LARAC chair Cathy Cook discusses the impact on local authorities of the proposed expansion of the Emissions Trading Scheme (ETS).

With a new government in place and a suite of policies being introduced, how waste and recycling are collected and treated in the UK is subject to significant change over the next few years.

Policies currently in the pipeline impact every part of the supply chain, from packaging producers with Extended Producer Responsibility (EPR) to fundamental infrastructure shifts such as the Deposit Return Scheme (DRS). There are also nation-specific policies including Simpler Recycling in England, Rethinking Our Resources in Northern Ireland, the Circular Economy Bill in Scotland and the newly introduced Business Recycling requirements in Wales. One constant with all these policies is that, either directly or indirectly, local authorities will be impacted.

The proposed expansion of the Emissions Trading Scheme (ETS) is one huge piece of policy that has been at the top of the agenda over the last few months, including a recently closed consultation from the Department of Energy Security and Net Zero (DESNZ).

In short, this proposes expanding the existing ETS to include waste facilities, specifically incinerators and Energy from Waste (EfW) sites. This will apply a variable cost per tonne of carbon emissions, requiring sites to purchase allowances and theoretically incentivising the decarbonisation of the waste streams sent to these sites by removing fossil-based plastics. Taken at face value, this seems like a positive move to help achieve the UK’s ambitious net zero targets and incentivise decarbonisation across the waste sector. However, that positive does come with several caveats and possible unintended consequences, particularly for local authorities.

Local authorities must collect waste from households but have limited enforcement powers to ensure correct resident behaviours regarding household waste and recycling. Combined with the additional burden that requires increased volumes of bulky household waste, containing persistent organic pollutants (POPs) to be disposed of via high-temperature incineration, this limits what local authorities can do to change the composition of incinerated residual waste. Ultimately, this means that ETS becomes an unavoidable cost passed down by EfW facilities to its local authority customers, who have no viable alternative than to pay. Furthermore, financial drivers inconsistent with other policies, or other nations, may mean that other disposal methods, including domestic landfill or Refuse Derived Fuel (RDF) export, become a more attractive alternative.

So, how can this be safeguarded against? LARAC proposes 6 key areas that would limit the impact on local authorities:

1. Relevant ETS costs are covered by Packaging Extended Producer Responsibility (pEPR).

As the primary influencer on the recyclability and/or carbon emissions of packaging at its end of life, producers should bear the increased incineration cost. This will help to support decarbonisation by incentivising producers to reduce the plastic content of their packaging.

2. New Burdens Funding.

Local authorities must receive New Burdens Funding to cover the increased costs for waste management due to the expansion of ETS, particularly before the full implementation of EPR.

3. Successful implementation of the Collection and Packaging Reforms (CPR).

If the expansion of ETS is to happen by 2028, the implementation of all aspects of the CPR must take place to current timelines. Simpler Recycling and similar policies in the devolved nations will help capture more materials, particularly plastics and food waste in the recycling and recovery streams and divert it away from incineration.

4. Expansion of EPR to non-packaging items.

LARAC wishes to see EPR expanded to cover additional items, including (but not limited to) textiles and absorbent hygiene products (AHP), to ensure these sectors pay for the management of their products at the end of life. This will also incentivise producers to increase their products recyclability and reusability and ultimately decarbonise.

5. Clarification on the use of funding.

It is understood that the funds generated through the inclusion of the waste sector in ETS will go to HM Treasury and not be ringfenced or directly reinvested in the sector. LARAC would like to see the money reinvested to help local authorities directly and develop the costly carbon capture technologies required for EfW facilities.

6. Greater enforcement powers for local authorities.

Local authorities require greater powers to ensure that residents’ disposal behaviours are correct to help support positive changes to the composition of the residual waste streams, as well as recycling and organic waste in line with other policies.

Ultimately, incentivising the decarbonisation of incineration will be an essential step in reducing the carbon impact of waste in the UK. But with such financial pressure on local authorities to deliver an increasing number of complex services, not just waste and recycling, it cannot simply become an unavoidable tax that councils will have to swallow.

For more articles like this, check out: Recycling Week: New government, new direction?