Environment | UK Regulatory Outlook September 2025

Government releases updated policy on engineered greenhouse gas removals model 

Following an independent review into how greenhouse gas removals (GGR) can assist the UK in meeting its net zero targets in March 2025, the Department for Energy Security and Net Zero published its updated policy and related documents on the proposed business model for engineered greenhouse gas removals in August 2025. 

The government is aiming to develop a sustainable market where engineered GGR (through technologies like direct air carbon capture and storage and bioenergy with carbon capture and storage are funded by high-pollutant industries. The intention is that this will compensate for their residual emissions. 

The UK ETS Authority has already committed to integrating GGR into the UK Emissions Trading Scheme by the end of 2029 (subject to various legislative powers and assessments). In the meantime, the government is developing the GGR business model to unlock private investment in GGRs by allocating risk between government and industry while providing price stability.  

Aware of the need to gain public support, the government is exploring the use of GGR credits within the wider voluntary carbon market and looking to ensure they are underpinned by robust standards. The recent policy update also details the GGR business model, which includes revenue support for eligible GGR projects based on the Contracts for Difference framework.  

With GGRs having the potential to play a key role in the UK's Clean Energy missions, delivering clean power by 2030 and accelerating to net zero by 2050, it is anticipated that further updates to the GGR policy will be announced. 

Government consultation of reforming the Environmental Permitting of industrial installations 

Following the identification in the Corry Review that environmental regulation can be risk-adverse and inefficient, the Department for Environment, Food and Rural Affairs (Defra) has published a consultation on reforming how the Environmental Permitting (EP) regime regulates industrial installations. The reforms aim to deliver a simplified framework, enable innovation, ensure there is proportionate regulation and create a transparent environmental permitting framework. 

The key proposals include: 

• making the Environment Agency responsible for setting standards in England,
• exploring horizontal best available techniques (BAT) to achieve net zero and circular economy goals;
• the integrated regulation of emissions to water and land by applying integrated pollution control and BAT to installations currently regulated under Part B of the Environmental Permitting (England and Wales) Regulations 2016;
• providing exemptions or simple registration-based approaches for low-risk industrial activities;
• sector-specific reforms, including new regulated activities (such as battery energy storage systems, non-waste anaerobic digestion); and
• a new outline permitting approval stage (similar to outline planning permission). 

The government is seeking views from those within the energy sectors as well as wider organisations to understand how EP can support the industry's development. The consultation applies to England only, although the government notes it has worked closely with the devolved governments, and is due to close on 21 October 2025 

Government publishes a policy paper on waste and a potential move to Environmental Permitting 

Noting the current failure of the waste carriers, brokers and dealers regime to deliver proportional charges and regulation, on 26 August 2025 Defra published a policy paper on reforming this system in England. The key focus is on moving to the EP regime.  

Some of the key changes include: 

• Changes in terminology of "waste carriers", "brokers" and "dealers" to "waste transporters", "waste controllers" and "controller-transporters". It is hoped that this will differentiate between the operations roles more clearly.
• Moving away from the current registration system and to the standard rules under the EP regime. There will be three types of permit, differentiated by activity, scale and type and volume of waste handled, with exemptions available for some operators of low-risk activities.
• Introducing a mandatory technical competence requirement, noting this will not be required where a registered exemption applies.
• Setting charges in line with the existing EP regime, with an application fee and additional monitoring fee. 

Defra envisages that the general EP regime enforcement and offences framework will apply here, streamlining and aligning the different regimes.  

Once the regime is in force, operators with existing upper-tier registration will be required to apply for the relevant permit when their registration is due and operators with existing lower-tier registrations will be required to register within 12 months. Chargeable permit renewal will need to be undertaken every three years. However, existing permit holders will simply be required to declare they are still meeting the conditions of their permit. 

Environment Agency publishes consultation response on charging sewerage undertakers for enforcement 

The government has recognised that there has been an extended period of poor performance from the water industry, exacerbated by the Environment Agency only having limited powers to recover costs linked to permit compliance.  

In April 2025, the Environment Agency launched a consultation on its proposals to charge an annual levy on certain water discharge activities carried out by water companies that have sewerage undertaker status. The proposed levy will fully recover the costs, upfront, of providing sustainable and consistent enforcement under the Environment Agency's enforcement and sanctions policy. The aim is to drive better performance by water companies by helping to fund the Environment Agency regulation of the water industry.  

The Environment Agency has now published its consultation response which confirms that an annual levy will be introduced on each sewerage undertaker. The levy will be calculated according to the number, type and volume of environmental permits for operating sewerage discharge activities. A 40% reduction to the total levy charged to water companies for 2025 to 2026 will be applied to correspond with the transitional period. From 1 April 2026, the full yearly costs will be recovered under the levy process. 

The levy will be reviewed when the Environment Agency is granted additional enforcement powers under the Water (Special Measures) Act 2025, which is expected to come into force in April 2026. 

A copy of the Environment Agency's updated charging scheme to reflect the new levy can be found here. 

Welsh government consults on drinks container deposit return scheme for Wales 

Following the acceleration of the Deposit Return Scheme (DRS) in Wales to match the introduction of DRS to the rest of the UK, the Welsh government published a consultation on 18 August 2025 on its proposals for this scheme. 

The consultation includes questions on proposals for: 

• exemptions for low-volume glass producers who already qualify for the low-volume exemption under the packaging extended producer responsibility scheme;
• transitioning from single-use to reusable glass bottles by phasing in different types of drinks over the next three years;
• expanding the scope of DRS in the future to other types of drinks or drinks containers in the future;
• incentivising the use of standardised bottles; and
• how the deposit level should be set. 

The 12-week consultation closes on 10 November 2025.