Councils must be protected from the costs of energy-from-waste (EfW) being included in the UK’s emissions trading scheme (ETS).
The warning has come from the Local Authority Recycling Advisory Committee (Larac), which said extended producer responsibility (EPR) should be imposed on materials beyond the intended inclusion of packaging to help defray the costs.
In a response to a Government consultation, Larac said it supported inclusion of waste in the scheme, but measures were needed to “avoid it becoming an unavoidable expense passed down to local authorities” at a time when their budgets were already severely stretched.
Under the ETS, there is a limit imposed on the emissions a sector can produce, with participants receiving free allowances which can be traded between those who need less or more of them. Over time, the cap is reduced to push down overall emissions.
This scheme did not originally apply to EfW but is expected to do so from 2028 until at least 2050, in what the Environmental Services Association has called “the most significant regulatory intervention to the UK waste industry in a generation” and one that would “fundamentally change the economics of the sector”.
Larac said this would leave councils with problems because they must collect waste from households but have limited powers to ensure residents recycle everything possible, rather than put materials into residual waste streams for eventual incineration.
In addition, councils are burdened by recent regulations that require waste containing persistent organic pollutants (POPs), to be sent for high-temperature incineration.
“This limits what local authorities can do to change the composition of residual waste being sent for incineration,” Larac said. “Ineffective rollout of the scheme expansion can also carry unintended consequences, such as a greater use of domestic landfill or refuse- derived fuel export.”
Larac chair Cathy Cook said: “Including the waste sector in the ETS is a step in the right direction for decarbonisation.
“However, it is crucial that the financial burden does not directly or otherwise fall on to local authorities who are already under significant financial pressures and have limited mitigation opportunities.
“Our recommendations aim to ensure that the scheme is implemented in a way that supports local authorities while decarbonising our sector.”
Larac said relevant costs from the scheme should be covered by the planned packaging EPR regime. It argued this was reasonable because producers were the primary influence on the recyclability and/or carbon emissions of end-of-life packaging and they should therefore bear the increased incineration cost.
But this would still leave much of the municipal waste stream outside EPR, and Larac said this should be expanded to cover textiles, absorbent hygiene products and other streams judged suitable to ensure that such sectors pay for the management of end-of-life products.
It also said councils should receive new burdens funding from central Government. This is a mechanism intended to compensate councils for additional duties imposed on them by Whitehall.
In theory these would become cost-neutral for councils but in practice this is a frequent source of disputes as councils claim they have been allocated too little.
There is already a dispute about who will control funds generated from waste in the trading scheme, with Larac objecting that these are destined for the Treasury and will not be ringfenced or directly reinvested in the sector.
It pointed to the practice in Germany, where around 90% of the funds are invested in decarbonisation projects.
