2. Legislative frameworks and circular economy impacts

Emissions from waste incineration are included in the EU ETS if they result from “the combustion of fuels in installations with a total rated thermal input exceeding 20 MW (except in installations for the incineration of hazardous or municipal waste)”.

Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (Text with EEA relevance), EP, CONSIL, 275 OJ L (2003). http://data.europa.eu/eli/dir/2003/87/oj/eng , Annex I (ETS Directive)

Hazardous and municipal waste incinerators, as determined by the competent national authority in accordance with the relevant definitions under Directive 10/75/EU on industrial emissions (Industrial Emissions Directive or IED), are therefore excluded from the scope of the EU ETS.

Directive 2010/75/EU of the European Parliament and of the Council of 24 November 2010 on industrial emissions (integrated pollution prevention and control) (recast) (Text with EEA relevance), EP, CONSIL, 334 OJ L (2010). http://data.europa.eu/eli/dir/2010/75/oj/eng

Only waste incineration installations qualifying as ‘waste co-incineration plant’ under Article 3(41) IED, whose main purpose is the generation of energy or production of material products, are included. That way, two Norwegian incineration installations are currently covered by the ETS (Frevar and Sarpsborg).

Emissions from Norwegian municipal waste incinerators outside the EU ETS fall within the scope of the ESR, which establishes emissions reduction targets for non-ETS sectors.  Under the climate agreement with the EU, Norway has agreed to cut its non-ETS emissions by 40% by 2030 compared to the 2005 level. This target can be achieved either through national cuts in emissions and/ or by using the flexibility mechanisms set out in the ESR. According to the National Climate Action Plan (Klimaplan), the Norwegian government plans to exceed the non-ETS target of 40%, aiming to reduce non-ETS emissions by 45% through domestic measures.

Meld. St. 13 (2020 – 2021) Report to the Storting (white paper) Norway’s Climate Action Plan for 2021–2030, 3.7.3.3.

Concerning non-ETS emissions from waste incineration, the main strategy is to achieve emission reductions through taxation and the implementation of Carbon Capture and Storage (CCS). In addition to national policies and regulations related to climate impacts, the Industrial Emissions Directive provides EU environmental standards for waste incinerators, allowing to further limit environmental impacts.

Commission Implementing Decision (EU) 2019/2010 of 12 November 2019 establishing the best available techniques (BAT) conclusions, under Directive 2010/75/EU of the European Parliament and of the Council, for waste incineration, OJ/L 312/55. https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32019D2010&from=EN

As of January 2022, Norwegian waste incineration installations pay a mandatory waste incineration tax that covers emissions to air of fossil CO₂ when burning waste and is calculated by multiplying the amount of waste delivered to the incineration facility measured in tons by a factor of 0.5498 ton fossil CO₂ per ton of waste, with the option to apply for facility-specific factors.

Waste incineration tax. (n.d.). The Norwegian Tax Administration. Retrieved October 12, 2023, from https://www.skatteetaten.no/en/business-and-organisation/vat-and-duties/excise-duties/about-the-excise-duties/avfallsforbrenning/

Tax exemptions are available for hazardous waste or where CO₂ from waste is captured and stored (Carbon Capture and Storage or CCS). The tax on waste incineration was implemented at the level of 192 NOK/t CO₂ and recently increased to 238 NOK/t CO₂ in 2023. Until 2030, the Norwegian Government plans to gradually increase the tax rate for waste incineration along with the standard tax rate for non-ETS emissions to about NOK2000 per ton of CO₂eq.

Climate Action Plan for 2021–2030

While the two waste incinerations installations currently covered under the ETS scheme are also covered by the waste incineration tax, the Norwegian government plans to consider rises in carbon tax rates in conjunction with the price of emission allowances in the EU ETS (see graph). For 2023, differentiated tax rates for ETS and non-ETS incinerators have been decided. Accordingly, facilities covered by the EU ETS pay 50% less tax compared to 2022, thus, NOK95/t CO₂ whereas the differentiated tax rate for facilities not subject to the EU ETS has been increased by 141%, to NOK476/tCO₂. The time for the decision to take effect has not been set.

Figure 20 WtE: EU ETS and CO₂ tax – Possible Scenario

As of 1 January 2013, waste incineration plants which are primarily used for district heating were included in the EU ETS in Denmark.

EU Energy Union – Denmark’s National Energy and Climate Plan (NECP). (2020, January 13). Energistyrelsen. https://ens.dk/en/our-responsibilities/energy-climate-politics/eu-energy-union-denmarks-national-energy-and-climate , Annex 8

Today, most Danish waste incineration plants are covered by the ETS. As such, they pay the emissions allowance price for fossil emissions from waste incineration. Incineration installations covered by the ETS also pay the Danish CO₂ tax.

In Denmark, several taxes apply to incineration. A waste heat tax is levied on the amount of heat produced from waste incineration, including heat used at the plant for indoor and water heating (20.7 DDK/GJ in 2022).

European Environmental Agency. (2022). Early warning assessment related to the 2025 targets for municipal waste and packaging waste—Denmark. https://www.eea.europa.eu/publications/many-eu-member-states/denmark/view

The waste heat tax is coupled with an additional tax charged per GJ produced heat, calculated, in principle, based on the energy content of combustible waste (31.8 DKK/GJ in 2022).

European Environmental Agency. (2022). Early warning assessment related to the 2025 targets for municipal waste and packaging waste—Denmark. https://www.eea.europa.eu/publications/many-eu-member-states/denmark/view

Together, these taxes correspond to the energy tax on other fossil fuels. Biogenic waste in clean loads, like biomass, is exempt for the waste heat tax and additional charge. However, biogenic waste mixed with fossil waste is, in practice, subject to both waste heat tax and additional tax. Moreover, a CO₂-tax is levied on emissions from incinerated non-biodegradable waste (179.2 DKK/tCO₂ in 2022).

European Environmental Agency. (2022). Early warning assessment related to the 2025 targets for municipal waste and packaging waste—Denmark. https://www.eea.europa.eu/publications/many-eu-member-states/denmark/view

Emissions from waste incineration are also subject to NO_x and sulfur taxes. The taxes are mainly designed to ensure a level playing field in the energy sector and to help divert waste toward recycling. Given the different tax bases for the taxation elements, the taxes on waste incineration cannot easily be translated into a tax per ton of waste. According to estimations of the European Environment Agency in 2022, assuming an energy content of 10.6GJ/t, the incineration tax would have been around 557 DKK/t, corresponding to 75 EUR/t. In June 2022, the Danish Parliament agreed on a Green Tax Reform, planning a conversion of the current taxes into a higher and more uniform CO₂ tax. According to the Danish Ministry for Climate, Energy and Utilities, the expert group for the green tax report is scheduled to publish their final report Autum 2023.

Ekspertgruppen for en grøn skattereform—1. Delrapport. (n.d.). Skatteministeriet. Retrieved October 23, 2023, from https://www.skm.dk/aktuelt/publikationer/rapporter/ekspertgruppen-for-en-groen-skattereform-1-delrapport/

According to Article 24 of the EU ETS Directive, Member States may introduce additional institutions and emissions into the trading system, provided that the Commission and Member States give their approval.

Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (Text with EEA relevance), EP, CONSIL, 275 OJ L (2003). http://data.europa.eu/eli/dir/2003/87/oj/eng

Sweden has availed itself (as only EU country apart from Denmark and Lithuania) to that option by (1) unilaterally including waste incineration installations with a capacity below the EU threshold of 20 megawatts since the first EU ETS trading period, if they are connected to a district heating network with a total effect of 20 megawatt and (2) extending the definition of eligible installations by the government in 2006, which meant that more installations were included in the ETS.

Emission Trading Ordinance (2004:1205); Bill 2005/06:184

This was approved by the Commission in 2004 and 2007 respectively.

COMMISSION DECISION of 7 July 2004 concerning the national allocation plan for the allocation of greenhouse gas emission allowances notified by Sweden in accordance with Directive 2003/87/EC of the European Parliament and of the Council, (2004). https://climate.ec.europa.eu/system/files/2016-11/sweden_final_en.pdf; COMMISSION DECISION of 23/01/2007 concerning the unilateral inclusion of additional activities by Sweden in the Community emissions allowance trading scheme pursuant to Article 24 of Directive 2003/87/EC of the European Parliament and of the Council, (2007). https://climate.ec.europa.eu/system/files/2016-11/sv2ndexclusions_en.pdf

It seems that all the waste incineration plants were included in the ETS trading scheme from the 3^rd trading period which started in 2013. The reason for this is an interpretation of the Commission’s guidance on co-combustion waste incineration plants, stating that their primary aim is to produce heat and power. Following this interpretation, the sector must be included in the ETS scheme.

Until recently, the CHP-sector, and thus also waste incineration, was burdened with a separate tax of 125 SEK per ton. The tax was waived with effect from January 2023, arguing that the intended control effects had not materialized. Without the tax, the government hopes that necessary investments in maintaining existing and building new CHP capacity will become more cost-effective.

Including the sector in the ETS scheme has led to a higher cost per ton incinerated waste as emission allowances increased in price. In 2022, the average cost was 740 SEK/ton, a 12% increase from 2021.

As mentioned above, not a lot of waste is landfilled anymore in Sweden. Apart from a landfill ban on sorted combustible waste in 2005, a ban on organic waste landfilling in 2005, and obligatory collection of food waste, a landfill tax has been in place since the year 2000, which in 2023 amounts to 634 SEK/ton.

Swedens national waste strategy defines a number of goals that will impact the waste incineration sector:

In addition, the branch goal defined by Avfall Sverige in 2019 is to cut fossil emissions in half by 2030 and reduce them to close to zero by 2045.

Waste incineration and its emissions, as well as emissions of co-incineration are subject to regulation in Finland. Waste legislation is largely based on EU legislation but is stricter in some cases.

Legislation and instruments. (n.d.). EastCham Finland ry. Retrieved October 17, 2023, from https://www.eastcham.fi/finnishwastemanagement/municipal-solid-waste/legislation-and-instruments/

General Waste legislation:

The environmental impacts of waste are also addressed in legislation on environmental protection:

Finland has also a National Waste Plan to 2027 that sets objectives for waste management and waste prevention.

National Waste Plan. (n.d.). Ministry of the Environment. Retrieved October 17, 2023, from https://ym.fi/en/national-waste-plan

The plan sets a goal to recycle 57% of municipal waste and 65% of bio-waste for 2027. A ban on landfilling of organic waste has also been implemented in 2016.

In a report,

Possibilities to impact CO2 emissions and to promote circular economy by different policy instruments targeting waste incineration. http://urn.fi/URN:ISBN:978-952-383-093-6

various measures were studied. The analysis shows that a waste incineration tax (at the analyzed levels) does not result in significant recycling or emissions impacts. The expectation is that the cost of the tax will be transferred from waste-to-energy plant operators via the gate fees to household waste fees. The cost impact on households is marginal and thus does not provide sufficient incentive for improving the sorting of household waste. A tax would not result in significant changes in district heating prices or plant investments. However, the suggested tax levels were relatively low, and higher taxes may lead different results.

There have been negotiations about voluntary agreements (i.e., green deal) for waste incineration companies to decrease emissions, but it looks like the companies are willing to utilize new technologies to decrease emissions in the future.

A study on the impacts of inclusion of waste incineration in the EU ETS has been carried out. The report suggests that the ETS would not necessarily give the desired results on reducing incineration, minimizing production of wastes and improving recycling.

Including waste incineration in emission trading, Finnish Ministry of Economic Affairs and Employment 2023

Co-combustion plants are already in the emission trade system.

Iceland is a member of the EEA, which binds it to implement EU environmental directives. The country has a Waste Management Law no. 55/2003 and a Regulation no 737/2003 on waste treatment, which aim to decrease the quantity of waste by preventing the generation of waste, increase recycling, and recovery and reduce the quantity of waste deposited in landfills. Further regulation (no. 738/2003) provides for a ban on landfill and no. 739/2003 frames the incineration of waste. So far in the research, nothing pointed out that the waste incineration sector is included in the EU ETS.

Directive 2010/75/EU on industrial emissions (Industrial Emissions Directive or IED) lays down rules on integrated prevention, control or reduction of pollution arising from industrial activities, including waste management activities and energy industries.

Directive 2010/75/EU of the European Parliament and of the Council of 24 November 2010 on industrial emissions (integrated pollution prevention and control) (recast) (Text with EEA relevance), EP, CONSIL, 334 OJ L (2010). http://data.europa.eu/eli/dir/2010/75/oj/eng

Installations undertaking the industrial activities listed in Annex I of the Directive are required to operate with a permit that is granted by the competent national authorities. The IED also sets mandatory requirements on environmental inspections and secures the public’s rights to information and participation. Regarding incineration activities, the IED differentiates between waste incineration plants and co-incineration plants (Article 3(40) and (41). The former are defined as “any stationary or mobile technical unit and equipment dedicated to the thermal treatment of waste, with or without recovery of the combustion heat generated (…)” whereas the latter covers stationary or mobile technical units “whose main purpose is the generation of energy or production of material products and which uses waste as a regular or additional fuel”. Operators of waste incineration or co-incineration plants must seek prior authorizations in the form of a permit (Article 44). Permit conditions must be based on environmental performance and Best Available Techniques (BAT), more specifically, the BAT conclusions adopted by the EU Commission.

Commission Implementing Decision (EU) 2019/2010 of 12 November 2019 establishing the best available techniques (BAT) conclusions, under Directive 2010/75/EU of the European Parliament and of the Council, for waste incineration (notified under document C(2019) 7987) (Text with EEA relevance), 312 OJ L (2019). http://data.europa.eu/eli/dec_impl/2019/2010/oj/eng

For waste incineration and co-incineration operations the IED furthermore sets out rules for the control and monitoring of emissions as well as other technical specifications. Pollutants for waste incineration and co-incineration, including emissions to air, are also subject to EU wide emission limit values set out in Annex VI. Emissions data is reported by EU countries through the European Pollutant Release and Transfer Register (E-PRTR).

The EU ETS was established by the ETS Directive.

Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (Text with EEA relevance), EP, CONSIL, 275 OJ L (2003). http://data.europa.eu/eli/dir/2003/87/oj/eng

Under the ETS, operators of certain activities must purchase emission allowances. However, free allowances are allocated to heat generation for district heating.

European Commission. (2019). COMMISSION DELEGATED REGULATION (EU) 2019/ 331 determining transitional Union-wide rules for harmonised free allocation of emission allowances pursuant to Article 10a of Directive 2003/ 87/ EC of the European Parliament and of the Council. 62.

 The activities which fall under the ETS are listed in Annex I of the ETS Directive. Emissions from waste incineration are included in the EU ETS if they result from “the combustion of fuels in installations with a total rated thermal input exceeding 20 MW (except in installations for the incineration of hazardous or municipal waste)”.

Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (Text with EEA relevance), EP, CONSIL, 275 OJ L (2003). http://data.europa.eu/eli/dir/2003/87/oj/eng , Annex I (ETS Directive)

Hazardous and municipal waste incinerators, as determined by the competent national authority in accordance with the relevant definitions under the IED, are thus excluded from the scope of the EU ETS.

Directive 2010/75/EU of the European Parliament and of the Council of 24 November 2010 on industrial emissions (integrated pollution prevention and control) (recast) (Text with EEA relevance), EP, CONSIL, 334 OJ L (2010). http://data.europa.eu/eli/dir/2010/75/oj/eng

Only waste incineration installations qualifying as ‘waste co-incineration plant’ under Article 3(41) IED, whose main purpose is the generation of energy or production of material products, are included.

In the first half of 2023, important amendments were adopted to reform the EU ETS. As part of these developments, in June 2022, the European Parliament approved an inclusion of the municipal waste incineration sector in the ETS as of 2026, pricing waste incinerator’s fossil CO₂ emissions with the aim of levelling the playing field within national ETS systems already covering the sector and incentivizing further decarbonization.

Amendments adopted by the European Parliament on 22 June 2022 on the proposal for a directive of the European Parliament and of the Council amending Directive 2003/87/EC establishing a system for greenhouse gas emission allowance trading within the Union, Decision (EU) 2015/1814 concerning the establishment and operation of a market stability reserve for the Union greenhouse gas emission trading scheme and Regulation (EU) 2015/757 (COM(2021)0551 – C9-0318/2021 – 2021/0211(COD)). Retrieved October 12, 2023, from https://www.europarl.europa.eu/doceo/document/TA-9-2022-0246_EN.html

The EU Commission is to submit an impact assessment report on the feasibility of including incineration installations in the ETS from 2028 by 31January of 2026. While, thus, strong signals for the inclusion of the municipal waste incineration sector in the EU ETS exist, the timeline remains uncertain. However, the amendment of Annex I to the ETS Directive already includes installations for the incineration of municipal waste from 1 January 2024 for the purpose of monitoring, reporting, verification, and accreditation of verifiers. The Monitoring and Reporting Regulation has been amended to take this new development into account.

EUR-Lex—32023R2122—EN - EUR-Lex. (n.d.). Retrieved November 28, 2023, from https://eur-lex.europa.eu/eli/reg_impl/2023/2122/oj

Directive 2008/98/EC on waste (Waste Framework Directive or WFD) establishes the legal framework for treating waste in the EU. According to the WFD, the EU’s approach to waste management builds on the waste hierarchy defined in Article 4 of the WFD, which sets the following priority order: prevention, preparing for re-use, recycling, other recovery (i.e. energy recovery), and lastly, disposal.

Directive 2008/98/EC of the European Parliament and of the Council of 19 November 2008 on waste and repealing certain Directives (Text with EEA relevance), EP, CONSIL, 312 OJ L (2008). http://data.europa.eu/eli/dir/2008/98/oj/eng, art. 4

Among other things, the Directive also emphasizes the ‘polluter-pays principle’, the concept of ‘extended producer responsibility’, requires competent national authorities to establish waste-management plans and waste prevention programs, and introduces recycling and recovery targets. For example, as part of a package of measures on the circular economy, the WFD has been amended to set new municipal-waste-recycling targets, increasing the share of municipal waste prepared for reuse or recycled to 55% of all municipal waste generated by 2025, 60% by 2030 and 65% by 2035.

Directive (EU) 2018/851 of the European Parliament and of the Council of 30 May 2018 amending Directive 2008/98/EC on waste (Text with EEA relevance), CONSIL, EP, 150 OJ L (2018). http://data.europa.eu/eli/dir/2018/851/oj/eng

The amendment also encourages EU countries to introduce charges and restrictions for the incineration of waste to provide economic incentives for waste prevention and recycling.

Directive (EU) 2018/851 of the European Parliament and of the Council of 30 May 2018 amending Directive 2008/98/EC on waste (Text with EEA relevance), CONSIL, EP, 150 OJ L (2018). http://data.europa.eu/eli/dir/2018/851/oj/eng, Annex IVa.

Directive 1999/31/EC on the landfill of waste (Landfill Directive) introduces stringent technical requirements to prevent, or reduce as much as possible, any negative impact from landfill. In addition, EU countries are required to implement national strategies to progressively reduce the amount of biodegradable waste sent to landfills. In 2018, amendments to the Landfill Directive introduced restrictions on landfilling from 2030 of all waste that is suitable for recycling or energy recovery, limited the share of municipal waste landfilled to less than 10% by 2035.

Directive (EU) 2018/850 of the European Parliament and of the Council of 30 May 2018 amending Directive 1999/31/EC on the landfill of waste (Text with EEA relevance), CONSIL, EP, 150 OJ L (2018). http://data.europa.eu/eli/dir/2018/850/oj/eng

The EU legislation on waste management and landfills has the practical consequence of diverting waste from landfills to material and energy recovery, underlining the EUs Circular Economy Action Plan under the European Green Deal while potentially bringing more feedstock to waste incinerators.

Currently, the European Parliament and the Council are also discussing a proposal to update the EU legislation of cross-border waste shipments.

Waste shipments: Council ready to start talks with Parliament. (n.d.). Retrieved October 13, 2023, from https://www.consilium.europa.eu/en/press/press-releases/2023/05/24/waste-shipments-council-ready-to-start-talks-with-parliament/

So far, Regulation (EC) No 1013/2006 on shipments of waste primarily aims at aligning EU law on cross-border shipments of waste compliant with the Basel Convention of 22 March 1989 on the Control of Transboundary Movements of Hazardous Waste and their Disposal. Under the new rules, waste exports to non-OECD countries would be restricted and only allowed if third countries are willing and able to receive and manage certain wastes sustainably. In addition, the proposal aims to make the intra-EU transport of waste easier and to better tackle illegal shipments. Taken together, these measures may have potential impacts for waste incineration operators in the EU as they may obtain more waste as feedstock at a lower price.

The European Waste incineration sector may also see itself increasingly influenced by EU Climate Law and strategy. In December 2021 the EU Commission published a communication on sustainable carbon cycles, in which it, among other things, highlighted the need to push for innovation to capture CO₂ and use it as feedstock for the production of fuel, chemicals and materials as well as to kick-start and upscale industrial carbon management approaches such as CCS and CDR (carbon dioxide removal) more generally.

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Sustainable Carbon Cycles, (2021). https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=COM:2021:800:FIN

The Communication forms part of the greater recognition of the important role of CCUS and CDR in hard-to-abate sectors and has been followed by EU legislative initiatives such as the Carbon Removal Certification Framework proposed in 2022, the 2023 proposal for the Net-Zero Industry Act and the Industrial Carbon Management Strategy that is presently being developed by the EU Commission. With respect to the waste incineration sector, these instruments may trigger trends such as an increase in CCUS project activity at waste incineration installations but also greater competition for biogenic feedstock. They will receive further consideration in Section 3.2 of the report.

Turning waste into resources is an essential building block of the circular economy according to the European Commission.

From the point of view of the circular economy, utilization as a material takes precedence over waste incineration. The better the materials are recovered, the smaller proportion of them is burned. The recovery of plastic and wood in particular reduces the share of material with a high calorific value in incinerable waste, while bio-waste is poorly combustible and has a low calorific value due to its high-water content. In general, an improvement in the recycling rate leads to an increase in the proportion of unburnt material and relatively high ash concentrations in combustion.

In general, the share of waste going to incineration will decrease in all the Nordic countries.

Table 7 National goals related to the recycling of plastic waste

On the other hand, valuable raw materials can be obtained from the ashes of waste incineration in the future. Nowadays the metals removed from ash can be calculated as recirculation, but utilization of other components of ash or ash in total cannot.