The UK Government has delayed its plan to expand the Emissions Trading Scheme to include Energy-from-Waste and waste incineration.
In a statement, the Department for Energy Security and Net Zero (DESNZ) said a new timeline would be set out in due course.
“We are aware that a lack of certainty regarding expansion of the UK ETS to waste incineration is undermining the ability of local authorities and industry to plan and budget for the future,” the statement read.
The UK Emissions Trading Scheme (ETS) currently applies to energy-intensive industries, the power generation sector, and the aviation industry.
DESNZ planned to expand the scope of the scheme to include waste incineration and Energy-from-Waste (EfW) facilities from 2028.
A voluntary Monitoring, Reporting, and Verification (MRV) period has been in place since 2026.
Emissions Trading Schemes have been described as a ‘cost-effective way of reducing greenhouse gas emissions’ by the London School of Economics.
The UK ETS sets an overall cap on total emissions from in-scope sectors, which is divided into allowances.
Operators who are covered by the scheme must acquire allowances through auctions run by the UK ETS Authority, from other participants through secondary markets, or, if eligible, they can obtain UKAs from their free allocation.
The scheme creates a market for carbon allowances, allowing operators who decarbonise to trade allowances with those whose operations continue to emit.
However, local authorities have warned that expanding the scheme in 2028 to include waste would add significant costs to taxpayers.
North London Waste Authority warned the expansion could add £35 million annually to waste disposal costs for north London residents.
A report by SUEZ estimated that the expansion will increase costs by around 50%, with gate fees set to rise by approximately £48 per tonne.
The analysis also found that investing in waste minimisation and reuse and recycling services would avoid ETS costs, potentially without impacting overall service costs.
Industry reactions
CIWM’s Director of Policy, Communications and External Affairs, Dan Cooke, called the delay a ‘sensible decision’ based on the wider challenges facing local authorities currently reliant on EfW for residual waste treatment.
“EfW provides a vital role in the responsible treatment of the UK’s residual (non-recyclable) waste and 50% of the energy generated is renewable power,” Cooke said.
“The other 50% comes from carbon-emitting fossil-fuel-based plastic packaging and similar waste, which contributes to climate change.”
He continued that reducing the carbon emissions from the resources and wastes sector relies on ‘clear mechanisms’ to divert more fossil fuel plastics from EfW facilities – whether by recycling more, replacing plastic packaging with other (non-fossil) material, and producing significantly less plastic.
“Collectively, we cannot kick this down the track forever if the UK is serious about reducing greenhouse gas emissions and its impacts, and about the long-term economic benefits of carbon markets,” Cooke said.
“Clarification on a revised timeline and policy framework for ETS for EfW is required sooner, not later.”
National Association of Waste Disposal Officers (NAWDO) welcomed the delay, saying it would have put ‘immense strain on local authority finances’.
“Currently, many local authorities send much of their residual waste to EfW facilities for energy recovery,” the statement read.
“This method of disposal for waste often represents a significant proportion of total disposal costs for collected waste and offers the best environmental and economic outcomes of the current options available for disposing of non-recyclable waste.”
“Local authorities have very limited control over the content and volume of waste they are required to manage and have limited resources to remove carbon-heavy products or manage the resulting carbon emissions generated.”
NAWDO continued that government should only proceed with the expansion when there is a system-wide plan for decarbonising waste, which addresses the need for new technology and infrastructure, and provides support for practical actions that are within local authorities’ power to implement.
“Above all, other solutions which incentivise producers to reduce the fossil carbon content of products should be implemented before any new timelines for this proposal is set,” the statement concluded.
