Incinerator companies avoided £500m of pollution charges for burning plastic last year because of a “loophole” in government policy.

Despite burning millions of tonnes of plastic rubbish, the operators of incinerators – including waste giants Viridor, Veolia and Suez – were not required to buy pollution permits under the Emissions Trading Scheme.

The Climate Change Committee (CCC) today called on the government to end this exemption and impose a moratorium on granting planning permission for new incinerators.

But a waste industry trade group, the Environmental Services Association, is lobbying the government to allow its members to keep burning plastic without paying for the pollution for at least five more years, documents obtained by openDemocracy reveal.

Shlomo Dowen, the national coordinator for the United Kingdom Without Incineration Network (UKWIN), told openDemocracy: “The current loophole that allows climate-damaging emissions from incinerators to continue to go untaxed is shameful.

“The public are unfairly subsiding incineration by paying the cost that should be borne by those profiting from the pollution. Inclusion of incineration in the UK ETS would be a welcome start to addressing this injustice.”

The ‘polluter pays’ principle

The government’s Emissions Trading Scheme (ETS) policy requires British companies to buy permits for each tonne of carbon dioxide they emit.

The scheme aims to make the polluter ‘pay’ and incentivise greener alternatives. But it doesn’t apply to incinerators that burn household waste to make electricity because their primary purpose is waste management – not electricity generation.

But last week, an openDemocracy investigation revealed that some ‘Energy from Waste’ (EfW) incinerators produce more CO₂ per unit of electricity generated than coal-fired power plants – yet they still claim to be “renewable”.

In 2022, incinerators emitted seven million tonnes of fossil-based CO₂, which was almost entirely due to the burning of plastic.

The average price of a single pollution permit that year was £79.20, meaning companies would have spent around £554m if plastic-based incinerator emissions had been covered.

One of the biggest beneficiaries of the loophole was Viridor, which was exempted from more than £73m in pollution permit charges, according to openDemocracy’s analysis of the emissions reports the company submitted to the Environment Agency.

Viridor’s Beddington incinerator, which serves several south London boroughs, pumped 136,000 tonnes of CO₂e (carbon dioxide equivalent) into the atmosphere last year, which would have cost the firm around £10m in pollution permits if it had been included in the ETS.

Beddington also breached the legal limit for emissions of carbon monoxide and other noxious chemicals eight times last year, company reports to the Environment Agency show.

Viridor, which is owned by the Wall Street private equity giant KKR, posted profits of £222m last year. The company did not respond to a request for comment by openDemocracy.

KKR also owns a 25% stake in Northumbrian Water, which routinely dumped raw sewage into British rivers last year while turning a profit of £188m.

Industry lobbying

The government last year issued a call for evidence on expanding the ETS to include incineration – a move that the Environmental Services Association (ESA), which represents incinerator operators, is lobbying to delay.

In a response to the government seen by openDemocracy, the ESA argued that the ETS should apply to incinerators “no earlier than 2028” and only then if strict conditions were met.

Delaying the introduction for another five years would save the waste industry approximately £2.5bn – assuming the level of emissions and carbon price remain similar to in 2022.

The ESA said incinerators provided an “essential sanitary service” to society, which could be “undermined” by making their owners pay for their emissions.

The ESA also threatened that its members would simply pass on the cost of purchasing ETS allowances to councils, meaning they would be forced to make cuts to other services if they could not gain extra government funding.

Piers Forster, a professor of physical climate change and interim chair of the independent Climate Change Committee, told openDemocracy: “There should be absolutely no new Energy from Waste capacity until a full review has been done and we can confidently talk about the country’s needs.

“The sector needs to do much more to expand recycling and deliver the necessary emission reductions for Net Zero.”

The CCC warned in its annual report to Parliament today “the continued growth in the use of EfW plants [incinerators] is undermining efforts to reduce emissions within the waste sector.”

There are already 57 incinerators in the UK with a further 18 under construction and around 90 in various stages of planning.

A coalition of environmental campaign groups has called on the government to include incineration in the ETS immediately and to introduce an incineration tax.

In a letter in April to prime minister Rishi Sunak, the coalition – which includes Greenpeace, Extinction Rebellion and UK Without Incineration Network (UKWIN) – said these measures are necessary “to ensure alternatives such as recycling and waste minimisation are always less expensive than incineration and thus more attractive to investors and decision-makers”.

A spokesperson for the Department for Energy Security and Net Zero said: “Generating energy from waste plays an important role in diverting it from landfill and is the best option for treating waste which cannot be prevented, prepared for reuse, or recycled.

“We recently ran a consultation on including waste burning in the ETS standards and will provide further updates in due course.”