A new tax on carbon emissions from waste incineration, set to be introduced under the expanded Emissions Trading Scheme (ETS) by 2028, could see local councils bearing billions in costs over the next decade, according to fresh research commissioned by the Local Government Association (LGA), County Councils Network (CCN), and District Councils Network (DCN).

The research highlights that the new proposals could inflict approximately £747 million on councils in 2028 alone, with potential costs rising to £1.1 billion by 2036. The cumulative impact could reach as high as £6.5 billion over this period, a burden that councils, with limited financial flexibility, are ill-prepared to manage.

Council representatives are urging the government to revise the ETS expansion to ensure that the industries producing fossil-based materials - such as those found in packaging, textiles, electricals, and furniture—shoulder the cost of emissions. This shift would not only align with the polluter pays principle but also encourage producers to reduce the amount of fossil-based waste, mitigating the environmental impacts at the source.

Councillor Adam Hug, environment spokesperson for the LGA, emphasised the support of councils for the goals of the ETS but criticised the current focus of the financial burdens. "Placing these costs on councils will not only fail to meet the scheme’s environmental objectives but will also expose local governments to significant financial risks," he said. Councillor Hug further noted that councils are playing a critical role in energy recovery from waste incineration, which supports the national grid and electric vehicle fleets.

The call for action is echoed by Councillor Andy Graham, DCN Environment Spokesperson, who highlighted the strain on local waste services. "Taxing councils for incinerating waste, which we often have no choice but to do, could severely impact the funding of local waste management, including recycling efforts," Graham stated.

Additionally, Councillor Richard Clewer of the County Councils Network voiced concerns over the misplacement of the proposed carbon tax. "It is imperative that the burden of these costs falls upon the producers of the waste-generating materials. By doing so, we can incentivise greener production practices rather than penalising local authorities," Clewer argued.

Recent LGA polling with YouGov revealed significant public support for shifting financial responsibility to producers, with 48% of respondents favouring manufacturers covering the costs of reducing packaging waste compared to just 4% who believe councils should pay.

As councils continue to enhance recycling rates and waste management efficiency, the proposed carbon tax on waste incineration presents a pivotal issue for local government finances and environmental policy. With the consultation period underway, there is a strong consensus among local authorities for the government to reconsider its approach to ensure that fiscal responsibilities align with environmental and public expectations.

Read more about the research HERE.