ZWE propose full inclusion of waste incineration emissions in EU Emissions Trading Scheme

New report published by Zero Waste Europe recommends also including biogenic emissions when the EU considers adding municipal incineration into ETS, ‘as the atmosphere does not distinguish between fossil and non-fossil CO2 in terms of its response to emissions’.

Waste to power plant and artificial ski slope in CopenhagenIn preparing the ground for what is likely to be a fiercely fought debate, Zero Waste Europe has set out the case for a ‘comprehensive inclusion’ of emissions from municipal waste incinerators when the European Commission next reviews the question in 2026.

The study, ‘Incineration in the EU emission trading system: a set of suggestions for its inclusion’ conducted by consultancy Equanimator, argues that the current approach to emissions from waste incineration may be inconsistent with the EU's climate goals.

Since 1 January 2024, municipal waste incineration (MWI) installations have been included in the EU ETS, but only for monitoring, reporting, and verification (MRV) purposes. This means these facilities must report their emissions but are not yet required to surrender allowances for them.

The European Commission is scheduled to review the feasibility of fully including MWIs in the EU ETS by July 2026, with potential full inclusion from 2028.

The report puts forward several recommendations for consideration, notably that all CO2 emissions, both from fossil and non-fossil (biogenic) sources, should be counted and require allowances under the EU ETS. The study also recommends that both power and heat from incineration should be fully included in the EU ETS, without free allowances allocated to heat generation.
It distinguishes between the principles used for compiling greenhouse gas inventories and those that should guide policy design. While inventories aim to report on current sources and sinks of greenhouse gases, policy should be focussed on meeting the climate change objectives.

The report discusses the potential implications of how biogenic CO2 emissions are treated in the EU ETS, highlighting that zero-rating CO2 emissions from wastes of non-fossil origin (biogenic materials) could create incentives that undermine waste prevention and recycling efforts for these materials, by effectively making these materials, such as paper, wood, food waste, and natural textiles, a lower cost feedstock.
The study also suggests that the current 20 MW threshold for inclusion in the EU ETS could potentially be lowered to 10 MW or aligned with the Industrial Emissions Directive, to avoid the development of smaller facilities to game the system.

Power and heat in the EU ETS

Zero Waste Europe also recommends inclusion of both power and heat from incineration in the EU ETS, which would align with the planned inclusion of the buildings sector (which includes heating) in the ETS from 2027.

"With the buildings sector to be included in the EU-ETS as of 2027, the argument for including only emissions apportioned to power (or to heat) has disappeared." This approach could further simplify the system by removing the need to apportion incinerator emissions across power and heat outputs.

While primarily focused on incineration, the report also discusses other waste management processes, particularly landfills. It suggests that the European Commission should consider including landfills in the EU ETS, noting their methane emissions. However, the report acknowledges challenges in accurately measuring landfill emissions and suggests that existing landfill taxes might be more easily adjusted to address methane emissions.

Wider implications

The report acknowledges that implementing its recommendations would represent a significant shift in how waste incineration is treated within the EU's climate policy framework. It points out that changing the emissions accounting for waste incineration could have notable economic effects and could better align with the EU's waste hierarchy, potentially encouraging waste prevention, reuse, and recycling.

A key challenge highlighted is the complexity of harmonising the approach to biogenic emissions across different sectors. The current zero-rating of biogenic emissions in waste incineration aligns with practices in other sectors, such as biomass energy. Changing this approach would require addressing several interconnected issues.

Biomass power plants have had their emissions zero-rated, and some countries have granted free allowances for heat from biomass. This contrasts with the recommendation for incineration presented in the study. The authors argue that this differential treatment of emissions across sectors lacks justification from a climate perspective and advocate for a more consistent approach in addressing all CO2 emissions, regardless of their source.

The report also discusses implications for Carbon Capture and Storage (CCS), noting that the current approach allows biomass power plants with CCS to claim to be "carbon negative." Changing how biogenic emissions are counted would affect this claim not just for waste incineration but potentially for other biomass energy sectors as well.

Commenting on the report, Janek Vahk, Zero Pollution Policy Manager at Zero Waste Europe, said: “The inclusion of incineration within the EU-ETS is long overdue. Incinerators are poised to become the most carbon-intensive power source once coal is phased out. Bringing municipal waste incineration into the EU-ETS will ensure that every sector contributes to emission reductions, driving us towards a cleaner, more circular future.”

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