The EU and UK ETS are market-based mechanisms designed to incentivise the reduction of greenhouse gas emissions. They operate by setting a cap on the total amount of emissions allowed within the scheme. Participants are allocated allowances representing the right to emit a certain quantity of greenhouse gases. If their emissions exceed their allowance, they must purchase additional allowances from other participants, effectively creating a financial incentive to reduce emissions.
The inclusion of energy from waste facilities in the schemes is a recognition of their role as emitters of greenhouse gases and marks a significant turning point for the waste sector.
While EfW offers a valuable solution to managing residual waste and generating heat and power, it still involves the combustion of waste, which releases carbon dioxide; the municipal solid waste burned is part-fossil and part-biogenic, and hence the electricity and heat output from an EfW can be considered – in part – a renewable energy source. By incorporating EfW into an emissions trading regime, the aim is to encourage EfW operators to invest in technologies and operational practices that minimise greenhouse gas emissions. Operators within an ETS only have to pay for emissions of fossil carbon dioxide, so this presents a specific challenge for EfW operators: to accurately determine the fossil/bio split of their CO2 emissions.
The emissions trading schemes are expected to stimulate innovation, and drive the development and adoption of cleaner technologies, such as carbon capture and storage, within the waste sector.
The EU goal of including EfW facilities in its emissions trading system by 2028 will follow an impact assessment to be carried out in 2026. This will place a price on the carbon emissions from municipal waste incineration, though hazardous waste incinerators will remain exempt. The EU has also required member states to start measuring, reporting, and verifying emissions from EfW facilities from 2024.
Decarbonising EfW in the UK
The UK emissions trading scheme was set up post-Brexit to replace the UK’s previous participation in the EU scheme. There is considered to be future potential for linkage between the two systems.
The timetable for incorporating EfW into the UK ETS is similar to that planned for the EU Emissions Trading System.
In the UK, the Climate Change Committee’s Seventh Carbon Budget, published February 2025, stressed the need for more stringent decarbonisation policies in the EfW sector. Specifically, it recommended that all new EfW facilities have a viable route to connecting to carbon capture and storage technology.
A recent project delivered by Ricardo, the global strategic, environmental and engineering consultancy, as part of the UK-government-funded research programme Climate Services for a Net Zero Resilient World (CS-N0W), aimed to establish the basis for a monitoring, reporting and verification (MRV) system suitable for deployment as part of an emissions trading scheme.
Greenhouse gas emissions from the waste sector have declined in recent decades, as the UK’s landfill tax has reduced the amount of biodegradable waste being buried, and the capture and use of landfill methane has become more widespread. However, the reduction in emissions has stabilised as waste is diverted to EfW facilities (see graph below).
Whilst electricity from EfW reduces the demand for fossil fuel power generation, it is a growing source of CO2. EfW now contributes the second largest share of waste sector greenhouse gas emissions after landfills.
By 2022, 57 EfW facilities were operational in the UK, contributing roughly 3% of total UK power generation. None of these facilities is equipped with carbon capture and storage technology. The Climate Change Committee argues that by 2050, all of them should have CCS.
This is the backdrop against which the initiative to include EfW facilities in the UK ETS can be seen.
The MRV challenge: monitoring, reporting and verification
The inclusion of EfW facilities in the UK ETS can be regarded as a critical step towards aligning the waste sector with the UK’s ambitious net-zero targets. However, it presents a series of challenges, not least the development of measurement, reporting and verification solutions that enable EfW to join the UK ETS and achieve comparable levels of accuracy in its fossil carbon emissions data to that of other sectors participating in the ETS.
MRV for EfW facilities is technically more complicated than it is for other power plants. Most fossil fuel power stations apply rigorous fuel sampling and compositional analysis to determine the fossil carbon inputs to the unit, which are then used for UK ETS reporting. For EfW, this option is far more challenging, given the heterogeneous nature of the inputs to EfW, which vary by location and season. Also, the routine and systematic sampling and analysis of municipal solid waste needed to achieve the certainty required under the UK ETS is resource-intensive and presents health and safety issues.
The municipal solid waste processed by EfW facilities is typically comprised of a mixture of part-fossil (eg, plastics) and part-biogenic (eg, biomass, biofuels, biogases, etc) components. Under the UK ETS, waste incineration facilities will only need to purchase emission allowances for their fossil emissions, and not biogenic emissions. This distinction presents a specific challenge: how to develop a cost-effective MRV system that can distinguish between fossil and biogenic CO2.
To answer this question, the UK Department for Energy and Net Zero (DESNZ) turned to the CS-N0W programme, led by Ricardo. DESNZ tasked the CS-N0W research team to establish an MRV system for EfW that is suitably accurate, rigorous and proportionate.
The delivery team worked with the department to understand the evidence gaps and mapped the current landscape. To understand key challenges and evaluate MRV options, the team engaged widely with EfW operators, trade associations, policy makers, technology suppliers and laboratories that provide biogenic/fossil carbon analysis services.
Through this process, several available MRV options were identified, including:
- The manual sorting method. A representative sample is collected from incoming waste or the waste bunker, sorted into fractions, sieved, dried, then aggregated into categories (biomass, non-biomass, inert, etc).
- The selective dissolution method. A representative sample of waste is collected and placed in a concentrated solution of sulphuric acid and hydrogen peroxide. The biomass materials will dissolve, while the fossil derived materials will not.
- Flue gas sampling and radiocarbon C-14 analysis. Waste incineration generates a mixture of gases that are channelled into the atmosphere via a flue. C-14 analysis is conducted on flue gas samples collected from the stack. The half-life of C-14 is used to determine the biogenic and fossil fuel components of the emissions. Fossil fuel material will contain close to zero C1-4, whilst biogenic materials will contain trace levels.
- The balance method. Uses a mathematical model that establishes a set of mass and energy balances to describe the waste incineration system. Inputs to the model consists of real time operational data and values from literature for multiple input and output stream parameters.
For each method, information was gathered on: costs; likely sampling design/frequency to achieve different levels of uncertainty per approach; and practical considerations for each operator (eg, sampling access requirements). The team elaborated field-testing protocols to validate the different methodologies by reviewing available data and uncertainties in estimating fossil CO2.
It was determined that continuous flue gas sampling using C-14 analysis is the preferred MRV method for EfW sites.
Alternative methods were deemed overly labour intensive and less accurate. EfW operators viewed C-14 sampling as simpler than alternatives and more transparent as it uses direct measurements. Several of the large operators either already have C-14 equipment installed or are trialling it with the intention to roll it out across their fleet. The costs of C-14 installation and operation were seen as minor compared to the upcoming cost of the UK ETS.
The ability to distinguish between fossil and biogenic carbon dioxide in the flue gases requires specialist sampling and analysis techniques. Samples of flue gases are collected at the stack and sent to a lab for C-14 analysis.
An important step in establishing this MRV system will be to build up the laboratory capacity with the accreditations to perform C-14 analysis of stack samples.
The analysis delivered by CS-N0W provided DESNZ policy teams with a baseline of institutional knowledge on the available methods for measurement, reporting and verification and the stakeholder engagement and workshop gathered insights from across the industry regarding the challenges and opportunities for implementing each option.
The final report fed directly into the UK government consultation on the UK ETS scope expansion to include waste.
What EfW operators should do to prepare for the UK ETS
As already noted, expansion of the UK ETS in 2028 to include EfW facilities presents a series of challenges, including complex MRV requirements. Early engagement with MRV and CCS planning will be critical to avoid compliance risks and cost shocks in 2028.
However, challenges can be overcome with careful analysis, evidence-based policy design and systematic stakeholder engagement.
By proactively addressing the challenges, the expansion of the UK ETS provides an opportunity. The carbon price will create a market signal to promote more sustainable waste management practices and the uptake of CCS technology, without which, warns the UK Climate Change Committee, EfW facilities risk becoming stranded assets.
Article contributed by Ricardo plc, a global strategic, environmental, and engineering consulting company providing specialist technical and consulting services at the intersection of transport, energy and climate agendas.
EfW operator readiness checklist for UK ETS
- Start planning for MRV compliance now: Review your current emissions monitoring systems and identify gaps against UK ETS requirements
- Engage with MRV solution providers: Explore options for Carbon-14 flue gas sampling and ensure access to accredited labs for analysis
- Budget for ETS costs and MRV implementation: Factor in allowance purchase costs and MRV system investment into financial planning
- Assess CCS readiness: Evaluate technical and commercial feasibility of connecting to CCS infrastructure to future-proof assets
- Participate in industry consultations: Respond to government consultations and engage with trade associations to influence policy design
- Train operational teams: Ensure staff understand MRV requirements, sampling protocols, and reporting requirements
