Bringing the waste sector into emissions trading could increase the costs of generating energy unless there is reform.
A Chartered Institute of Waste Management (CIWM) has put out a report today calling on the UK ETS Authority to ensure that the cost allocation of ETS charges for the EfW (energy from waste) sector fully reflects the waste composition.
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 outlines that whilst 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 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.
Stronger regulations will be needed they say to stop accidental misrepresentation of waste or when fraud is identified, to tackle it fast.
CIWM also want the revenue collected by the ETS 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.
CIWM’s Director of Policy 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.”
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 concludes the report.
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