Emissions Trading Scheme expanded to include maritime transport and waste industries

The UK Emissions Trading Scheme Authority has announced a tightening of the Emissions Trading Scheme (ETS) limits as they apply to the industrial, power and aviation industries and expanding the scope of the scheme to include emissions from the domestic maritime transport, waste incineration and energy from waste sectors.

The scheme – which has been in place since 2021 – incentivises industries away from fossil fuels by putting a limit on the total amount of greenhouse gases aviation, power and other energy intensive industries can emit, encouraging them to invest in energy efficiency or renewable technologies.

Under the scheme participants are required to obtain and surrender allowances to cover their annual greenhouse gas emissions. Participants can purchase allowances at auction or trade them amongst themselves, which allows the market to find the most cost-effective way to reduce emissions.

From 2024, the industries currently included in the scheme will need to bring their emissions down at the rate needed to reach net zero goals. 

Domestic maritime transport will be brought into the scheme in 2026 and waste from 2028. From 2026  the free carbon allowances enjoyed by the aviation industry will begin to be phased out, obliging businesses to buy allowances for every tonne of carbon emitted under the scheme. 

On the news that the waste industry is being included in the scheme, Mike Maudsley, CEO of enfinium, said: ‘We need to decarbonise the UK economy at pace, which is why we support the proposed inclusion of energy from waste in the UK Emissions Trading Scheme in 2028. Combined with banning landfill and minimising waste exports, this change could deliver billions of pounds of investment in decarbonising Britain’s waste infrastructure. enfinium is already helping to reduce the UK’s emissions through five local decarbonisation hubs around the country. With carbon capture and storage technology, we have the potential to go one step further and become a carbon removals business.

‘We also welcome the Government’s decision to include engineered Greenhouse Gas Removal technologies in the UK ETS. This will provide a regulated compliance market that will drive investment in high-quality carbon removal technologies such as energy-from-waste with CCS.

‘We look forward to working with national and local government and our waste collection partners to develop a transition plan that ensures a smooth entry into the ETS that works for all of the waste supply chain.’

In a joint statement, UK ETS Authority Ministers, including Lord Callanan, Julie James MS, Màiri McAllan MSP and Gareth Davies MP said: ‘With the recent rises in energy prices, it is more important than ever that we accelerate the transition away from costly fossil fuels, towards greener and more secure energy.

‘Our UK Emissions Trading Scheme, along with other interventions, forms part of a wider strategy to provide a long-term framework to incentivise UK industries to decarbonise – seizing the huge opportunities that are arising from a rapidly expanding clean energy sector, and providing the certainty that industries need to invest in new green technologies.

‘The decisions taken here will not only put us on the path to net zero, but will also support crucial industries on their path to long term sustainability.’