Emissions scheme extended to energy-from-waste

The UK Emissions Trading Scheme (ETS) will be extended to cover energy from waste (EfW), under proposals published today (23 May).

The UK ETS Authority, which is made up of the government and three devolved administrations, has published consultations on expanding the scheme to include EfW and waste incineration.

It is also consulting on how engineered greenhouse gas removals, such as direct air carbon capture, could be integrated into the scheme, and on whether nature-based removals of sufficiently high quality could be suitable for the ETS.

Under the ETS was set up in 2021 following the UK’s departure from the similar EU-wide scheme as a result of Brexit.

Operators covered by the scheme are required to obtain allowances for every unit of carbon they emit. These allowances can then be traded between participating businesses, generating a carbon price which is designed to spur them to invest in cleaner or renewable energy sources and improved energy efficiency.

The UK ETS currently applies to aviation, power, and heavy industry.

However, since its establishment in 2021 the authority has been examining how carbon pricing could drive decarbonisation across more of the economy.

Last year the authority confirmed its plan to include waste incineration and EfW in the scheme from 2028, preceded by a two-year transitional phasing period from 2026.

Under the government’s proposal, the overall volume of allowances within the scheme will be expanded to account for the extra emissions resulting from the new sectors being incorporated. These allowances from the new participants will not be ringfenced but will be traded alongside those from the ETS’ existing sectors.

However, there will be no allowances for certain materials, like polymers, which can be recycled, says the paper.

A second paper on extending the UK ETS to greenhouse gas removal technologies, like DACC, aims to provide a long-term market for such technologies and asks whether carbon stored by the creation of new UK woodland could be integrated into the UK ETS.

In a joint statement, ministers from the four governments making up the UK ETS Authority, said: “The consultation covering waste emissions will help bring certainty to drive investment in decarbonisation, as well as helping businesses make the necessary preparations for the expansion of the scheme.

“For greenhouse gas removals, this is an important step towards building a thriving market for carbon removals in the UK.”

Responding to the announcement, Mike Maudsley, CEO of EfW operator enfinium, said: “Today’s Emissions Trading Scheme announcements underline the importance of decarbonisation to the future of the UK energy from waste sector.

“Even if the UK hits its recycling targets, there will still be 17 million tonnes of unrecyclable waste in the early 2040s.

“But by working together with national and local governments, we believe that the problem of unrecyclable waste can be turned into a net zero solution.”