ETS for EfW Webinar Q&A: Do Cement Kilns Operating on SRF Sit Outside the ETS?
Welcome to the fourth instalment of our blog series, where we delve into the pressing questions raised during our webinar with Materials Recycling World. Today, we tackle a crucial topic: the inclusion of Energy from Waste in the Emissions Trading Scheme (ETS) and its impact on cement kilns operating on SRF.
The webinar focused on how independent waste operators can prepare for the inclusion of Energy from Waste in the Emissions Trading Scheme (ETS).
In this blog, we’ll answer the question: Do cement kilns operating on SRF sit outside the ETS?
The answer is no, as all cement production is subject to the ETS. In fact, the ETS has been applied to the cement industry since 2008, and it’s currently in its fourth phase of the scheme.
This means that the cement industry is well organised around its decarbonisation efforts and already has various strategies, systems and programmes implemented into its infrastructure. One of them is using SRF in their production.
This is where the real opportunity lies, as using a high-quality SRF lowers the tax burden for cement kilns, as Dr Stephen Wise explains:
“For context, greenhouse gas emissions in the cement sector are regulated by the EU ETS, which uses the ‘cap and trade’ principle to limit the total amount of allowable GHG emissions.
“This cap is divided into millions of tradeable individual emissions allowances, and producers must hand over enough allowances to cover their emissions. If an installation reduces its emissions, it can use its spare allowances to cover its future needs or sell them to another installation that needs them.
“According to a 2022 report by Carbon Market Watch[1], the EU ETS has not successfully triggered emissions reductions in the cement sector, and CO2 emissions per tonne of material have remained stable since 2012. Accounting for more than 2% of all EU emissions, cement production is one of the most carbon-heavy industries. It must drastically reduce its emissions in the coming decade to ensure the EU achieves climate neutrality well before 2050.
“One way to support this endeavour is by powering kilns with biogenic carbon-rich Solid Recovered Fuel (SRF) derived from non-recyclable waste. With the spotlight on its carbon footprint, cement producers have been steadily increasing their use of SRF in recent years as it helps to lower their ETS tax burden without compromising the quality of the combustibles they use. SRF, produced by Advetec technology, can be utilised even in the pre-calciner stage of cement production, signifying its higher value to the kilns.”
But what makes a high-quality biogenic carbon-rich SRF? The first thing to look for is a high calorific value, which enables the kilns to achieve the right temperature – this comes from the plastic component of the fuel. The second is a high proportion of biogenic carbon found in the SRF’s organic matter, which reduces the ETS tax burden and makes it a sought-after material.
Why does this matter to independent waste operators?
Until now, waste handlers have required expensive plant and infrastructure to create SRF from non-recyclable waste streams such as residual waste, washroom waste or AD rejects. Plus, many smaller operators haven’t had the necessary volumes of waste to pursue this route or the funds to cover the laboratory testing required by offtakers. However, Advetec’s biotechnology offers smaller waste operators easy access to the SRF market for the first time and empowers them to create high-quality SRF on their own sites without onerous financial implications.
This gives waste handlers greater control, choice and cost certainty, which is particularly crucial as the waste status quo has to change. The UK’s landfill assets are almost at capacity, and the cost of EfW is rising. Plus, it supports the circular thinking required to push the UK closer to Net Zero by 2050.
Read more about the value of SRF derived from non-recyclable waste streams in our LinkedIn article.