Caution urged by CIWM when introducing ETS into UK Energy from Waste Sector

A CIWM report launched today has called on the UK ETS Authority to ensure that the cost allocation of Emissions Trading Scheme (ETS) charges for the Energy from Waste (EfW) sector fully reflects the waste composition and that there is a practical system for ensuring this is the case. Failure to do so, CIWM believes, will not fully incentivise the intended reduction in carbon in EfW feedstock—the primary driver for introducing ETS to the sector.

The report, entitled ‘The Systemic Impact of ETS on the Resources & Waste Sector’, outlines that while implementing ETS into the EfW sector from 2028 will produce some opportunities—such as increased plastics separation, chemical recycling, and carbon capture and storage—ETS will significantly increase the cost of generating energy from residual waste through the UK’s network of EfW facilities. Whilst ETS won’t impact all stakeholders equally, there will be an approximate increase of 50% in gate fees across the board. This could result in an additional £660 million annual bill for UK local authorities.

CIWM highlights that cost allocation must be practical and reflect waste composition, so that it achieves the intended reduction in carbon in EfW feedstock. In order for this to be achieved, there needs to be discussion and agreement across the sector about the role of waste sampling and composition studies. An adequately resourced regulatory framework will also be required to ensure any accidental misrepresentation of waste or fraud is identified and tackled quickly.

The CIWM report also emphasises the need to ensure that all the revenue collected by the ETS (and other initiatives such as EPR) is ring-fenced for interventions that will increase recycling rates, divert fossil plastics out of residual waste, and support the UK in meeting its target of achieving net zero by 2050.

Commenting on the potential challenges associated with implementing ETS in the EfW sector, CIWM’s Director of Policy, Communications and External Affairs, Dan Cooke, said:

“The costs passed through to EfW must reflect the actual composition of their waste in order to incentivise those who have invested in measures to reduce fossil carbon content in their waste. Failure to reward this action would mean there is no business case for change and the ETS would effectively become an EfW tax.

One of the main issues we need to overcome is that EfW operators can do little to influence the composition of residual waste they receive from customers. Ultimately, it’s the brands and manufacturers that have the greatest ability to reduce the quantity of fossil content from residual waste through the material choices they make for their products and packaging. These businesses, however, are not directly impacted by ETS, as costs are only passed back to the waste producer and not onto the supply chain.

Plastic packaging is estimated to contribute 70% of the fossil carbon in residual waste. Selecting alternative materials and/or increasing the recyclability of the packaging would significantly reduce the ETS burden for waste producers and have the greatest impact on reducing carbon.”

The full CIWM report, containing all the key findings and recommendations, can be accessed here.