Carbon Policy Update: UK ETS Expansion to Waste Incineration
Following Brexit, UK Emissions Trading Scheme (UK ETS) has been the UK’s primary carbon pricing tool. To align the waste and recycling industry with the UK’s net-zero targets and combat rising waste incineration emissions, the UK ETS plans to expand and update its policy to ensure producer responsibility for incineration and Energy from Waste (EfW) emissions.
Accordingly, from 2028, packaging Extended Producer Responsibility (pEPR) payments will include UK ETS carbon costs where packaging waste is incinerated. The inclusion of waste incineration in the UK ETS will mark a shift in carbon policy, set in motion by the UK ETS announcement of a voluntary monitoring, reporting and verification (MRV) period starting in 2026. The 2026 framework will cover combustion and process emissions from energy-waste facilities, as well as clinical waste incineration, but will not impose penalties for non-participation. Alignment of UK ETS and pEPR will ensure local authorities are compensated for the carbon costs of disposing of waste through incineration, therefore ensuring producers bear the carbon costs for fossil-based packaging disposal.
Potential Challenges: Landfill and Waste Export
The Environmental Services Association (ESA) suggest aligning the UK ETS and pEPR will incentivise behaviour to focus more directly on initial prevention, then re-use and recycling, supporting the waste hierarchy. However, concerns have been raised that expanding the UK ETS waste incineration could undermine the waste hierarchy, as increased incineration costs therefore incentivise landfill and waste exports. Nonetheless, it is essential to acknowledge that landfill expansion under UK ETS has been recognised as unfeasible; therefore, we’re unlikely to see a shift to landfill.
Scope of Inclusion:
Included
- Incineration
- Hazardous waste (except ~1/3 of the UK’s hazardous waste incinerators eligible for Hospital or Small Emitter (HSE) status)
- Clinical waste (except specialist clinical waste facilities eligible for HSE or Ultra Small Emitter (USE) status)
- Advanced Thermal Treatment
- Waste-to-fuel operations
- Chemical recycling of plastics to create burnable fuel
Excluded
- Biogenic emissions
- Chemical recycling of plastics to create raw materials for new products
- High-temperature hazardous waste incineration
What this Means for Local Authorities
The expansion of the UK Emissions Trading Scheme (ETS) to include waste incineration from 2028 is expected to drive up costs, as incinerator operators are likely to pass new carbon charges onto local authorities, increasing residual waste disposal expenses. From 2026, councils may also have to ensure robust monitoring, reporting, and verification (MRV) of incineration emissions, meaning they should begin aligning their reporting systems with MRV requirements now. To mitigate these rising costs and regulatory pressures, local authorities are encouraged to review waste management contracts and shift focus on greater recycling and reuse, reducing dependency on incineration.
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