Energy from Waste (EfW) and greenhouse gas removals – including Direct Air Capture (DAC) – are to be considered for inclusion under the UK Emissions Trading Scheme (ETS) as part of consultations announced by the ETS Authority today (May 23).
The Waste consultation closes on July 18 and ‘Integrating Gas Removals’ on August 15.
The ETS, a key part of the UK’s strategy to addressing climate change, requires operators to obtain allowances for every unit of carbon emitted.
These allowances can be traded between participants, generating a carbon price that spurs businesses to invest in cleaner or renewable energy sources and improved energy efficiency.
The UK ETS currently applies to the aviation, power, and industry sectors, but since its launch in 2021, the Authority has been examining how carbon pricing can drive decarbonisation across more of the economy.
In a joint statement, UK ETS Authority ministers Lord Callanan, Huw Irranca-Davies MS, Màiri McAllan MSP, Andrew Muir MLA, Anthony Browne MP and Gareth Davies MP, said the consultations deliver on its commitments to provide further clarity on the expansion of the UK ETS.
“The consultation covering waste emissions will help bring certainty to drive investment in decarbonisation, as well as helping businesses make the necessary preparations for the expansion of the scheme. For greenhouse gas removals, this is an important step towards building a thriving market for carbon removals in the UK,” they said.
The consultations cover how the UK ETS will expand to include fossil CO2 emissions from EfW and waste incineration from 2028.
This includes a two-year phasing-in period for the sector from 2026 during which emissions will be monitored, reported and verified, with no obligation to purchase or surrender UK ETS allowances until their full membership in 2028. It will work alongside other initiatives to decarbonise the sector by providing an incentive for industry to adopt decarbonisation technologies.
The second consultation will look at how UK-based engineered greenhouse gas removal technologies such as Direct Air Capture (DAC), where carbon dioxide is removed from the air and permanently stored, could be integrated into the UK ETS.
This aims to provide a long-term market for greenhouse gas removals. It also asks whether carbon stored by the creation of new UK woodland could be integrated into the UK ETS.
These will be followed by two further consultations in due course, on how to expand the UK ETS scheme into the domestic maritime sector from 2026, and on how the scheme would recognise non-pipeline methods for moving captured CO2 into storage, including by road, rail or shipping.
The EU ETS covers greenhouse gas emissions from around 10,000 installations in the energy sector and manufacturing industry as well as aircraft operators flying within the EU and departing to Switzerland and the UK.
From 2024, it also covers emissions from maritime transport, as well as installations for the incineration of municipal waste ‘above a certain threshold’.
enfinium’s CEO Mike Maudsley said today’s ETS announcements underline the importance of decarbonisation to the future of the UK EfW sector.
He said, “Even if the UK hits its recycling targets, there will still be 17 million tonnes of unrecyclable waste in the early 2040s. But by working together with national and local governments, we believe that the problem of unrecyclable waste can be turned into a net zero solution.”
enfinium has published an independently verified Net Zero Transition Plan setting out its ambition to install carbon capture technology across its fleet over the coming years, designed to transform itself into a carbon removals business in the 2030s.
Yesterday, a report from the Oxford Institute of Energy Studies highlighted the need to integrate EfW with carbon capture in storage (CCS) when meeting climate objectives (click here).
