Industrial Emissions Directive 2.0: Mandatory EMS, Stricter Limits, Materially Higher Sanction and Liability Risks

On January 21, 2026, the German Federal Cabinet adopted a draft bill to implement the EU’s revised Industrial Emissions Directive (Directive (EU) 2024/1785, “IED 2.0”), marking a major step toward stricter environmental performance standards and more digital, streamlined permitting. The bill, which mirrors elements of the EU-level “Environmental Omnibus Package,” provides early insight into how Germany intends to transpose IED 2.0 ahead of the July 1, 2026, transposition deadline.

Key changes are:

1. A Mandatory Environmental Management System ("EMS") for IED installations, aligned with ISO 14001 or EMAS, with defined content and documentation duties. Existing plants must implement and show EMS conformity by July 1, 2030. New plants, which start operating after July 1, 2026, must prove conformity at start-up, with internal first audits allowed, then external every three years. Operators must set up robust measurement and data systems covering energy, water, raw materials, and other resources to track EMS goals.
2. Binding Environmental Performance Limits tied to best available techniques ("BAT") conclusions, including resource and water consumption, monitored by authorities with operator data duties. As a rule, plants must meet new BAT-based limits within four years of each BAT conclusion, with up to eight years for legacy plants if solid transformation plans justify it. A planned “INCITE” center will feed technology insights into future BAT updates, which could be worth watching for early signals. Efficiency and climate-related requirements are expected to gain greater weight in permitting decisions, as authorities will increasingly assess energy efficiency, resource use, and decarbonization measures as integral elements of BAT compliance and of the overall environmental performance of an installation.
3. Broader Permit Requirements aligned to IED Annex I, capturing more activities such as battery gigafactories, pyrolysis, and textile finishing. Public transparency and participation increase, including online publication of monitoring and key EMS information, and stronger access to justice.

Non-compliance will attract substantially higher sanctions. Administrative offenses include failures in publication, audits, and reporting, with fines up to EUR 30,000. New, severe offenses by larger companies can trigger turnover-based fines up to 3% of EU turnover, and operators may face civil liability for health harms from breaches of core duties. Enhanced transparency obligations, and explicit civil liability for health-related damages materially increase litigation and liability risks.

What Companies Should Do Now

Companies operating IED installations in Germany should prepare to align with the expected changes. Key steps include:

• Design an EMS and data plan;
• Assess gaps against BAT performance;
• Prepare transformation paths to secure deadline flexibility where justified;
• Check if activities require additional permits;
• Build annual reporting and publication routines; and
• Review risk controls and liability coverage given rising sanctions.