The UK Emissions Trading Scheme (UK ETS) Authority this week published its interim response to a consultation exploring the expansion of the UK ETS to waste treatment.
This interim consultation response primarily set out the terms of the Monitoring, Reporting and Verification (MRV) period, which will begin on 1st January 2026, and the scope of facilities it will apply to (on a voluntary basis) – which includes combustion and process emissions from Energy-from-Waste facilities as well as clinical waste incineration, but excludes high-temperature hazardous waste incineration.
The ESA remains highly supportive of the application of the ETS to waste treatment to drive decarbonisation and has long been a proponent of the use of “emissions factors” to calculate and fairly allocate emissions (and associated costs) across the waste value chain which will, in turn, create an appropriate incentive to decarbonise.
In its announcement, the UK ETS Authority recognises that a well-designed emissions factor-based system could reinforce the “decarbonisation signal intended by the carbon price”, which is highly welcomed by the ESA, since the association remains firmly of the view that coupling the MRV process with the allocation of emissions costs is fundamental to the future success of the ETS regime as it relates to waste decarbonisation.
The MRV period will allow the UK ETS authority to assess emissions factor-based approaches using the data received by participants before making a final decision on the MRV approach to be used once the scheme comes into effect – although it did not commit to an implementation date for this in the consultation response.
Emissions associated with the treatment of clinical and hazardous waste are very challenging to reduce or avoid, and these processes are essential to maintain a safe and sanitary environment. The ESA also therefore welcomed the exclusion of hazardous waste treatment from the MRV period, and the intention of the UK ETS Authority to review the inclusion of clinical waste incineration over the course of the MRV-only period.
Furthermore, the ESA also welcomed Government’s commitment to aligning the ETS with the Extended Producer Responsibility (pEPR) regime for packaging, which will ensure that the additional carbon costs incurred by local authorities for disposing of packaging materials through incineration are considered as part of pEPR payment calculations – further incentivising recycling and waste minimisation efforts.
Significant further detailed guidance will be required, particularly around cost-allocation, prior to full implementation of the ETS to waste treatment, and the ESA looks forward to continuing to work closely with the UK ETS Authority to inform this process through the MRV period and ensure successful implementation.
Jacob Hayler, Executive Director of the ESA, said: “The proposed monitoring, reporting and verification (MRV) period to 2028 can and should now be used to create a viable system which fairly and accurately attributes carbon emissions and associated costs through the waste value chain in a way that creates incentives to decarbonise waste and that dovetails with other waste policy reforms including the EPR regime for packaging.
It is essential that we have robust and comprehensive data upon which to design the details of the ETS regime as it relates to waste, so voluntary participation in the MRV period is not the ESA’s preferred approach, but we will continue to work closely with the UK ETS Authority – alongside our local authority partners – to participate in and inform the design of this once-in-a-generation policy reform.
“The inclusion of waste in the ETS, done correctly, could drive billions of pounds worth of investment in waste decarbonisation across the UK, but these investments will not be made until there is certainty over both the timing and detail of the reforms. It is right however, that no commitments have yet been made on implementation timescales in order to ensure that the scheme is designed well and will meet its intended outcomes. In the meantime, Government must ensure – as the ETS Authority acknowledges – that measures are put in place to mitigate the risk of unintended outcomes.”
