UK consults on extending ETS to waste incineration and greenhouse gas removals

The UK ETS Authority opened consultations to expand the Emissions Trading Scheme to energy-from-waste and waste incineration by 2028 and to integrate engineered greenhouse gas removals. For Indian exporters and carbon-market participants, the UK's move toward broader carbon pricing signals tightening compliance costs that could shape future cross-border carbon mechanisms.

The UK Emissions Trading Scheme Authority released consultations to expand the UK ETS, which since 2021 has covered aviation, power, and industry sectors. The proposals would extend the scheme to fossil CO2 emissions from energy-from-waste and waste incineration by 2028, with a two-year transition from 2026 during which emissions are monitored and verified without surrendering allowances. A separate consultation covers integrating engineered greenhouse gas removals such as Direct Air Carbon Capture and exploring whether carbon stored through new UK woodland creation could be included.

Operators in the energy-from-waste and waste incineration sectors are directly affected, as they will need allowances for fossil CO2 emissions once fully covered in 2028. Greenhouse gas removal technology developers, including Direct Air Carbon Capture operators and new UK woodland creators, would gain access to a long-term removals market. Future consultations will affect the domestic maritime sector from 2026 and operators using non-pipeline CO2 transport by road, rail, or shipping. The UK ETS Authority comprises the UK, Scottish, Welsh governments and Northern Ireland's relevant department.

Stakeholders should submit feedback before the consultation deadlines: the waste scope expansion consultation closes 18 July 2024 and the greenhouse gas removals consultation closes 15 August 2024. Waste sector operators should prepare for the 2026 transition period by establishing emissions monitoring and verification systems ahead of full ETS membership in 2028. Removal technology developers should engage on methodology design for engineered and nature-based removals. Entities should also monitor forthcoming consultations on maritime inclusion from 2026 and recognition of non-pipeline CO2 transport methods.

Key figure — Waste consultation closes 18 July 2024; full ETS coverage of waste from 2028