WIREDGOV

A new tax on the carbon emitted from burning waste could load billions of unavoidable costs on councils over the next decade instead of manufacturers picking up the bill, new research for the Local Government Association (LGA), County Council Network (CCN) and District Councils Network (DCN) has found. 

The Emissions Trading Scheme (ETS) is a system that puts a market price on carbon emissions. It currently applies to the aviation industry, and the last Government proposed to expand it to the incineration of waste from 2028.

In response to a consultation on the scheme, councils are calling on the Government to ensure the costs are passed on to the industries creating fossil-based material in the first place – such as found in packaging, textiles, electricals and furniture.

New analysis by the LGA, CCN and DCN show the proposals could cost councils as much as £747 million in 2028 and could rise to £1.1 billion in 2036, with a total cumulative cost over this period as high as £6.5 billion. Volatile market costs create additional risks for councils that must set balanced budget.

Councils have no powers to reduce the amount of fossil-based material put on the market, and no meaningful levers to reduce the levels of fossil-based waste sent for incineration. 

By placing this cost on industry, the Government will incentivise producers to reduce the level of fossil-based material created in the first place while also raising funding to reinvest in solutions such as carbon capture and storage technologies.

Although there are plans to transfer costs for packaging waste onto producers, the new analysis suggests this would cover only 19 per cent of costs while there are no plans to do the same for the vast majority of waste that is sent for incineration. 

LGA polling with YouGov found the public are 12 times more likely to think costs in reducing packaging should be met by companies producing it (48 per cent) rather than councils (4 per cent)

Cllr Adam Hug, environment spokesperson for the LGA said: 

“Councils support the principle of this scheme’s objective to incentivise a reduction in carbon emissions from waste incineration and to encourage recycling efforts, but to succeed it must put the right incentives in the right places.

“Current proposals risk councils and local taxpayers facing enormous costs, which simultaneously risks the scheme failing to meet its objectives while exposing councils to significant additional financial risk. Council’s are also increasingly ensuring that energy is generated from the incineration process supporting both the grid and electric vehicle fleets.

“We urge government to review proposals, to hold industry responsible for reducing the level of waste it creates in the first place, alongside wider support for council’s in their efforts to increase recycling.”

Cllr Andy Graham, DCN Environment Spokesperson, said:

“Taxing councils for the waste we have little option but to incinerate would be a bombshell for the delicately-balanced funding of local waste services – including district councils’ successful efforts to increase recycling.

“District councils spend over 40 per cent more on waste collection than we did four years ago as we battle to retain staff and implement stringent national guidance on how we collect waste. We cannot afford to be hit by an incineration tax.

“We want to make it easier for our citizens to recycle materials like clothing and medical waste so it doesn’t need to be incinerated. We can only do this through action from producers, who should be incentivised to produce recyclable goods and penalised if they don’t.”

Cllr Richard Clewer, Infrastructure and Planning Spokesperson for the County Councils Network, said:

“Councils support the principle of reducing fossil-based materials, but this proposed carbon tax is in the wrong place: we should employ the polluter pays principle instead. It must be down to the producers of fossil-based materials to pay these costs to incentivise them to use greener methods, rather than local authorities who have no choice but to incinerate this waste long after it is produced and purchased.

“As this research shows, these proposals will result in significant extra costs for local authorities. If these costs are to be borne by councils, they will have to paid for by council tax or by reducing highly-valued services so we are calling on the new government to rethink these proposals.

Notes to editors

• The table below indicates the gross and net estimated ETS cost ranges for all English local authorities. ETS is a market-based mechanism and the actual amount payable will be determined by the market in each year. The low, medium and high figures use the range of ETS cost forecasts provided by DESNZ. 

  https://www.gov.uk/government/publications/traded-carbon-values-used-for-modelling-purposes-2023/traded-carbon-values-used-for-modelling-purposes-2023#modelling-carbon-values

• Residual waste volumes are drawn from Defra’s official statistics on local authority collected waste management

  https://www.gov.uk/government/statistics/local-authority-collected-waste-management-annual-results

• Research commissioned by the LGA analysed waste composition analysis from 13 local authorities in England which suggested that the level of fossil content in residual waste is in the range of 23% to 50% of.  A figure of 40% has been used based on information from post-combustion analysis of emissions.
   
• The LGA’s research found that packaging makes up 19% of the residual waste stream.
   
• The estimated net cost is the remaining cost after payments are made to local authorities through the packaging Extended Producer Responsibility (pEPR) scheme and pass through of costs to trade waste customers where possible.

​Full article and table