UK Emissions Trading Scheme: A costly headache or a green goldmine?

In a nutshell, the recent expansion of UK ETS to include energy-from-waste (EfW) and waste incineration will cost stakeholders come 2028. Burning waste, after all, creates carbon emissions and the UK ETS is basically a ‘polluter pays’ system, as outlined in the Environment Act. With this principle in mind, waste producers hold ultimate responsibility.

This means businesses and authorities face potential cost increases to operations due to carbon allowances they will need to purchase, impacting budgets and profitability. It also could lead to operational changes in the form of investments in better technologies like carbon capture, utilisation and storage (CCUS) to manage emissions and comply with the scheme.

To support our customers, we thermally treat waste on their behalf, while emphasising sustainable disposal methods wherever possible.

Data gaps and evolving policies can also create uncertainties in terms of future costs, infrastructure needs, and regulatory requirements, throwing a monkey wrench into effective planning.

But not everything’s doom and gloom. Our panel presented different perspectives from the official government angle and the local council view to the public and private sector insights.

Hot takes from the experts

Some of the main points that stood out:

No man, not even ETS, is an island

For ETS to work, all kinds of waste policies need to click and the more sectors in the ETS, the more progress towards the reduction of emissions.

Proactive stance

ETS is just one piece of the jigsaw puzzle. To truly solve the problem, we need to create less waste. Less plastic in your bin = reduced costs. Better recycling and keeping waste ‘local’ are other considerations. The UK needs to avoid unnecessary waste exports to ensure proper handling and reduce environmental impact. If waste is sent abroad, it needs to be strictly tracked and charged for the carbon emissions it generates.

A Suffolk perspective

Local councils will most likely find ETS costs to be massive. For instance, Suffolk County Council (in an engaging presentation that had its chief financial officer’s head spinning) is estimating an annual cost of £6 million to £7 million. What’s more, costs might fluctuate, making budgeting difficult. While government funding will help, it might not be enough to cover all the costs. They might need to do some trading and hedging, which are complex and risky.

All’s not lost

Best case scenario –recycling targets are met, costing councils less. Worst case – nothing changes, costs soar. It’s important to look closely at residual waste, whether it goes to landfill or gets incinerated for energy. Wales, for instance, is looking specifically at what constitutes residual waste to identify potential materials to target for reduction under ETS. These include flexible and dense plastics, textiles, absorbent hygienic products, and miscellaneous combustibles.

Understanding which materials cause the most waste problems empowers Wales to tackle them head-on: by encouraging reduced usage, holding polluters accountable through the ETS, and actively seeking environmentally friendly alternatives.

To navigate these challenges, stakeholders can adopt several strategies:

• Early preparation: Start planning for the ETS now by understanding potential costs and exploring mitigation options.
• Policy clarity and engagement: Actively participate in consultations and discussions to shape the policy and advocate solutions that address relevant concerns. It all boils down to having clear guidance and timely information on technical details like monitoring, reporting and verification (MRV) methodologies and fair cost pass-through mechanisms.
• Collaboration and communication: Open dialogue and collaboration between businesses, authorities, and policy makers are crucial for smooth implementation and addressing concerns.
• Invest in carbon capture: Explore technologies like CCUS and other waste reduction strategies to minimise carbon footprints and future costs.
• EPR integration: Link ETS with extended producer responsibility (EPR) schemes to encourage producers to reduce the fossil content of their products, minimising waste disposal costs.

Looks like we all have so much work to do on the ETS front. The experts also seem to be a bit torn. There are potential wins for the environment but that depends on multiple policies lining up just right. Add to that, we also need to see businesses actually switching to less pollution-heavy production.

As always, Dr Adam Read, who chaired the webinar, kept the energy high, and got the audience to fully participate. Thank you to our expert panel who made this webinar such a fascinating discussion: Stuart Hayward-Higham (Chief Technical Development and Innovation Officer, SUEZ recycling and recovery UK), Andy Rees, OBE (Head of Waste Strategy, Welsh Government), Steve Palfrey (Assistant Director, Waste & Environment, Suffolk County Council), and Kristy Spindler (Senior Director, Climate, Local Partnerships). Of course, our appreciation to our webinar attendees who were very proactive and took part in the discussions and polls enthusiastically. Just remember, the less we create waste, the less this becomes problematic (and dramatic)!

If you missed the live webinar session, you can watch it on-demand here.