Yesterday the UK ETS Authority published a number of responses to consultations covering scheme scope expansion to waste and maritime, and the integration of greenhouse gas removals. This update is the first of three. It summarises the interim response regarding the expansion of the UK ETS to the waste sector.
After confirming waste incineration facilities (energy from waste and waste incineration) may join the UK Emissions Trading Scheme (UK ETS) in 2028, the UK ETS Authority has now (July 2025) published an interim response to the consultation that was released in 2024.
The following decision has been made:
A 2 year Monitoring, Reporting and Verification (MRV) only period will commence from 1st January 2026 and participation is voluntary. There will be no legal obligation to participate and no penalty for non-participation. Participants will have full access to regulator support during the MRV-only period completely free of charge.
What is the purpose of the MRV-only period?
The UK ETS Authority plan to use the voluntary period to determine the best approach to MRV in the EfW sector, and use the data provided to determine if full inclusion will be implemented from 2028. The other aim is to allow operators to better understand the UK ETS regulations and the Managing your ETS (METS) portal while having full and free access to regulator support.
All data submitted in the MRV-only period will be shared with regulators and the UK ETS Authority to aid legislation development but will be treated and processed confidentially.
Who can take part?
Only sites that meet the inclusion threshold can take part in the MRV-only period. All facilities that exceed a tonnage-based throughput threshold based on the Small Waste Incineration Plant (SWIP) threshold in the Environmental Permitting Regulation (EPR), will be included within the scope of the voluntary MRV-only period. All clinical waste incineration at specialist and non-specialist facilities, will also be included, while high temperature incineration that primarily processes non-clinical hazardous waste will be exempt from this initial voluntary MRV-only period. For ease we have summarised the thresholds below:
Operation |
Inclusion Threshold |
|
| SWIP | Non-hazardous waste incineration | Capacity exceeds 3 tonnes an hour |
| Hazardous waste incineration | Capacity exceeds 10 tonnes a day | |
| Clinical waste incineration and clinical waste treated at non-specialist facilities | All included – no specified threshold | |
| High temperature incineration that primarily process non-clinical hazardous waste | Exempt from MRV-only period | |
All exemptions on previously excluded incineration facilities operating within installations already captured by the UK ETS will be lifted regardless of size. Where the facility is operating within a HSE installation and the installation breaches the HSE threshold of 25 000 tCO2e per year the installation will be required to return to the main scheme. The only exception is if at least 85% of the heat produced by the installation in a scheme year is used by or supplied to one or more hospitals.
What will MRV-only period participants be asked to do?
The Authority wishes the MRV-only period to mirror how participants would fulfil their regulatory requirements once the waste sector is included in the UK ETS. These requirements include:
- Apply for a voluntary monitoring plan on METS.
- Monitor emissions in line with the voluntary monitoring plan.
- Vary their voluntary plan when relevant changes happen.
- Submit an annual emissions report containing the total emissions for their installation, in line with the reporting schedule for the main UK ETS scheme.
- Where applicable, submit data to support the development of emissions factors on an agreed timescale (e.g. quarterly) (this data will be handled confidentially by the UK ETS Authority and regulators).
- Verify their emissions reports with ETS verifiers* in order to gain experience of the verification process.
It is anticipated that detailed guidance on how to participate in the MRV-only period will be provided before the end of 2025.
*Please note, there may be a financial cost to gaining third-party verification
Will smaller installations get the opportunity to “opt out”?
While all qualifying installations can choose to take part in the MRV-only period, should the UK ETS expand to include the waste sector long term, the Authority is intending to allow waste incinerators to apply for either a Hospital Small Emitter (HSE) permit or Ultra-Small Emitter status should they meet the qualification criteria during a baseline period. For an installation to qualify for a HSE permit it must produce between 2 500 and 25 000 tonnes fossil CO2e per year. For an installation to qualify for USE status it must produce less than 2 500 tonnes fossil CO2e per year.
The Authority intends for operators whose emissions do not exceed the HSE/USE thresholds in the 3 years prior to the inclusion of the waste sector in the UK ETS will be considered eligible for HSE/USE status and will be entitled to enter mid-phase upon the inclusion of the waste sector in the UK ETS. This is also not conditional of them partaking in the MRV-only period. The Authority and regulators will provide further guidance on the HSE/USE approach in due course.
If you would like to discuss this in more detail with a Swan Energy ETS Consultant, please get in touch.
