The UK Emissions Trading Scheme (UK ETS) Authority (a consortium comprised of the UK Government, the Scottish Government, the Welsh Government and the Department of Agriculture, Environment and Rural Affairs for Northern Ireland) has launched a consultation (published 23 May 2024), seeking input in relation to the proposals to expand the UK ETS to include energy from waste and waste incineration: UK Emissions Trading Scheme scope expansion: waste - GOV.UK (www.gov.uk)

The UK ETS came into operation in 2021 and is a key contributor to the UK’s net zero emissions strategy, as it places limits on emissions in the sectors within its scope and ensures appropriate pricing measures are in place. The UK ETS Authority is seeking to expand the scope of the scheme into various new sectors to increase its influence over the decarbonisation of the UK. 

The consultation builds on the UK ETS Authority’s earlier announcement of the intention to expand the UK ETS to the waste sector. Last year, the UK ETS Authority confirmed its intention to include waste incineration and energy from waste in the UK ETS from 2028.

The UK ETS Authority anticipates that the expansion of the UK ETS will provide an incentive for the development and uptake of decarbonisation technologies or practices to reduce emissions. In addition, it complements existing waste policy. 

The consultation covers how the UK ETS will expand to include fossil CO2 emissions from EfW and waste incineration from 2028. This includes the two-year phasing-in period for the sector from 2026 during which emissions will be monitored, reported and verified, with no obligation to purchase or surrender UK ETS allowances until 2028.

The consultation is seeking views on the implementation of the expansion, in particular:

  • The scope of the scheme;
  • Participation in the scheme (including requirements for operators, monitoring, reporting and verification (MRV) and guidance);
  • The impact of the waste sector being incorporated;
  • How the UK ETS cap would be adjusted to address waste; and
  • How the waste sector inclusion into the UK ETS may incentivise heat network investment.

The consultation is open until 18 July 2024.

At the same time, a second consultation is looking at how UK-based engineered greenhouse gas removal technologies such as Direct Air Capture (DAC), where carbon dioxide is removed from the air and permanently stored, could be integrated into the UK ETS.

This aims to provide a long-term market for greenhouse gas removals. It also asks whether carbon stored by the creation of new UK woodland could be integrated into the UK ETS.

These will be followed by two further consultations in due course, on how to expand the UK ETS scheme into the domestic maritime sector from 2026, and on how the scheme would recognise non-pipeline methods for moving captured CO2 into storage, including by road, rail or shipping.

For a more detailed discussion on the future of the waste sector, listen to the Environment Team’s recent Environment Matters podcast episode here: Environment Matters Episode 6 - The future of waste (youtube.com)

This article was written by Victoria Barnes and Sasha Anisman