EfW inclusion in ETS marks significant policy intervention for the waste sector

Charlotte Rule, ESA Climate and Energy Policy Advisor, Aug 1, 2023

Earlier this month (July) the UK Government published its response to a Call for Evidence over Developing the UK’s Emissions Trading Scheme (ETS), which includes expansion of the ETS to cover Energy-from-Waste.

As part of its response, Government announced that it will include all waste incineration technologies within the ETS from 2028, with a two-year phase-in period from 2026 – effectively imposing a new tax on waste treatment through energy recovery. 

The expansion of the UK Emissions Trading Scheme to Energy from Waste represents the most significant regulatory intervention to the UK waste industry in a generation. It will fundamentally change the economics of the sector, and impact all stakeholders across the value chain, including local government, waste producers and the general public. 

The ESA supports the Government’s proposal to extend carbon pricing to Energy from Waste by 2028. We believe that this is a practical timeline that could provide the industry and local authorities sufficient lead-in time, provided other complementary decarbonisation and waste reduction policies are also implemented by Government – reducing the already significant burden on waste producers. 

However, any implementation by 2028 must align with supporting policies. These should include the immediate implementation of key packaging and recycling reforms as well as increasing the minimum recycled content threshold for the plastic tax to fifty per cent, which will help to reduce plastic content in the residual waste stream. Additionally, this must work alongside policy to nearly eliminate biogenic waste to landfill as well as the development of other regulatory drivers to minimise exports and waste crime.

ESA looks forward to working with the Department for Energy Security and Net Zero & other government departments to ensure the detailed regulations needed for inclusion in the Emissions Trading Scheme - such as transition arrangements, allowances, monitoring reporting and verification, and financial aspects of cost pass-through to waste producers and local authorities - are fair, transparent, and practical.

Following the announcement, the ESA and Policy Connect hosted an event at the House of Lords to publish a new scorecard tracking the policy progress this Government has made since the release of the ESA’s Net Zero Strategy in 2021. 
 
The work coordinated by the ESA found that overwhelmingly there is clear alignment between government and industry that we must act on Net Zero now and how this should be done successfully. However, while the commitment is there – delivery is lagging. 
 
This same sentiment has been continually reiterated by broader actors in the Net Zero space in recent months - notably the Climate Change Committee and the Independent Review of Net Zero. 

ENDS

*This piece was first published in the CIWM Magazine, July/August edition*