UK ETS moves closer to including waste incineration with new monitoring framework
The UK Emissions Trading Scheme (UK ETS) Authority has announced a monitoring, reporting, and verification (MRV) period starting in 2026, paving the way for the potential inclusion of waste incineration within the carbon pricing framework.
The UK ETS Authority has published its interim response to a consultation on expanding the UK Emissions Trading Scheme (UK ETS) to cover waste incineration. The announcement, made on 21 July 2025, outlines the start of a Monitoring, Reporting, and Verification (MRV) period on 1 January 2026, which will initially apply on a voluntary basis.
The MRV framework will cover combustion and process emissions from energy-from-waste facilities, as well as clinical waste incineration. High-temperature hazardous waste incineration will remain excluded due to the challenges associated with reducing emissions in that sector.
It is essential that we have robust and comprehensive data upon which to design the details of the ETS regime as it relates to waste
The Environmental Services Association (ESA) has welcomed the move, particularly the recognition of “emissions factors” as a fair way to allocate emissions and associated costs across the waste value chain. The ESA believes that such a system will incentivise decarbonisation and ensure a balanced approach to emissions pricing.
Jacob Hayler, Executive Director of the ESA, said: “The proposed monitoring, reporting and verification (MRV) period to 2028 can and should now be used to create a viable system which fairly and accurately attributes carbon emissions and associated costs through the waste value chain in a way that creates incentives to decarbonise waste and that dovetails with other waste policy reforms including the EPR regime for packaging.”
Hayler also emphasised the need for comprehensive data collection during the MRV period. While participation will be voluntary, the ESA has argued that a mandatory approach would ensure a stronger evidence base for designing the final ETS regime for waste treatment.
“It is essential that we have robust and comprehensive data upon which to design the details of the ETS regime as it relates to waste, so voluntary participation in the MRV period is not the ESA’s preferred approach,” Hayler added.
“The inclusion of waste in the ETS, done correctly, could drive billions of pounds worth of investment in waste decarbonisation across the UK, but these investments will not be made until there is certainty over both the timing and detail of the reforms.”
Viridor, one of the UK’s largest recycling and energy recovery companies, also welcomed the UK ETS Authority’s announcement.
A Viridor spokesperson said: “We welcome the Government’s announcement yesterday on the Emissions Trading Scheme’s expansion, which is a strong step forward for the UK’s waste sector. Developing and testing carbon factors is vital to drive decarbonisation and ensure waste producers are rewarded for decarbonising their waste.
“Using the MRV period to test and develop this approach will help ensure an effective full ETS implementation in 2028. The support for the local authorities is very welcome as is policy to prevent waste leakage to landfill or export. We look forward to continuing to work closely with the Government through this period and we are committed to playing our part in delivering a net zero, more circular economy.”
Emissions factors and policy alignment
The UK ETS Authority’s response highlighted that a well-designed emissions factor-based system could reinforce the “decarbonisation signal intended by the carbon price.” The ESA strongly supports this, viewing emissions factors as key to ensuring fair cost allocation and stimulating change across the waste sector.
In addition, the government confirmed plans to align the ETS with the Extended Producer Responsibility (pEPR) regime for packaging. This alignment would mean that local authorities’ additional carbon costs for disposing of packaging materials through incineration will be reflected in pEPR payment calculations. The ESA argues that this will create stronger financial incentives for recycling and waste minimisation efforts.
Government must ensure – as the ETS Authority acknowledges – that measures are put in place to mitigate the risk of unintended outcomes.
The ESA also welcomed the exclusion of hazardous waste treatment from the MRV period, acknowledging the difficulties in reducing emissions from essential processes such as clinical waste incineration. The UK ETS Authority has indicated that the inclusion of clinical waste will be reviewed over the course of the MRV period.
While no implementation date has been confirmed, the MRV phase is expected to run until at least 2028, giving time for the collection of reliable data and for developing a robust, cost-effective approach to carbon allocation.
Hayler concluded: “It is right that no commitments have yet been made on implementation timescales in order to ensure that the scheme is designed well and will meet its intended outcomes. In the meantime, Government must ensure – as the ETS Authority acknowledges – that measures are put in place to mitigate the risk of unintended outcomes.”
The ESA has committed to working closely with the UK ETS Authority and local authority partners during the MRV period, describing the scheme as a “once-in-a-generation policy reform” that could significantly advance waste sector decarbonisation.
