Councils expect meeting ETS tax on incineration will hit services

Councils have warned that the planned extension of the UK Emissions Trading Scheme (ETS) to waste incineration could force cuts to essential waste and recycling services, according to research from the Local Government Association (LGA) published today (25 April).

The LGA’s survey of English councils found that 93 per cent expect to be unable to meet the additional costs within their waste and recycling budgets, with 79 per cent anticipating a negative impact on overall waste services.

From January 2028, the government will expand the UK ETS, which currently applies to the aviation industry, to include the incineration of waste. While councils support the scheme’s environmental aims, they warn the policy could cost local authorities as much as £747 million in 2028, rising to £1.1 billion by 2036, with a cumulative cost over this period potentially reaching £6.5 billion.

Cllr Adam Hug, environment spokesperson for the LGA said:
“Councils want to see a reduction in carbon emissions and support the aims of the scheme, while encouraging recycling efforts, but to succeed we need to see the right incentive in the right places.

“Current proposals are hitting the wrong target. It will load billions of pounds of extra costs onto councils, who will have little choice but to cut back valued local waste and recycling services and net zero projects, while producers of fossil-based material avoid incentives to reduce what they produce.”

Councils expect to reduce waste services

The LGA survey, conducted in January and February 2025, received responses from 64 councils representing 45 per cent of waste disposed of by local authorities in England. It revealed widespread concern about potential service cuts resulting from the carbon tax.

Nearly 80 per cent of councils expect to reduce their overall waste and recycling services, with 42 per cent anticipating a “substantial negative impact.” Other services likely to face cuts include:
• Household recycling centre services (anticipated by 77 per cent of councils)
• Fly-tipping services (65 per cent)
• Street cleaning and littering services (63 per cent)
• Street bins provision (60 per cent)

Communication and awareness campaigns promoting recycling would also be hit, with 70 per cent of councils expecting substantial or moderate negative impacts – despite these campaigns being identified as one of the most effective ways to reduce fossil-based waste going to incineration.

The survey also revealed that two-thirds of councils expect the carbon tax would lead to reductions to local net zero schemes and green energy projects, such as initiatives helping communities install solar panels or transition to electric vehicles.

Options to limit ETS costs

English councils manage 14.3 million tonnes of residual (non-recycled) waste each year, with most treated at energy-from-waste plants. The LGA estimates that 5.7 million tonnes of this waste consists of fossil-based plastics.

The focus on “fossil-based waste” in the context of the UK ETS is because the government’s proposal specifically targets the carbon emissions originating from fossil fuels present in the residual waste stream, such as plastics. The policy excludes biogenic emissions from materials like food waste, paper, and wood, which are considered part of the natural carbon cycle.

The survey examined what measures councils could realistically implement to reduce fossil-based waste sent for incineration. Although additional sorting of collected waste to remove fossil-based material before incineration was considered the most effective approach (80 per cent), only 17 per cent of councils currently say this is realistic given costs and implementation challenges.

The three approaches that councils considered most realistic to implement were:
• Further communication and awareness promoting recycling (63 per cent)
• Additional activity to support re-use and repair (54 per cent)
• Implementing further restrictions on residual waste collection, such as smaller bins or less frequent collections (51 per cent)

However, councils noted that while these measures could help, based on the findings the LGA says this would be insufficient to offset the significant costs imposed by the ETS extension, particularly since councils have limited control over the amount of plastic packaging entering the waste stream.

In a separate poll commissioned by the LGA, 64 per cent of the public supported requiring companies to reduce plastic used in hard-to-recycle household items, with just 8 per cent opposing such requirements.

Shifting responsibility to producers

Ahead of the upcoming Spending Review, councils are calling on the government to rapidly review its plans for the ETS extension and to prioritise policy and financial incentives for producers to design out fossil material from their products.

The LGA survey findings show councils want a shift in responsibility to manufacturers, with many respondents noting that an effective approach would be “eliminating plastic packaging and ensuring products are repairable and recyclable.”

Other suggestions included stronger EPR (Extended Producer Responsibility), higher plastic taxes, material bans, and better education around waste prevention.

Without such reforms, the LGA warns that the carbon tax could become a significant financial burden on local authorities already facing severe budgetary constraints, potentially undermining rather than advancing environmental goals.

Cllr Hug added: “The Spending Review is an opportunity for government to review these proposals and force producers of fossil-based waste to face up to their responsibilities, by reducing the amount of plastic entering the market, instead of loading unaffordable extra costs onto already overstretched local councils.”