Energy-from-Waste facility

The Chartered Institution of Wastes Management (CIWM) has called on the UK Emissions Trading Scheme (ETS) Authority to carefully consider cost allocation of ETS charges for the Energy from Waste (EfW) sector.

The professional body warns that a reduction in carbon emissions will not be fully incentivised, if the costs do not reflect waste composition.

In ‘The Systemic Impact of ETS on the Resources & Waste Sector’ report, CIWM outlines how extending the UK’s carbon pricing scheme to include EfW facilities from 2028 will create a financial imperative to decarbonise waste streams, but could add approximately 50 per cent gate fees across the sector.

According to the report, this could result in an estimated £660 million annual additional cost for local authorities, £230 million for commercial and industrial waste producers, and £6.5 million for construction and demolition waste when payments begin in 2028.

"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," said Dan Cooke, CIWM's Director of Policy, Communications and External Affairs. "Failure to reward this action would mean there is no business case for change and the ETS would effectively become an EfW tax."

Challenges of ETS implementation

A key concern highlighted in CIWM’s analysis is the difficulty in accurately measuring and allocating fossil carbon content in waste streams. Detailed sampling can cost approximately £15,000 per sample and requires significant space, staff resources, and expertise - costs that could prove prohibitive for many operators.

The report also emphasises that stakeholders across the value chain will be unequally affected. While EfW facility operators have the compliance obligation to purchase carbon allowances, they will likely pass most costs through to waste producers who have limited ability to influence the material choices made by manufacturers.

Cooke added: “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.”

The report identifies several potential unintended consequences that could undermine the environmental benefits of ETS, including:

• A potential return to landfill disposal if it becomes cheaper than EfW with added carbon costs
• Increased cross-boundary waste shipments if price differentials emerge with other countries
• Higher risk of waste crime and misrepresentation of waste composition
• Lack of suitable outlets for the plastics that would be extracted from residual waste
• Market disruption from competing waste treatment technologies

Opportunities for EfW sector growth

Despite these challenges, CIWM’s report identifies significant opportunities for the resources and waste sector. The report outlines three major growth areas in residual feedstock and plastics separation, chemical recycling development, and biogenic carbon capture and storage.

The case for removing plastics from residual waste will be strengthened, with potential value between £20-615 million. The report calculates that removing 30-60 per cent of plastics could reduce ETS costs by between £145-500 million annually.

ETS could also provide stable investment conditions for chemical recycling technologies to process hard-to-recycle plastics. The report estimates this opportunity could generate £390-780 million in value through the production of recycled polymers.

EfW facilities equipped with carbon capture technology could create further value through greenhouse gas removals by storing biogenic CO2, with potential value estimated as £735-1,200 million.

CIWM's recommendations

CIWM makes six key recommendations to ensure the successful implementation of ETS in the EfW sector:

1. Local authorities and waste producers must invest early in plastic reduction and diversion measures before 2028 to maximise impact
2. All actors throughout the supply chain should be incentivised to reduce fossil carbon materials and increase reuse and recyclability
3. A practical and cost-effective framework should be developed to standardise the analysis of fossil carbon content
4. Regulatory frameworks and resources must be established to ensure fraud is identified and tackled quickly
5. Implementation of carbon capture and storage must not disincentivise carbon reduction and material circularity elsewhere in the supply chain
6. Revenue from ETS and Extended Producer Responsibility (EPR) should be ring-fenced for interventions to increase recycling and divert fossil plastics from EfW

“Plastic packaging is estimated to contribute 70% of the fossil carbon in residual waste,” noted Cooke. “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.”