (which would then remain within the remit of the Offshore Petroleum Regulator for Environment and Decommissioning (OPRED)); or
• OPRED becomes the sole regulator for the entire offshore element of the CCS pipeline.  

Amendment to UK ETS for merchant shipping 

The government has recently published the Merchant Shipping (Monitoring, Reporting and Verification of Carbon Dioxide Emissions) (Revocation) Regulations 2026, which will come into effect on 3 April 2026.  

The regulations will remove legacy EU regulations on monitoring, reporting and verification (MRV) requirements for international shipping. The change will be accompanied by a change to the UK ETS from 1 July 2026, where eligible maritime operators will be required to meet updated MRV requirements in respect of their carbon dioxide (CO2), methane and nitrous oxide emissions arising from certain activities. 

The regulations are designed to avoid any potential confusion with the legacy regulations prior to the implementation of the new requirements.  

Government response to EOR consultation 

The government has published its response to the consultation on the introduction of Environmental Outcomes Reports (EOR) to replace existing, EU-derived, Strategic Environmental Assessments (SEA) and Environmental Impact Assessments (EIA). The response was published alongside a consultation outcome, EOR: Roadmap to Reform. 

Generally, the Ministry of Housing, Communities and Local Government's response suggests that it will continue to pursue its original consultation proposals. The government is expected to publish a further consultation on the draft EOR regulations, once available, in order to supplement the existing consultation feedback. 

The government aims to bring forward EORs by the end of 2027, and the roadmap to delivering the regulatory framework for them is as follows: 

• Phase 1 – Outcome Setting (this will be accompanied by guidance on demonstrating outcomes are being met).
• Phase 2 – Reforming the process (including drafting and consulting on EOR regulations).
• Phase 3 – Transition and testing (working with the planning advisory service and other stakeholders to ensure a managed transition).  

Government lays plans to expand enforcement powers for waste offences 

Defra has announced that the government is planning to expand the EA's powers of enforcement in order to tackle growing waste crime. Under the proposals, the EA and its enforcement officers will be given additional powers under the Police and Criminal Evidence Act and the Proceeds of Crime Act. 

The changes will mean that EA officers can search premises, seize assets, and arrest individuals without a warrant. Criminals found guilty of transporting and handling illegal waste will also face up to five years in prison. 

Defra is also exploring additional options, including information sharing between banks and finance providers to inform them of offences to prevent financial support, and confiscation of driving licences for those found to be fly-tipping.