UK ETS Expansion Delay: What it means for businesses managing waste and resources
The UK Emissions Trading Scheme (ETS) is the UK’s cap and trade carbon pricing mechanism that aims to reduce greenhouse gas emissions. The UK ETS currently covers the industrial, power, aviation and domestic maritime sectors which makes up approximately 25% of UK territorial emissions and includes over 1000 participants.
The scheme, which first came into operation in 2021, works by setting an overall cap on emissions from these sectors, and creating a carbon price. The overall cap is then divided into allowances, allowing those who decarbonise to trade their allowances with those who emit. This cap will be reduced over time in line with the Government’s net zero targets, in order to reach the goal in the most cost-effective way. By setting a cap on emissions from high-emitting sectors, and creating a carbon price, the scheme incentivises investment in decarbonisation.
The UK ETS Authority is the responsible body overseeing the scheme, consisting of the UK, Scottish and Welsh Government, as well as the Department of Agriculture, Environment and Rural Affairs in Northern Ireland.
The delay
The Government has announced a delay to the planned expansion of the UK Emissions Trading Scheme (ETS) to Energy from Waste (EfW) facilities. The expansion would have introduced carbon pricing on emissions from waste incineration.
The delay was announced on August 26th 2026 by the Department for Energy Security & Net Zero (DESNZ), who provide the main ministerial and administrative capabilities on behalf of the UK Government, as well as the resources for the Authority, and confirmed that the expansion of the UK ETS to waste incineration would no longer take place in 2028.
While decarbonising the waste sector remains a crucial objective, it is essential that carbon pricing policies are introduced alongside the infrastructure and collection systems needed to maximise recycling and reduce the volume of fossil-carbon materials sent for incineration in the first place. Concerns across the industry surrounded the implementation of the scheme ahead of the policy implementation necessary to stimulate investment in recycling infrastructure and collection systems across the UK, causing unnecessary economic burden to businesses, local authorities and taxpayers.
Reconomy Connect see this delay as an opportunity for the Government to publish the long-awaited Circular Economy Growth Plan for England and to develop stronger policies that incentivise both the recycling of plastics and textiles and the procurement of recycled content by packaging producers. Measures that keep plastics and textiles in the circular economy must be prioritised, stimulating investment in UK recycling infrastructure, and creating sustainable end markets for recycled materials, rather than simply increasing the cost of managing them once they have become waste.
What this means
For businesses, whilst we await the revised timeline, the delay provides some additional time to understand the potential impact of carbon pricing on waste management costs.
Businesses should review the procurement of upstream materials that ultimately become waste, consider what opportunities there are to reduce the amount of waste being generated, challenge partners to design to repair, refurbishment and reuse, maximise the potential for recycling and to minimise the risk of cross-contamination.
To truly close the loop on the circular economy businesses should consider their packaging choices to focus on the recycled content. The delay to the UK ETS expansion should therefore not be viewed as a reason to delay action. Instead, it provides businesses with an opportunity to review their current waste practices, identify areas for improvement and take practical steps towards reducing emissions and increasing circularity ahead of the revised timeline for the expansion.
Get in touch with the team today to see how Reconomy Connect can support your business ahead of the UK ETS expansion.