Viridor Insights: The Emissions Trading Scheme (ETS)
Emissions Trading Scheme (ETS) – application to the Energy from Waste Sector
Background
The ETS has been operating in one form or another for c.20 years. It is a “cap and trade scheme” where emitters buy tradeable allowances for each tonne of CO2 they emit. ETS is intended to give a signal to emitters to decarbonise. A fixed number of allowances are available to the market, as set by Government. UK ETS is already established for high carbon sectors including power generation, oil and gas, large industry and aviation. The UK ETS scheme will be extended to the waste sector from 1st January 2028. In advance of its introduction, monitoring commenced on 1st January 2026.
Energy from Waste in ETS
The first two years of Energy from Waste (EfW) in ETS will be the voluntary monitoring, reporting and verification phase (MRV). During this period, processes will be refined and legislation finalised to attribute the fossil CO2 emissions from waste supplied to an EfW facility. There will be no requirement to purchase or surrender ETS allowances during this MRV period.
From 2028, every EfW will have to submit ETS allowances to the ETS Authority for every tonne of fossil CO2 emitted by the EfW. This liability will be allocated to waste suppliers based on the fossil carbon content of its waste, to drive decarbonisation across the supply chain.
Waste decarbonisation can happen in two possible ways:
• Source Segregation - reduction of the plastic content of waste to be treated through source segregated recycling, e.g. reducing the amount of packaging, hydrocarbon based materials and artificial fibres entering the residual stream requiring treatment.
• Pretreatment - extraction of plastics from residual waste prior to EfW treatment.
Working with our customers
Viridor will continue to work closely with the ETS Authority during the voluntary MRV period. During the MRV period, Viridor will be analysing the waste composition of individual customers’ wastes to understand and determine the current carbon liability. The data provided will enable evaluation of the proposed MRV approaches to fairly apportion fossil carbon to different waste suppliers, rewarding customers for their decarbonisation activities,
As we receive further guidance and clarity we will continue to provide further updates to our customers.
Registration
Operators of EfW facilities obligated by the ETS scheme are required to register with the ETS Authority to become an accredited EFW facility and apply for Green House Gas (GHG) permits.
Monitoring and Measurement
Operators of accredited EfW facilities will be required to ensure that emissions are monitored and measured in line with the rules of the scheme. This data allows verification of applicable emissions in each compliance year.
Surrender and Compliance
Following verification, EfW operators will be required to surrender carbon certificates that equal the verified carbon for each compliance year.
Installation/Site
The operator of a permitted installation holds the responsibility for complying with the scheme including obligation to surrender UK ETS certificates plus the costs of all measurement and verification.
Waste provider/Customer
The ETS Authority is actively considering the carbon content of the waste delivered for disposal by each customer to determine the quantum of the carbon liability. This liability will be recovered from the customer via an agreed mechanism.
ETS Authority Consultation Response (August 2025)The ETS Authority's interim response to the consultation was recently published.
The direction of travel is very positive for the sector. The ETS Authority has moved from its original position of ‘top down’, stack only MRV, to the ‘bottom up’ hybrid approach of using carbon factors calibrated with C-14/CEMS
The voluntary MRV period started in January 2026, where each participating operator will report its emissions by C-14/CEMS and further data on tonnage, waste sources, etc. The ETS Authority will then use this data to test the different MRV approaches.
While operators will have a monitoring plan in place, the ETS regulations will not be enforced during this voluntary MRV period.
Sometime this year (2026), the ETS Authority will issue its final response, detailing the MRV approach, and progress the necessary legislation.
We greatly value the ongoing partnership with our waste suppliers and look forward to continuing working with them and the governments of the UK's nations to ensure that when our sector enters into the ETS it delivers decarbonisation.
Read more in this Blog: What is the Emissions Trading Scheme? written by our ETS Project Manager, Yomola Oyedipe.