Closing the Carbon Loophole: Waste Incineration and the EU ETS
The Problem: An Exemption That No Longer Makes Sense
The EU’s Emissions Trading System (ETS) is the world’s largest carbon market, successfully curbing emissions across power generation, steel, and heavy industry. Yet waste incineration — a major and growing source of fossil CO₂ — remains largely outside its scope. With a decision on inclusion due by July 2026, the authors argue the political window to act is now.
The Scale of the Issue
Over the past decade, Europe has increased the volume of waste burned by approximately eight million tonnes per year. Driven by aggressive industry marketing, the EU has built at least 60 million tonnes of annual overcapacity in incineration infrastructure, creating structural pressure to keep facilities running at full capacity. This expansion directly conflicts with both EU climate neutrality goals and the circular economy agenda. Each tonne of waste burned emits around 1.1 tonnes of CO₂, roughly half of which is fossil-based, primarily from plastic derived from oil and gas.
The Climate Case for Inclusion
A CE Delft study cited in the article projects that bringing incineration under the ETS would reduce system-wide emissions by 4–7 million tonnes of CO₂ by 2030, rising to 18–32 million tonnes by 2040. At forecast carbon prices of €108 per tonne in 2030 and €184 in 2040, incineration gate fees would rise substantially, creating a meaningful price signal that incentivises diversion away from burning and toward recycling.
Circular Economy and Jobs Benefits
The carbon price signal would drive measurable behavioural change. Companies would reduce unsorted waste volumes by 15–28% by 2030 and up to 41% by 2040. Recycling one tonne of municipal waste instead of incinerating it delivers a net climate saving of approximately 0.75 tonnes of CO₂. Beyond emissions, the economic case is compelling: recycling and circular economy activities are significantly more labour-intensive than incineration, and inclusion in the ETS could generate between 8,700 and 21,000 additional jobs by 2040.
Addressing the Landfill Diversion Risk
Critics warn that pricing incineration could divert waste to landfill. The authors acknowledge this risk but argue it is manageable. The upcoming Circular Economy Act, expected in September, can address landfilling directly through stronger pre-treatment requirements, tighter waste acceptance criteria, and proper enforcement of the existing Landfill Directive. The solution is robust regulatory safeguards, not continued exemptions for incineration.
A Broader Policy Package
ETS inclusion should sit within a wider policy framework: mandatory recycled content for plastics, extended producer responsibility schemes, and pay-as-you-throw systems. Sweden’s experience is instructive — it has included incineration in its national ETS since 2013, demonstrating that carbon pricing successfully incentivises pre-incineration plastics extraction and reduces fossil emissions.
Conclusion
Waste incineration emissions amount to tens of millions of tonnes of CO₂ annually and are rising. The authors conclude that Europe cannot credibly claim climate leadership while expanding incineration capacity and exempting its fossil carbon from pricing. The July 2026 deadline makes this a defining policy moment.