How the Emissions Trading Scheme can help the waste sector meet decarbonisation targets

Carbon, net zero and climate change are a key focus of governments, businesses and citizens across the world, especially when brought into stark focus through the exceptional heat and rainfall events of recent weeks. Whilst keeping an eye on resource consumption, natural capital and biodiversity net gain, greenhouse gas reduction must be a key focus of us all if we are to stop further global warming and seek over time to redress much of the damage already inflicted on this world in which we live.

‘What can I (or we) do’ is often a statement that reflects confusion or inertia-based nervousness as we strive to comprehend some of the challenges ahead. However, as with all journeys, if you know where you are and where you need to be, the rest is about route planning and delivery. Our recent webinar called ‘Emissions Trading – let us in’ was designed to help provide a baseline (where we are), provide a vision of the future (net zero for the waste sector by 2040) and consider the UK Emissions Trading Scheme (ETS) as the route by which much of the journey can be delivered or supported. Firstly, Simon Gandy of Ricardo AEA set out the baseline of carbon in the sector which I have reconstructed into the waterfall graph below. As Simon explained, most of the green ‘benefit’ components are the product of the sectors’ work but the actual benefits are assigned to those parties who use those products.

Tim Rotheray from Viridor then explained the basics of the ESA net zero strategy and its target of 2040. The ESA working group on this involved many of its members and set out the baseline and a number of future trajectories that were available to the sector. The ambitious one chosen for 2040 included more recycling, more zero emissions vehicles, and carbon capture at EFW plants.

So, having set the scene for the start and journey endpoint, the question to then ask is: how do we traverse the journey between the two? For me, the absolutely wrong way of doing it is to allow the sector to be segmented into silos, either directly or indirectly impacted by ETS policies being enacted elsewhere. The Carbon Reduction Commitment (CRC) was a brilliant example of this, designed to reduce energy consumption, and taxed elements such as power consumption.

In the waste and resources sector we use lots of power in our recycling and sorting facilities, as can be seen in the blue blocks in the graph above. So, in effect the outcome of the CRC was an increasing tax bill as we recycled more materials as a result of having to use more power to do so. This tax completely missed the benefit of the sorting and recycling process, and as you can see from the green column adjoining the blue ones, ignored the huge societal benefit of recycling these materials.

Considerations around bringing EFWs into ETS under the power station profile completely miss the point that an EFW is primarily providing a sanitary service for the treatment of residual waste left over after recycling, both protecting human health and the environment. Power stations only deliver the function of power production and if they need a shutdown, for example, can stop buying fuel temporarily whereas with an EFW the waste continues to be produced by householders and businesses alike and needs to be treated. The recovery of energy through heat and electricity from waste (and in the future fuels and chemicals) is a welcome and valuable addition to the service we provide but always secondary to the sanitary one.

If we allow ETS to impact on parts of our business, through vehicle electrification, through power production or resources consumed, we will never have a coordinated approach and risk adverse or unintended consequences. We, as a sector, cannot avoid playing an important role in helping prevent climate change; we have done a great job so far by reducing our emissions by over 50% in the last 30 years and have an important role going forward – so rather than standing on the side-lines and being captured in parts, we should be front and centre to the debate, use being fully in ETS to accelerate progress and fully define the role we need to play.

Based on the feedback in the online polls we ran through the webinar, it would appear we are not alone in our opinion. Seventy-four percent of attendees who responded to the question ‘is ETS necessary for the waste and resource sector to meet its decarbonisation targets?’ said yes, and 64% think it will enhance the delivery of the current policy reforms.

There are some very tricky questions to ask, like how do we account for the green columns in the chart above, but its these very questions that are fundamental to our service to waste producers and the very questions that need to be answered to ensure the sector can play its part. So let’s be ambitious: support bringing forward the DEFRA organics to landfill ban from 2035 to an earlier date; support the detailed work necessary to define how the waste and resources sector should be defined and managed under ETS; and, target full implementation of ETS for the sector by 2030, compounding and accelerating the changes already proposed under extended producer responsibility, consistent collection and the other policy proposals.