Pizza boxes, coffee cups and food packaging: roughly 15mn tonnes of these household waste items are gathered around the UK per year and sent to incinerators.
These incineration plants make money not only from fees to take the waste but also from the electricity that is produced from the steam created from flue gases in the 1,000-degree centigrade furnaces. That has made the plants an appealing proposition for investors ranging from KKR, the US investment giant, and Suez, the French utility.
That appeal is now being tested. The “energy-from-waste” sector is under pressure as the UK government tries to curb the country’s greenhouse gas emissions in line with its legally binding commitment to net zero emissions by 2050.
Ministers have paused environmental permits for new plants and plan to make the sector start paying for its emissions, triggering potentially large costs for its customers, which include cash-strapped local authorities.
The number of energy-from-waste plants in the UK has soared since taxes were introduced in 1996 to deter the amount of waste sent to landfill, with 60 operational today and a further 12 being built.
The fleet accounted for about 3 per cent of the country’s power generation in 2022, but also emitted more than 6mn tonnes of carbon dioxide equivalent, up 5 per cent on 2020. That raised alarm at the Climate Change Committee, which advises the UK government; it argues that the UK needs to boost stagnant recycling rates and prevent waste. The emissions figure does not include emissions from biogenic waste, which are counted as carbon neutral in the UK.
Wales introduced a moratorium on new energy-from-waste plants in 2021, while Scotland says it will only support developments “in very limited circumstances”. Last month, UK government ministers said they would pause issuing new environmental permits in England until May 24 while they review the case for new plants, sending jitters through the sector.
“There are a lot of worried investors about the implications of this political interference in what should just be a purely technical determination,” said Jacob Hayler, executive director of the Environmental Services Association trade group.
The move came after the UK government said last year that it planned to include the energy-from-waste sector from 2028 in its emissions trading scheme, under which polluters have to pay for the carbon dioxide they emit.
The cost of emissions is currently low, at roughly £40 per tonne, but that is expected to rise as the scheme is tightened up.
“We think this is going to be a massive driver of change for our sector,” added Hayler. “Our working assumption is that [carbon credits] are going to cost about £100 per tonne.” That compares with median payments from local authorities in 2022 of £103 per tonne of waste taken, according to a study by Wrap, a non-governmental organisation dedicated to tackling the climate crisis.
Energy-from-waste is being included in the emissions scheme despite objections from local councils which, depending on contract terms, face having to foot the bill for the waste they send to incinerators.
“We are concerned about the potential financial impacts to councils,” said Darren Rodwell, Labour leader for Barking and Dagenham Council and environment spokesperson for the Local Government Association.
“For the scheme to succeed it is critical that the costs fall on the industries producing the material in the first place, rather than the council that collects, processes and disposes of the waste.”
Several energy-from-waste plant owners are now looking at plans to fit their plants with technology to capture their emissions. Yet carbon capture and storage systems have yet to be proven at scale in the UK and may not be suitable for many.
“[Carbon capture] is not a silver bullet for the entire industry,” said Cory Reynolds, director of corporate affairs at Veolia, one of the UK’s largest operators, which is exploring using the technology at one of its plants. “We need to focus on the prevention of fossil carbon emissions by removing plastics from the waste stream input.”
Enfinium, which owns four plants and is building two more, outlined plans this month under which it would potentially invest £1.7bn in emissions-cutting, including carbon-capture technology, across its fleet.
“I want the industry to be creating a solution before it becomes a problem,” said Mike Maudsley, chief executive of Enfinium, owned by Igneo Infrastructure Partners.
He and others also believe that they could generate new revenue streams by generating so-called “negative emissions” and selling credits to other companies struggling to cut their own.
The idea is that because emissions from biogenic waste, such as food and garden waste are considered carbon neutral, capturing and storing them would amount to a net removal.
Rival Viridor, which was bought by KKR for £4.2bn in 2020, last month said it would enter final negotiations with the government over support for carbon-capture technology at its plant in Runcorn, claiming this could generate about 450,000 tonnes of “negative emissions” per year.
The CCC and others acknowledge that “negative emissions” will be needed to offset emissions from sectors struggling to decarbonise, and that energy from waste plants could contribute to this.
However, that is likely to spark debate about the carbon accounting behind the treatment of biogenic waste, which can include products such as kitchen roll and contaminated paper.
The CCC maintains that reducing waste should remain the goal. “Although negative emissions from energy-from-waste plants may be possible, emissions from the waste sector should be reduced through increased recycling and a reduction in the amount of waste produced,” it said.
The UK government’s department for energy, environment and rural affairs said it was “committed to reducing waste, improving recycling and meeting our net zero ambitions by sending less waste for incineration”.
“We must make sure we have the right waste management infrastructure to meet these goals, and are rightly considering the need for more waste incineration facilities.”
