Janek Vahk / Oct 2026
Image: Shutterstock
For years, environmental organisations have called for a carbon price on waste incineration. Now that the EU is finally moving in that direction, the priority should be to help make the system work as intended. That means ensuring the EU ETS actually changes the economics of waste management, while avoiding a situation where the costs simply fall on households and municipalities.
Bringing municipal waste incineration into the EU ETS is not an end in itself. A carbon price only works if it creates a meaningful economic difference between burning waste and preventing, reusing or recycling it. If incineration simply passes its additional costs on to municipalities and households, while producers and the wider waste system remain insulated, we will have missed the opportunity.
So the focus now should be on making the carbon price work in practice.
The first principle should be simple: the carbon price must remain visible. There should be no free allocation or loopholes that effectively cancel out the incentive. Incineration needs to face the real carbon cost of burning waste.
But that does not mean households should simply receive a larger waste bill.
This is where other parts of the waste system need to work together with the ETS.
Extended Producer Responsibility can help spread the cost upstream. Producers should contribute to managing the waste generated by the products and packaging they place on the market. If a material is difficult to recycle and ends up being incinerated, there should be an economic consequence for that choice.
There is already evidence that this can work. A Zero Waste Scotland study estimated that packaging EPR payments could offset around 40% of ETS costs for materials within its scope. A recent Ceres study similarly found that 37-56% of ETS costs could be avoided through proven, relatively low-cost measures to increase waste prevention, reuse and recycling.
These findings point to an important lesson for Europe: sharing the cost does not mean removing the price signal. It means using the additional cost of incineration to finance and accelerate the changes that reduce it.
Pay As You Throw (PAYT) can complement this at household level. People should have a clear financial incentive to reduce residual waste while making recycling and separate collection easier and cheaper. The point is not to punish households. It is to make the right choice easier and more affordable.
Together, these instruments create a stronger feedback loop.
The ETS makes incineration more expensive. EPR makes producers share responsibility for the waste they create. PAYT gives households an incentive to reduce residual waste. ETS revenues can then support better collection, sorting, reuse and recycling.
This matters because Europe already has a major structural problem with incineration capacity. We should not create a system in which municipalities remain financially locked into feeding incinerators for decades. The economic framework needs to move in the opposite direction, making prevention, reuse and recycling increasingly attractive.
There will be concerns about affordability. Those concerns should be taken seriously. But the answer should be to design the system better, not to remove the price signal.
The EU should therefore use the next phase of ETS negotiations to build a broader package around incineration: a strong and predictable carbon price, no free allocation, no loopholes, and mechanisms to share costs fairly through EPR and PAYT. ETS revenues should support prevention, separate collection, sorting and recycling.
The debate should no longer simply be about whether waste incineration belongs in the EU ETS.
It should be about how we make the ETS work for the waste system we actually want.
That means keeping the price signal, sharing the cost, and using the resulting economic pressure to move waste up the hierarchy.
