Timing of ETS for energy recovery is crucial to success

Jacob Hayler, Executive Director ESA, Aug 2, 2022

Inclusion of fossil-based emissions from energy recovery in the UK ETS will become a necessary component to achieve net-zero but the timing of its introduction is of vital importance to a successful outcome in our sector

The inclusion of fossil-based emissions from energy recovery in the UK Emissions Trading Scheme (ETS) will, in future, likely become a necessary component of our sector’s drive to achieve net-zero emissions by 2040 but the timing of its introduction is of vital importance to a successful outcome. 

The Environmental Services Association (ESA) believes that carbon pricing has a role to play in the decarbonisation of the UK's recycling and waste sector but this must be applied in an appropriate manner and only after the deployment of other policy instruments.

In particular, when applying the UK ETS to residual waste treatment, it is essential that it reflects the waste hierarchy – which broadly aligns with the carbon hierarchy – and supports a level playing field across all sites and technologies. 

The UK ETS sets a cap on the total level of permitted greenhouse gas emissions while simultaneously creating a carbon market for any unused emissions allowances. The scheme has been in action since January 2021 (replacing the EU ETS after the Brexit transition process) and, earlier this year, BEIS launched a consultation seeking views to support future development of the ETS – in part calling for evidence in relation to a possible expansion of the ETS to include energy recovery from waste.

The ESA submitted a comprehensive response to this consultation, which closed in June 2022, in which we set out the conditions which we believe must be in place before the UK ETS can be expanded to cover the fossil-based emissions from waste incineration and energy from waste. 

To ensure that the application of carbon pricing to the residual waste sector delivers the most cost-effective solution to decarbonise, it must be aligned with a comprehensive ban on organics to landfill, to avoid residual waste being diverted down the waste hierarchy, and a tax on Refuse Derived Fuel (RDF) exports that is equivalent to the carbon price – to ensure that our sectoral carbon is not simply exported.   

Furthermore, the timing must align with planned policies that incentivise recycling practices and the wider decarbonisation of the industry – across the UK and the devolved administrations – and provide sufficient lead-in time for fossil-based material to be removed from the residual waste stream.

Fundamentally, reducing carbon emissions from energy recovery is dependent upon waste prevention; and increasing recycling rates and re-use – particularly for plastics. For the residual waste material left over, capturing CO2 from the energy recovery emissions represents the last chance to capture emissions, but this will not be feasible across all current facilities.

Carbon-pricing alone will not solve the sector’s ability to decarbonise so we believe that residual waste treatment facilities should be introduced into the UK ETS no earlier than 2028, as this is the earliest feasible date in which the above conditions could be met and the effects of the relevant policy drivers will be seen. If these conditions have not been met by 2028, the application of carbon pricing to the industry should be delayed to avoid disruption to the waste hierarchy and other unintended outcomes.  


*This article was first published in the most recent edition of the CIWM Circular magazine and has been reproduced with kind permission.