Environment | UK Regulatory Outlook September 2026

UK

UK government consults on technical changes to free allocation for hydrogen production in the UK Emissions Trading Scheme

On 8 September 2026, the government published a consultation on technical changes to free allocation for hydrogen production under the UK Emissions Trading Scheme (UK ETS).

The changes are proposed as a result of the interaction between the UK ETS and UK Carbon Border Adjustment Mechanism (UK CBAM).

UK ETS is a cap-and-trade scheme that places a carbon price on emissions from energy-intensive industries, while UK CBAM imposes a carbon levy on certain imported goods to ensure they face an equivalent carbon cost to those produced domestically. Both schemes seek to reduce carbon leakage (the risk that production shifts to jurisdictions with lower carbon costs). They do so through different mechanisms, creating potential overlap where domestic producers benefit from free allocation under the UK ETS while also being shielded from foreign competition by the UK CBAM.

The government intends to phase out free allocation under UK ETS where UK CBAM protects against carbon leakage.

The proposed changes to the scheme would:

• Treat hydrogen supplied to another refinery or organic chemicals installation equivalently to on-site use, where the hydrogen is not used in the production of a good covered by UK CBAM.
• Allow a product benchmark sub-installation to be divided between UK CBAM and non-UK CBAM production. The UK-CBAM related free allocation phase-out would apply only to the share of the sub-installation used to produce UK CBAM goods.

The consultation closes on 2 October 2026.

Government publishes guidance on environmental delivery plans

The Department for Environment, Food and Rural Affairs (Defra), the Ministry of Housing, Communities and Local Government, and Natural England have published guidance on environmental delivery plans (EDPs) under the Planning and Infrastructure Act 2025.

EDPs allow for developers to meet certain environmental obligations relating to protected sites and species, removing requirements for developers to undertake their own assessments for matters addressed in the EDP where one is in place. Developers are obliged to pay the nature restoration levy into the Nature Restoration Fund (NRF) in order to use an EDP. The NRF is then used to pay for the conservation measures contained in the EDP.

New guidance has been published covering the nature restoration levy, what EDPs are, and the NRF. Natural England will be launching a consultation on the first draft EDP in due course.

Department for Energy Security and Net Zero postpones the inclusion of waste incineration and energy from waste operations in the UK ETS

The Department for Energy Security and Net Zero (DESNZ) has postponed plans to expand UK ETS from 1 January 2028 to include waste incineration and energy from waste (EfW). A new timeline with full policy details will be published in due course, providing operators with sufficient time to implement changes.

UK government publishes guidance on biodiversity net gain in nationally significant infrastructure projects

On 27 August 2026, Defra published guidance on biodiversity net gain (BNG) requirements in nationally significant infrastructure projects (NSIPs). The guidance covers how BNG requirements should be met throughout the design and consenting processes for NSIPs, and builds on the guidance on the final biodiversity gain statements published in June 2026. June's guidance clarified the following:

• BNG only applies to habitats impacted by developments, as opposed to the whole development site.
• BNG obligations can be achieved through on-site or off-site measures.
• Developments with temporary impacts are subject to streamlined requirements.

This guidance comes ahead of BNG requirements applying to all new NSIP applications from 2 November 2026.

Welsh government responds to consultation on air quality targets for fine particulate matter

The Welsh government has responded to its November 2025 consultation on air quality targets for fine particulate matter (PM2.5) in Wales. The response sets out its proposed aims of:

• Reducing the average concentration of PM2.5 in ambient air to ten microgrammes per cubic metre by 31 December 2035.
• Reducing the average exposure to PM2.5 by 25% by 31 December 2035, in comparison to the average exposure between 1 January 2017 to 31 December 2019.

These measures will help the Welsh government comply with requirements to make regulations which set targets for PM2.5 by January 2027 under the Environment (Air Quality and Soundscapes) (Wales) Act 2024, as well as bringing Wales in line with the World Health Organization's September 2021 recommendations on PM2.5 levels.

Consultation on granting local authorities powers to issue conditional cautions to fly-tippers

The Welsh government and Defra have published a joint consultation on giving powers to local authorities which would allow them to issue conditional cautions to fly-tippers.

Local authorities in England can currently issue a fixed penalty notice (FPN) of £5,000 for fly-tipping, but cannot prosecute for such offences. In Wales, they can issue FPNs of up to £400 (this is subject to a separate consultation and could increase to £5,000).

The consultation proposes using conditional cautions to tackle fly-tipping offences. Conditional cautions require the offender to admit guilt and accept the caution before they can be issued. If they refuse to comply with the conditional caution, the offender can then be prosecuted for the offence in question. Conditions attached to the caution can require offenders to clean up streets and parks, and may require them to cover costs for clearing public land.

The consultation closes on 16 October 2026.

Department for Transport consults on potential changes to the zero emission vehicle mandate

On 14 August 2026, the UK government published a consultation on potential changes to the zero emission vehicle (ZEV) mandate. The consultation also covers defining the 2030 phase-out of new petrol and diesel cars. The government is seeking views on:

• Four potential annual targets for the proportion of a manufacturer's new car registrations that must be zero emission, with the options to reach 70%, 60% or 50% ZEV sales by 2030, or retaining the current 80% target with extended flexibilities, being proposed.
• Four potential annual targets for the proportion of a manufacturer's new van registrations that must be zero emission, with the options to reach 60%, 50% or 40% ZEV sales by 2030, or retaining the current 70% with extended flexibilities, being proposed.
• The effectiveness of current compliance flexibilities, as well potential new flexibilities, including credits for vehicle-to-grid and vehicle-to-home capable cars.
• The technical definition for the 2030 phase-out (England only).

The consultation closes on 23 October 2026 and the government has confirmed that the outcome will not result in it changing its commitments for all new cars and vans to be zero emission by 2035.

Environment Agency publishes response to November 2025 consultation on significant water management issues for updating river basin management plans

The Environment Agency has responded to its consultation on significant water management issues as part of its review and update of river basin management plans (RBMPs). These set out how environmental objectives for a specific river basin district's water bodies will be achieved, with some containing a programme of measures to help bring the quality of waters in line with required standards.

The published response summarises stakeholder feedback on the consultation, covering issues such as climate-related pressures on the water environment, discharge of chemicals to water, water abstraction and biosecurity. The draft RBMPs will be published in December 2026 and will be subject to a six-month statutory consultation. The final RBMPs will then be published in December 2027, following approval from the secretary of state.

Guidance on planning for decommissioning of radioactive substances activities and on radioactive waste management plans

On 12 August 2026, the Environment Agency published guidance on decommissioning radioactive substances activities and radioactive waste management plans. Both guidance documents are aimed at sites without nuclear licences. The guidance relates to the radioactive substances regulation (RSR), which is governed by the Environmental Permitting regime.

The guidance on planning for decommissioning of radioactive substances activities sets out what should be included in a decommissioning plan. It also notes that operators should begin planning for decommissioning and surrender of RSR environmental permits as soon as their permit is granted by the Environment Agency. They should then continue to refine their decommissioning plan through the lifetime of the facility.

The guidance on developing and managing radioactive waste management plans explains why operators need a radioactive waste management plan. It also covers what this plan should include and how it should be developed.

Environment Agency consultation on updates to enforcement and sanction policy

The Environment Agency is consulting on proposals to update its enforcement and sanctions policy to include new waste and water powers. It is also seeking views on changes to general principles on how enforcement undertakings are assessed and a new additional enforcement penalty principle aimed at better protecting the interests of victims. The consultation sets out how the Environment Agency intends to apply Water (Special Measures) Act 2025 civil sanctions. It also sets out proposed amendments to the enforcement approach for the Producer Responsibility Obligations (Packaging and Packaging Waste) Regulations 2024, a proposed enforcement approach for the first phase of Digital Waste Tracking, and a proposed approach for the Deposit Returns Scheme.

New regulations moving waste carrier broker and dealer system to Environmental Permitting regime

The Environmental Permitting (Waste Controlling or Transporting) and Relevant Functions of Primary Authorities (Amendment) (England) Regulations 2026 (SI 2026/873) were made on 22 July 2026, accompanied by an explanatory memorandum.

The regulations will have the effect of regulating waste carriers, brokers and dealers as waste controllers and transporters under the Environmental Permitting regime. They also introduce waste controlling activities, waste transporting activities, and waste controlling-transporting activities as categories of regulated facility. Additionally, they introduce a penalty of up to five years imprisonment for waste controlling and transporting offences. Most provisions under the new regulations will come into force on 22 July 2027.

Welsh government consultation on a Rural Proofing and Environmental Sustainability white paper

The Welsh government has launched a consultation on a Rural Proofing and Environmental Sustainability white paper. The white paper contains proposals to require Welsh ministers to consider rural needs when developing policies and designing public services. It also proposes changes to Welsh statutory reporting and planning arrangements on climate resilience. Specifically, the environmental and sustainability proposals aim to support the effective delivery of nature recovery, woodland protection, waste management, environmental enforcement and sustainable management of natural resources. The consultation closes on 14 October 2026.

EU

European Commission publishes guidance on Articles 25 and 26 of the Net-Zero Industry Act

On 31 August 2026, the European Commission published non-binding guidance on Article 25 of Regulation (EU) 2024/1735. The regulation established measures to strengthen the EU's net-zero technology manufacturing ecosystem, helping the EU to achieve its climate and energy targets. Article 25 is in place to ensure public spending boosts the demand for net-zero technologies and places a minimum requirement for environmental sustainability and supply chain resilience in public procurement procedures. The new guidance aims to support contracting authorities and entities in assessing the sustainability and resilience contribution in public procurement procedures in accordance with this article.

In July 2026, the European Commission published guidance on Article 26 of the same Act. Article 26 requires member states to apply non-price criteria in renewable energy auctions, rather than awarding support on the basis of the lowest cost alone. The guidance was issued to help member states, auction authorities, and other participants understand and apply the rules contained in Article 26.

EU regulation on regulatory technical standards setting out requirements for authorisation and recognition as an ESG rating provider published

The Commission Delegated Regulation (EU) 2026/1119 was published in the Official Journal of the European Union on 1 September 2026, setting out regulatory technical standards (RTS) specifying what information should be included in an application for authorisation or recognition to operate as an ESG rating provider in the EU.

The RTS also notes the additional information needed from non-EU entities in applications for recognition. The regulation entered into force on 2 September 2026 and applies from 2 July 2026.

Additionally, Commission Delegated Regulation (EU) 2026/904 and Commission Delegated Regulation (EU) 2026/910 were recently published in the Official Journal of the European Union. They address rules of procedure on fines and periodic penalty payments imposed on ESG rating providers, and fees charged to ESG rating providers respectively. Both of these delegated regulations have already entered into force.

European Commission seeks feedback on proposals to modernise the EU Emissions Trading System

The European Commission has called for feedback on three proposals to amend the EU Emissions Trading System (EU ETS). The proposals relate to:

• The monitoring, reporting and verification requirements for the maritime sector.
• An increase in free allocation with respect to heat and fuel benchmarks for 2026 to 2030.
• A directive to amend the main EU ETS directive and the Market Stability Reserve Decision.

Feedback is being accepted on the proposals until 16 October 2026. 

European Commission publishes ten guidance documents on the implementation of the EU CBAM for non-EU operators

See ESG section.