This note summarises the RDF Industry Group’s position on the potential expansion of emissions trading to waste incineration and related waste treatment routes. It draws on the Group’s EU ETS consultation response and includes aligned UK-specific points relevant to the planned inclusion of energy from waste in the UK ETS.
For the section on the UK ETS, please refer to page 5.
Overall position
The RDF Industry Group is not opposed in principle to the inclusion of waste incineration, and potentially other waste treatment activities, within the EU ETS. However, the Group’s position is that carbon pricing alone is unlikely to deliver the desired decarbonisation outcomes in the waste sector. Residual waste typically moves to the lowest-cost outlet, and experience from Member States that have introduced incineration or carbon taxes suggests that such price signals have had limited impact on reducing residual waste arisings or driving major increases in recycling and prevention. Instead, those measures have often altered waste flows geographically, without producing the scale of upstream behavioural change that policymakers might expect.
For that reason, the Group considers that any ETS expansion must be part of a broader policy package. The central policy objective must be genuine emissions reduction across the waste system, consistent with the waste hierarchy, rather than the creation of new distortions within an already highly price-sensitive and cross-border market.
Summary
- ETS expansion should reduce structural distortion across Europe, not add a further uneven cost layer to an already fragmented market.
- EfW should not be included in ETS without equivalent treatment of landfill.
- Intra-EU exports are a legitimate part of the European waste system; the real leakage risk lies outside the EU carbon-pricing area.
- Scope should include all relevant thermal treatment and waste-derived fuel routes.
- MRV must support allocation as well as measurement.
- Carbon cost must be capable of being passed through to the actors responsible for introducing fossil-rich material into the waste stream.
- ETS alone will not deliver prevention, recyclability or wider circular-economy outcomes, and should be designed to avoid unintended consequences for recycling competitiveness.
- ETS incentivises CCUS in the waste sector, but deployment will require dedicated supporting policy.
- Complementary measures, including landfill controls, EPR alignment, recycling support and anti-leakage safeguards, are necessary for the scheme to work.
EU ETS positions by consultation theme
Level playing field across Member States and treatment routes
ETS expansion should reduce structural distortion across Europe, not add a further uneven cost layer to an already fragmented market.
A common EU carbon-pricing framework is only useful if it improves alignment across the internal market. Waste treatment already operates within a patchwork of incineration taxes, landfill taxes, landfill bans and other domestic regulatory constraints, and those differences already shape waste flows, infrastructure utilisation and relative treatment cost. ETS should not simply be layered on top of that patchwork in a way that compounds disparity.
The same principle applies across treatment routes. One outlet should not gain an artificial advantage because it sits outside scope, is treated differently in allocation, or can recover cost through a different commercial structure. The design objective should be a more consistent carbon signal tied to comparable environmental function, not a further divergence by jurisdiction or regulatory category.
Landfill
EfW should not be included in ETS without equivalent treatment of landfill.
If incineration faces a new carbon cost while landfill does not, the economics of residual waste treatment shift in the wrong direction. In a price-sensitive market, that creates a direct risk of diversion down the hierarchy, with worse climate outcomes given landfill methane emissions. Landfill must therefore be addressed alongside incineration, either through direct inclusion or through an equivalent fiscal and regulatory framework that ensures it faces no lower effective burden than EfW.
A distinction is also required between new and historic landfill. Only newly landfilled waste should be captured in such a framework. Historic landfill emissions should not be retrospectively priced, because those costs cannot realistically be passed back to original waste producers and would instead create stranded liabilities for landfill operators.
Exports and carbon leakage
Intra-EU exports are a legitimate part of the European waste system; the real leakage risk lies outside the EU carbon-pricing area.
Cross-border shipments within the EU should not be treated as a policy failure in themselves. They can divert waste from landfill, make efficient use of existing recovery capacity and in many cases deliver better carbon outcomes than the relevant domestic alternative. The real comparison is often not export versus ideal domestic circularity, but export versus landfill or export versus less efficient treatment.
The principal risk lies outside the EU carbon-pricing area. If ETS materially widens the cost differential and external routes remain outside equivalent carbon constraint, waste may be diverted beyond the Union, including to non-EU fuel-use routes. The policy response should therefore focus on preventing extra-EU carbon leakage, including consideration of a CBAM-type or equivalent safeguard, rather than suppressing efficient intra-EU trade.
Scope
Scope should include all relevant thermal treatment and waste-derived fuel routes.
A narrow incineration-only model would create avoidable arbitrage between technologies, plant types and end uses. Scope should cover all relevant routes where residual waste is thermally treated or converted into a fuel pathway that ultimately releases fossil carbon, including gasification, pyrolysis and other equivalent routes. Otherwise, waste will tend to move toward the excluded route irrespective of environmental merit.
Plant-size exclusions should also be avoided where they distort investment decisions. A sub-threshold carve-out, such as for smaller plants, would encourage fragmentation of infrastructure, lower thermal efficiency, weaker heat-network integration and poorer long-term CCS viability. Scope should follow comparable environmental outcomes, not legacy regulatory boundaries or administrative convenience.
Monitoring, reporting and verification
In the waste sector, MRV must support allocation as well as measurement.
The central issue in waste is not only how to quantify fossil carbon, but how to allocate responsibility for it. Waste differs from most ETS sectors because the combustible input is mixed and originates from multiple customers, municipalities and product systems. Plant-level emissions measurement alone is therefore insufficient if the policy objective is to influence the fossil content of incoming waste and, ultimately, the products and packaging placed on the market.
A purely stack-based approach may provide an accurate fossil carbon figure for the installation, but still fail to support fair charging or differentiated pass-through. If fossil cost cannot be attributed back to waste categories, customer groups or producer types, the likely result is averaging across materially different waste streams. That weakens incentives and undermines fairness. The more workable direction is an allocation framework based on waste categories, standardised factors and authority-backed methodologies. The test is not perfect forensic precision at load level, but whether the system is robust enough to support credible and differentiated cost allocation.
Cost pass-through
Carbon cost must be capable of being passed through to the actors responsible for introducing fossil-rich material into the waste stream.
Cost pass-through is not a secondary contractual issue. It is central to whether ETS can influence behaviour in this sector. If carbon cost remains trapped at installation level, is socialised across unrelated waste producers, or is recovered through revenue streams unrelated to waste composition, the carbon signal will not reach the actors capable of changing packaging design, product composition, procurement or waste sorting behaviour.
The framework therefore needs to allow carbon cost to be allocated and passed through in a way that broadly reflects actual or reasonably approximated fossil content by waste stream, customer type or producer category. The standard is not perfect traceability, but sufficient differentiation to avoid arbitrary charging and preserve a meaningful incentive. This also requires attention to where the economic burden actually lands. Different outlets recover cost differently: some through gate fees, some through heat or power revenues, and others through downstream product prices. Scheme design must account for that reality rather than focusing only on legal liability at installation level.
This also links directly to producer responsibility. A significant share of fossil carbon in residual waste arises from difficult-to-recycle plastic packaging and similar products. Where possible, the framework should allow cost to connect into EPR-type systems so that it reaches those placing such material on the market rather than stopping with local authorities, waste holders or treatment operators.
Circular economy and upstream incentives
ETS alone will not deliver prevention, recyclability or wider circular-economy outcomes, and should be designed to avoid unintended consequences for recycling competitiveness.
Carbon pricing should not be assumed to drive major upstream change on its own. Residual waste tends to move to the lowest-cost compliant outlet, while recycling competes not only with residual treatment costs but also with low-cost virgin materials, particularly virgin plastic. Making incineration more expensive does not automatically make recycling viable, nor does it necessarily drive prevention or product redesign.
This is particularly important where recycling processes generate unavoidable residual fractions requiring thermal treatment. If ETS costs are applied to those residues but equivalent carbon costs are not reflected in virgin production, the scheme can increase the cost of recycling relative to virgin material use. That would weaken the circular economy signal and risk penalising the very activity that upstream policy is intended to support. Scheme design should therefore ensure that recycling residues are treated in a way that does not make recycled material less competitive than virgin alternatives.
The likely near-term effect of a narrow ETS signal is therefore diversion between routes or jurisdictions rather than structural reduction in fossil content entering the waste stream. ETS should be treated as one instrument within a wider package, not as a standalone circular-economy lever.
Carbon Capture and Storage (CCS)
ETS can help incentivise CCS in the waste sector, but deployment of removals will require dedicated supporting policy.
Extension of ETS may improve the commercial rationale for carbon capture, but it will not deliver deployment on its own. Plants differ materially in scale, location, transport access, storage access and configuration, so the scheme should not assume equal decarbonisation options or a uniform timetable for response across the sector.
Supporting policy is therefore required, including infrastructure planning, investment support and clear treatment of captured biogenic carbon. Where biogenic carbon from waste treatment is permanently captured and stored, the framework should properly recognise the removals value. Without that support, ETS risks imposing uneven financial pressure without producing corresponding decarbonisation outcomes.
Complementary measures
Complementary measures, including landfill controls, EPR alignment, recycling support and anti-leakage safeguards, are necessary for the scheme to work.
A workable EU ETS must be accompanied by equivalent pressure on landfill, effective anti-leakage measures, stronger support for recycling and secondary material markets, alignment with EPR, and credible support for CCS, CCU and removals. This should include safeguards to ensure that unavoidable recycling residues do not make recycling more expensive than virgin production.
EPR alignment is particularly important. A substantial share of fossil carbon in residual waste comes from difficult-to-recycle plastic packaging and similar products. If ETS cost falls only on waste operators or local authorities, the polluter-pays principle is not functioning properly. The framework should therefore allow ETS cost, where appropriate, to connect into producer-responsibility systems and broader upstream incentives.
UK ETS: aligned position and additional UK-specific points
Overall UK position
The UK position is substantively aligned with the EU position set out above. Inclusion of EfW within emissions trading can be supported in principle, but only where scheme design reduces emissions in practice rather than displacing waste, distorting competition or creating unintended consequences elsewhere in the system. The same core tests apply on landfill, scope, allocable MRV, cost pass-through and supporting policy.
Level playing field and route neutrality
The UK scheme should not advantage one treatment route, waste type or plant configuration over another through uneven scope or cost treatment.
The same core concern about distortion applies in the UK context. Scheme design should maintain neutrality across EfW, waste-derived fuels, cement use, chemical recycling residues, small and large plants, and different waste categories sent to energy recovery. Route-specific exclusions can distort waste flows without improving carbon outcomes, and uniform treatment matters not only between EfW and landfill, but also between EfW and other fuel-use routes.
Landfill
The UK should not apply carbon cost to EfW without equivalent pressure on landfill.
The same risk applies in the UK as in the EU context. If EfW becomes materially more expensive and landfill does not face equivalent pressure, waste may be diverted down the hierarchy. Any UK scheme should therefore be designed with explicit regard to relative treatment cost effects and avoidance of perverse diversion outcomes.
Exports
Exports must not be considered inherently negative; the policy problem is distortion and leakage, not cross-border movement itself.
Exports can remain a legitimate part of the market where they avoid landfill, use efficient available capacity and do not create leakage or double-charging problems. The policy focus should be on preventing distortion and unfair cost outcomes, not on treating cross-border movement as inherently undesirable. Alignment with the EU direction of travel also matters in order to avoid perverse cross-market effects.
MRV
In the UK scheme, measurement method should be judged by whether it supports allocable pass-through, not only by plant-level precision.
The UK position places greater operational emphasis on MRV design. Flue-gas C14 monitoring should not be treated as the default solution simply because it is precise at plant level. On its own, it does not provide a workable basis for allocating carbon cost across customers or waste streams, and it may also raise practical constraints around laboratory capacity, cost and delivery.
A more workable approach is to give greater weight to feedstock sampling and default factors by waste stream. Those methods are more capable of producing differentiated cost allocation and a real behavioural signal, even if they do not provide perfect precision in every case. Stronger technical guidance is also needed on sampling practice, analytical standards and minimum sector capability.
Cost pass-through
UK ETS will only influence upstream behaviour if carbon cost can be passed through fairly and predictably.
The UK position develops this point in more operational terms. It highlights the exposure of local authorities where pass-through is poorly designed, and the difficulty of budgeting where allowance prices are volatile or only known retrospectively. Greater price certainty would materially improve the practicality of cost recovery and budget setting.
The same wider point also applies in the UK as in the EU context: if cost remains with local authorities, waste holders or operators rather than reaching those responsible for difficult-to-recycle fossil-based products, the behavioural signal is weakened. UK ETS and EPR should therefore be considered together rather than as separate policy silos.
Recycling residues, POPs and regulated waste streams
Recycling should not be made less competitive than virgin production because unavoidable residues, including POPs and other regulated waste streams, require compliant thermal treatment.
The UK position identifies a specific issue for POPs-related waste, but this should be understood as one example of a wider recycling-residue issue. Recycling and sorting processes can generate residual fractions that require safe and compliant thermal treatment. Where ETS costs attach to those residues, the cost can flow back into the economics of recycling itself.
Scheme design should avoid outcomes where recycling becomes more expensive than virgin production because residual treatment costs are imposed on recycling activity but not equivalently reflected in virgin material production. The same principle applies to POPs-containing residues, hazardous, clinical and other tightly regulated waste streams: these should be treated consistently within the framework, while recognising the legal and operational constraints attached to their handling and disposal.
Scope and specific route issues
The UK scheme should avoid route-specific exclusions that advantage particular technologies or end uses without environmental justification.
This applies particularly to dual-purpose chemical recycling facilities and to waste-derived fuels used in cement. Where a route produces both material outputs and fuel outputs, the fuel-generating element should not escape equivalent carbon treatment in a way that advantages it over EfW or other comparable routes. The same logic applies to SRF and other waste-derived fuels used in cement: equivalent carbon treatment is needed to avoid distortion between outlets competing for the same residual waste resource.
Plant thresholds, waste crime and overcapacity
Administrative simplification should not come at the cost of distortion, weaker enforcement or poor long-term infrastructure outcomes.
Small-emitter or plant-threshold exclusions should be tested carefully against their full lifecycle and system effects rather than assumed to be benign simplifications. They may encourage fragmentation, reduce efficiency and weaken long-term decarbonisation options. At the same time, any significant increase in system cost can sharpen incentives for waste crime, illegal disposal or misclassification, so enforcement implications need to be considered as part of scheme design.
UK policy should also avoid reinforcing long-term overcapacity or locking in infrastructure that becomes misaligned with future waste-reduction objectives. Carbon pricing should support decarbonisation of the residual waste system as it evolves, not embed structural inefficiency.
CCS, CCU and alignment with wider policy
As in the EU context, UK ETS can support decarbonisation in the waste sector only if it is backed by wider capture, infrastructure and market policy.
The same underlying position applies in the UK: ETS may strengthen the rationale for carbon capture, but it will not deliver deployment on its own. The framework needs to sit alongside realistic support for CCS and CCU, recognition of removals where relevant, and broader policy alignment across waste, energy and producer-responsibility regimes.
Conclusion
Expansion of emissions trading to waste can be supported, but only where it is comprehensive, technically workable and designed to reduce emissions across the system rather than simply move waste and cost around it. For the EU, that means equivalent treatment of landfill, broad and route-neutral scope, allocable MRV, effective cost pass-through, protection against extra-EU leakage, and alignment with EPR, recycling support and carbon-capture policy. The UK position is aligned with that approach, while adding more detailed operational points on MRV, local authority exposure, POPs, route-specific distortions, waste crime and infrastructure lock-in.
The core test is the same in both jurisdictions: the scheme should not merely price emissions at plant level. It should create a workable and fair carbon signal that reaches the actors capable of reducing fossil material in the residual waste stream, while avoiding perverse outcomes elsewhere in the system.