Jane Cherrington, Director – Climate at Local Partnerships and Resource Conference Cymru 2025 Panel Moderator, dives into the challenges local authorities and private waste collectors will face when Energy-from-Waste joins the UK Emissions trading scheme in 2028.
At a CIWM event last year, a colleague described the UK emissions trading scheme (UK ETS) as a silent express train tearing towards us. Even after years of communication about the inclusion of energy from waste and incinerators in the trading scheme, it can certainly still feel that way.
To say UK ETS is a slow burn for the waste sector (no pun intended) could be an understatement.
The primary goal of the UK ETS is to reduce fossil carbon emissions by setting a cap on the total amount of greenhouse gases that can be emitted by specific sectors.
The UK ETS Authority has announced the intention to expand the scheme to cover incinerators and Energy-from-Waste (EFW) plants from 2028, with data gathering starting in 2026. This means EfW facilities will receive or buy emission allowances.
Monitoring, reporting and verification for each tonne of fossil CO2 generated by combustion processes will start next year, so change is fast approaching.
The proposed changes will apply to all household and municipal waste, and that generated by commercial and industrial sources.
There are no exemptions for clinical and hazardous waste within the current proposals. The scheme covers almost any activity which ultimately results in the waste material being burned, so advanced technologies, such as pyrolysis and gasification, are within scope.
What will the cost be?
The potential costs of ETS are not fully known at this stage – the cost of allowances can fluctuate based on market conditions.
As of early 2025, the price of UK ETS carbon permits (UKAs) has varied significantly. For instance, the price hit a low of £31.48 per metric tonne in January 2024 but has been as high as high as £97.48. These values are significant and will soon add up, so those disposing of waste need to be ready.
What could this mean for those who operate and use these facilities, in particular local authorities and private waste collectors?
Local authorities and companies from across the UK are starting to come together to share their knowledge and ideas as they increasingly turn their attention to possible financial and practical implications of the proposed expansion of ETS.
It certainly is great to see knowledge of the new UK-wide scheme growing across the sector.
Facility operators have been exploring how they can adapt to the new requirements through more pre-sorting to remove fossil-based recyclables, ways to make their processing more efficient through CHP (combined heat and power), and the investment in carbon capture, usage and storage (CCUS).
Entities that collect waste are beginning to explore how applying the waste hierarchy will provide multiple benefits, but most importantly, in today’s difficult financial climate, how they will tackle cost avoidance.
Although this scheme might increase operational costs initially, it also fosters innovation aimed at reducing emissions and carbon footprints. Ultimately, these changes can lead to significant long-term environmental and cost savings.
Decades of thinking and practical application have shown us that the waste hierarchy and polluter pays principle are two of the most effective foundations of policy for waste and resource management. The UK ETS is no different.
The key points
Here are some key points to help you on your ETS journey:
- Review your services and identify opportunities to drive minimisation, increase recycling and improve the quality of what you collect – this could include changes to collections, whether it’s collection frequency to drive recycling, expansions to include additional materials or a refreshed communications campaign.
- Engagement with your current residual waste provider is key to understanding potential risks. Start conversations with them to understand how your emissions, and costs, will be calculated. Also, think wider, will there be impacts on any collection or treatment contracts as you reshape your services away from disposal?
- Make financial provision from 2028 for the potential cost increases as a result of UK ETS. Your corporate risk registers and medium-term financial plans need to reflect the possible financial impacts.
Areas to watch:
- Watch out for guaranteed minimum tonnages on your disposal contract as you divert more fossil-based materials.
- Typically, we think of plastic bottles and packaging as fossil-based materials, but what about other products like small electricals that have plastic housing, plastic-based textiles like polyester or even wrapping paper? Diverting or recycling these materials may be more difficult.
- Do you have enough processing capacity for the additional recycling and/or new materials, such as flexible plastics and food waste?
- Investment in carbon capture and storage has the potential to contribute, but this is still a developing field and is likely to be expensive initially.
- Watch recycling contamination levels – reject rates within mixed recycling collections are typically between 5% and 15% and end up in EfW.
Looking ahead, the UK ETS is expected to play a crucial role in the UK’s path to net zero emissions by 2050. The scheme aims to have a profound impact on reducing carbon emissions, driving economic innovation, and improving environmental quality.
While challenges remain, the scheme is a vital tool in the UK’s strategy to combat climate change and transition to a sustainable future. A scheme like this will continue to evolve, becoming more stringent, with a lower cap on emissions and fewer free allowances.
Making long-term investments in reducing the quantities of fossil-based materials we dispose of through applying the waste hierarchy, coupled with making long-term investments in low-carbon technologies can only be seen as a positive – but we need to be ready.
It is never too early to start planning, 2028 is not far away from implementing service changes, securing additional recycling capacity or educating customers. Are you on a journey of change, or are you simply bracing for impact?
The post What does EfW joining the UK ETS mean for local authorities? appeared first on Circular Online.
