Environment | UK Regulatory Outlook May 2026

Government responds to consultation on British Industrial Competitiveness Scheme 

The Department for Business and Trade (DBT) on 16 April published its response to the consultation on the British Industrial Competitiveness Scheme (BICS) – focusing on eligibility and approach. BICS is designed to reduce electricity costs for manufacturing in key industries in Britain. It will achieve this by exempting eligible businesses from paying costs associated with the Renewables Obligation (RO), Feed-in-Tariffs (FITs) and Capacity Market (CM) payments. The scheme will run until 2035.  

The consultation response confirms:  

• Businesses will be eligible for BICS if they operate in the "frontier industries" of the Industrial Strategy's growth sectors (the IS-8). Businesses will also need to manufacture at least one eligible product – defined using HS6 codes (international product classification codes).  
• Exemptions will be based on how much electricity is used on the eligible products – below 25% will see no exemption, between 25% and 50% will see a 50% exemption and above 50% will see a 100% exemption.  
• Exemptions from RO and FITs payments will apply from April 2027, with CM exemptions from October 2027.  

There will be an additional payment in April 2027 for businesses which would have been entitled had BICS been operable from April 2026.  

Surface and Groundwater Pollution Directive is published 

Directive (EU) 2026/805 has now been published in the Official Journal of the European Union amending previous directives on water policy and environmental standards (the Water Framework Directive, the Groundwater Directive, and the Directive on Water Surface Quality).  

The amendments align the reference lists of water pollutants to the latest scientific understanding. Newly added pollutants will be monitored and more strictly controlled. The new substances listed will be those with well-documented harmful effects on the environment and human health. Six substances have been reclassified as no longer posing EU-wide risks and will instead be designated pollutants of national concern.  

Member States will need to bring into force regulations to comply with the directive by 21 December 2027. 

UK government announces abolition of carbon price support 

The government has confirmed that carbon price support will be withdrawn from April 2028. The "carbon price floor" encouraged low carbon electricity by increasing the cost of emitting carbon dioxide by taxing fossil fuels used in the generating process.  

The statement confirming that the carbon price support would be removed said that the carbon price support system was no longer fit for purpose, and with the evolution of the Emissions Trading Scheme, removal of the carbon price support system would simplify tax and carbon pricing.  

BNG monitoring costs can be secured by planning obligation 

The Planning Inspectorate (PINS) has confirmed in an appeal decision that Biodiversity Net Gain (BNG) monitoring costs for councils could be secured via a planning obligation.  

The site in question would use on-site habitat enhancement as part of a development of a new boiler house and chip storage building. Both parties accepted the need for BNG, but the applicant contested that planning conditions are usually monitored as part of the council's usual duties so should not require additional monitoring fees to be secured as part of the planning consent. 

PINS accepted the planning inspector's position that, due to BNG requiring 30 years of maintenance, it was materially different from most standard conditions and placed a longer burden on local authorities. As such, the condition to pay a fee of £1,248 plus £360 in legal costs was acceptable.  

Amendments to the Climate Change Agreement Regulations 

Climate Change Agreements (CCAs) are voluntary agreements made with the Environment Agency. They commit energy-intensive industries to improve their energy efficiency and reduce CO2 emissions. In return, they receive a reduction in the rate of Climate Change Levy they are required to pay. 

From 1 January 2027, three new processes will be added to the CCA scheme: mechanical plastic recycling, packaging of spirits, and production of EV batteries. The regulations will also make some minor clarificatory updates to CCAs.  

Update to the ban on destruction of unsold consumer products 

See sustainable products section. 

Environmental Audit Committee: PFAS report 

The Parliamentary Environmental Audit Committee (EAC) has published a report, "Addressing the risks from Perfluoroalkyl and Polyfluoroalkyl Substances (PFAS)", calling on government to take a stronger approach to PFAS regulation.  

PFAS (often referred to as "forever chemicals") are a class of chemicals with a number of consumer and industrial use cases, such as frying pans or fire extinguishers. Due to their inherent resistance qualities, they accumulate in the environment and in animals and/or people.  

The EAC provides a number of proposals to reduce the harmful effects of PFAS:  

• Restricting PFAS: Implementing a phased restriction on PFAS use in non-essential consumer products (food packaging, cookware, school uniforms) from 2027; set limits on PFAS found in food and introduce standard labelling for consumer information.  
• Remediation: Applying the polluter pays principle to PFAS remediation; introducing a PFAS remediation fund.  
• Destruction: A review into the UK's current incineration capacity for destroying PFAS to determine whether it is sufficient and funding for research into other methods of removal.  

Draft Waste Tracking Regulations laid before Parliament 

The draft Digital Waste Tracking (England) Regulations 2026 have been laid before Parliament for consideration. The regulations are expected to come into force from 1 October 2026, to align with the application of equivalent regulations in Wales.  

The regulations will be implemented in phases.  

Phase 1 will require operators of sites which receive "controlled waste" under environmental permits to record information about the waste and ensure it is entered into the digital tracking system. This will replace the current system of waste transfer notes and hazardous waste consignment notes.  

Phase 2 will then include additional obligations to: include commercial waste received at household waste recycling centres, and track waste digitally from where it is produced to where it is received as waste.  

European Commission launches consultation on European Oceans Act 

The European Commission has launched the public consultation for the future European Oceans Act (EOA). The consultation will run until 16 July 2026, and the proposed directive will be adopted in Q4 of 2026.  

The EOA is designed to bring a "comprehensive strategy" to protect the ocean and its linked economies. The resulting directive is expected to bring together all related regulation on economic, climate, environmental and social protections into a single instrument.  

Flat rate of 20p announced for Deposit Return Scheme 

The deposit management organisation (DMO) has confirmed that the deposit return scheme (DRS) will have a flat "deposit" fee of 20p per in-scope container. It is set to launch in October 2027 in England, Northern Ireland and Scotland. 

The DRS will charge consumers for the containers at the point of sale. This deposit will then be returned to them when the containers are returned.  

Environment (Principles, Governance and Biodiversity Targets) (Wales) Act receives Royal Assent 

The Act represents a new overarching framework of environmental protection in Wales. It establishes:  

• Entrenched principles of precaution, prevention and rectification of environmental damage at source (via the polluter pays principle). There will also be an overarching objective to ensure environmental protection and improvement of environmental quality. 
• An independent body (Office of Environmental Governance) to oversee the implementation of environmental law by public bodies. 
• A biodiversity target-setting framework to reverse biodiversity decline. 

BNG for Nationally Significant Infrastructure Projects comes into effect 

The Environment Act 2021 (Commencement No 11) Regulations 2026 were officially made on 5 May 2026, and came into force from 7 May 2026. The regulations mean that Nationally Significant Infrastructure Projects (NSIPs) are officially subject to Biodiversity Net Gain (BNG) requirements from 2 November 2026. The BNG register was also concurrently extended to enable registration of NSIPs.  

New fly-tipping provisions under Crime and Policing Act 2026 

The Crime and Policing Act 2026 (CPA) received Royal Assent on 29 April 2026.  

It contains a number of provisions related to fly-tipping and waste offences, which complement other recent announcements from the government as it looks to tackle the growing problem of unauthorised waste disposals.  

The CPA introduces the following measures:  

• An obligation on the secretary of state to issue guidance to waste collection authorities (WCAs) on evidence collection to support their work to tackle fly-tipping, the powers of authorised officers to search and seize vehicles, and guidance on other enforcement functions.  
• An obligation for WCAs to have regard to the published guidance.  
• An addition of an offence where vehicles are used for the purposes of unauthorised waste disposal under the Road Traffic Offenders Act. The offence could lead to discretionary disqualification or up to nine points on the offender's licence.  

King's Speech 2026 – environmental implications 

The King's Speech outlined the following proposals that will affect the environment and energy sectors:  

• The Clean Water Bill: Creating a new water "super regulator" to absorb functions of various existing regulators. The bill aims to improve environmental protections and reduce pollution through various measures. 
• A Regulating for Growth Bill: This will enhance the duties on regulators (for example, the Environment Agency) to prioritise growth in their areas of oversight, without undermining their fundamental function.  
• The Energy Independence Bill: To reform market, planning and regulatory frameworks in the hope of accelerating deployment of renewable energy.  
• A Nuclear Regulation Bill: To progress the recommendations of the Nuclear Regulatory Review.  
• The Electricity Generator Levy Bill: Increasing the generator levy from 45% to 55% from 1 July 2026.  

Defra announces new legislation under the Waste Crime Action Plan 

The Department for Environment Food and Rural Affairs (Defra) has announced a number of new laws to be laid before Parliament under the UK government's Waste Crime Action Plan (WCAP). 

These latest reforms are aimed at enhancing the permit system for waste carriers, to ensure more thorough vetting and to improve enforcement. The amendments (expected to be brought into force in 2027) include:  

• Implementing a new permit system, which will require ongoing demonstration that they meet the requirements to operate.  
• Enhancing background check requirements for operators.  
• A requirement for operators to demonstrate they have the technical competence required to transport and manage waste.  
• Increased powers to revoke permits and issue enforcement notices.  
• The implementation of penalties of up to five years' imprisonment for illegally dealing in waste.  
• An obligation for operators to display their permit number in all advertisements (including on vans) to make identification and reporting easier.  

International Sustainability Standards Board to publish a nature-related disclosure practice statement 

See ESG section.