UK Emissions Trading Scheme (UK ETS) - Emissions from Waste Incineration and Energy from Waste
The UK ETS works on a cap-and-trade principle, whereby a cap is set on the amount of carbon emissions that can be produced by installations within scope. It currently applies to Energy Intensive Industries and Electricity Generators (known as stationary installations) and Aviation. Within the cap, installations receive or purchase carbon allowances, with 1 allowance being equal to 1 tonne Carbon Dioxide (CO2) equivalent.
The UKG and DAs, acting jointly as the UK ETS Authority, consulted in Spring 2022 on proposals to align the design of the UK ETS with the UK Government and DAs’ net zero targets (“Developing the UK ETS”). This included a call for evidence on proposals to include emissions from waste incineration and energy from waste within scope. The Government Response to the consultation, published on 3 July 2023, announced the intention to bring emissions from this sector within scope by 2028. In this response, the UK ETS Authority also stated that it is minded to include a 2 year phasing period from 2026-2028, whereby installations within scope would monitor their emissions, without the requirement to purchase carbon allowances.
Type of Change
Statutory
Affected Stakeholders
- Waste incineration installations
- Waste management companies
- Local Authorities
Changes
Expansion of scope of the UK ETS to cover emissions from waste incineration and Energy from Waste. Once fully implemented, this will require waste incinerators to monitor their carbon emissions from fossil based waste streams, and to purchase and surrender carbon allowances to commensurate with these emissions on an annual basis.
Status
In the UK ETS Authority Government Response to the “Developing the UK ETS” consultation referred to in paragraph 2 above, a commitment was given to extend the UK ETS to this sector by 1 January 2028, with a “minded to” 2 year period starting on 1 January 2026 whereby installations within scope would be required to Monitor, Report and Verify their emissions without the requirement to purchase carbon allowances. The Authority consulted further on the detailed design of the expansion of the UK ETS to the waste incineration/EfW sector between 23 May and 2 August 2024. An interim Government response to this consultation was published on 21 July 2025, and set out that a voluntary Monitoring, Reporting and Verification (MRV) only period would apply for the sector starting from 1 January 2026. The response also confirmed that it would be the EU ETS which would apply in respect of waste incineration in NI, under the terms of the Windsor Framework.
Expected Timeline
Voluntary MRV to apply under UK ETS from 1 January 2026. Work ongoing across UK ETS Authority wrt main Government Response to consultation. EU ETS will apply in NI under the terms of the Windsor Framework. Mandatory MRV in the EU ETS came into effect 1 January 2024. Analysis ongoing by DAERA officials to determine transposition requirements.