UK ETS waste sector scope expansion: Consultation now open

Background

The emissions trading scheme (ETS) is a carbon emission trading scheme that runs in both the UK (UK ETS) and EU (EU ETS)  supporting net zero commitments. It works on a cap-and-trade system with a cap on greenhouse gas emissions (GHG).

Participants in the scheme are required to obtain and surrender allowances to cover their annual greenhouse gas emissions (GHG). Organisations can purchase allowances at auction, or trade them amongst themselves.

UK ETS currently covers emissions from power and heat generation, energy intensive industries and aviation.

Proposed changes

The UK ETS Authority (UK Government, Scottish Government, Welsh Government and the Department of Agriculture, Environment and Rural Affairs for Northern Ireland) is seeking  views on proposals for expanding the UK ETS to the waste sector. The goal of this expansion is to capture more emissions and increase decarbonisation.

In the Authority Response to the previous ‘Developing the UK ETS’ consultation, the following points were confirmed.

• The scope of the scheme will be expanded to include emissions from waste incineration facilities in the UK ETS from 2028.
• There will be a two-year transitional phasing period, from January 2026 – December 2027, where installations will monitor, report, and verify their emissions but won’t be required to purchase and surrender UK ETS allowances.
• The emissions cap will be adjusted to take account of the new scope of the scheme.
• Hazardous or clinical waste will not be exempt.
• The obligation for monitoring, reporting and verification will be placed on the operators of waste incineration and energy from waste facilities.
• The existing Ultra-Small Emitters threshold (less than 2,500 tonnes of CO2e) will still apply, so participants in the waste sector below this threshold could apply for the status. The Hospital and Small Emitter threshold (less than 25,000 tonnes of CO2e) will also apply, but the thermal input threshold will not.
• Fossil CO2 emissions will be covered in the expansion to waste incineration and energy from waste.
• Different mechanisms for distributing costs will be explored to ensure fairness.

The consultation

• the scope of the scheme, including which activities are covered, thresholds for inclusion and exemptions;
• scheme participations, including requirements for operators, monitoring, reporting and verification, and guidance;
• impacts of the scheme and risks, including diversion of waste to landfill and waste export, decarbonisation pathways for customers, and cost pass through to customers;
• how to adjust the UK ETS cap for waste;
• how the UK ETS could potentially incentivise investment in heat networks.

You can view and give your views on the proposed changes to UK ETS here.

For LUS subscribers you can view this consultation and many more on the links below:

Health and safety consultations
Environment consultations