Decarbonisation Readiness Report requirements for electricity generators

09 Mar 2026

New rules in affect from 28 February 2026

The Environmental Permitting Regulations were amended in 2025 to ensure that high carbon combustion plants associated with the generation of electricity do not become stranded assets. The Environmental Permitting (Electricity Generating Stations) (Amendment) Regulations 2025 require that new or substantially refurbished electricity-generating combustion power plant in England are 'decarbonisation ready'. This will affect installations submitting permit applications to the Environment Agency on or after 28 February 2026.

What is a decarbonisation readiness report?

A Decarbonisation Readiness Report is a mandatory document that new or substantially refurbished electricity‑generating combustion plants in England must submit as part of their environmental permit application. It demonstrates that the plant can be converted in the future to low‑carbon operation, typically via hydrogen firing or carbon capture (CCUS) technologies within its operational lifetime.

Demonstrating decarbonisation readiness means demonstrating that there are ‘no known barriers’ to the decarbonisation of the combustion plant associated with electricity generation. In practice this means demonstrating decarbonisation readiness for reciprocating engines, gas turbines or boilers where these are used to produce steam for the generation of electricity.

Who needs to produce a decarbonisation readiness report?

Technologies Affected

The following electricity generating technologies are affected:

Fossil fuel combustion plants, including combined heat and power
Biomass, biofuel and biogas combustion plant
Energy from Waste plant, including those that burn fuel products from gasification or pyrolysis
Hydrogen and low carbon fuel combustion plants (e.g. 100% hydrogen, hydrogen/methane blends and ammonia or other low carbon fuels)

Capacities Affected

The following capacities of electricity generator are affected. Note, the extent to which you are affected depends on whether you are a new or existing installation.

Thermal input >50 MWth (New and existing facilities). For existing installations, only when they undergo substantial refurbishment (see below).
1-50 MWth (New facilities)
>5MWth (Existing facilities). Only when existing installations undergo substantial refurbishment (see below).
<1 MWth if generator holds Capacity Market Agreement or participates in Balancing Mechanism (New and existing facilities)
Waste incineration >3 tonnes/hour of non-hazardous waste or >10 tonnes/day for hazardous waste (New and existing facilities). For existing installations, only when they undergo substantial refurbishment (see below).
Smaller units that aggregate up to >50 MWth (New and existing facilities). For existing installations, only when they undergo substantial refurbishment (see below).

What triggers the need for a decarbonisation readiness report (DR)?

The following two situations trigger the need for a DR:

New electricity generators (meeting the above requirements of technology and capacity) seeking an Environmental Permit
Existing electricity generators (meeting the above requirements of technology and capacity) seeking an Environmental permit variation triggered by substantial refurbishment (see below).

What does substantial refurbishment mean?

Substantial refurbishment is considered to be taking place if the costs of refurbishing combustion plant in the generator exceeds 50% of the investment cost for a comparable new combustion plant, excluding the cost of abatement plant. In estimating the cost for a comparable new combustion plant applicants are expected to use evidence based estimates drawn from relevant technical studies, OEM statements and published industry sources.

What must you do (if you trigger the requirement)

If you are affected by this, then you must demonstrate either of the following requirements:

Requirement 1 (Carbon Capture Readiness, CCR)

The combustion power plant must be ready to operate as a 'complete CCS system. A complete CCS system is one where:

It can continuously operate at a minimum capture rate of 90%
Can transport the CO2
Dispose of the CO2 by way of permanent storage.

Requirement 2 (Hydrogen Readiness, HR)

The combustion power plant shall be hydrogen ready. This means that it can be converted to operate on hydrogen as the primary fuel source.

For both requirements, you will have to demonstrate that the installation passes the following tests:

Space test
Technical feasibility test
CO2 transport and storage test (for carbon capture readiness) or H2 fuel access test (for hydrogen readiness)
Economic feasibility test

Decarbonisation readiness support from Ricardo

At Ricardo, we can:

Assist you with interpreting the requirements of the Regulations to understand what it means for you and what you must do.
Identify the data and information necessary to carry out the four tests associated with CCR and HR.
Preparation of the DR reports for submission to the Environment Agency
Help you understand the impacts of CCUS and hydrogen on the technical and economic performance of your plant, such as changes to efficiency from hydrogen combustion or the impact on economics of performance of using heat to operate carbon capture plant.
Advise on the implications for hydrogen and CCUS on the ways of working for your plant, including implications for space and H&S.

Get in touch to start and conversation about how we can support you