UK Emissions Trading Scheme updates

This month, a new market update for the UK Emissions Trading Scheme (UK ETS) was announced, bringing important implications for the flooring sector. The update signals higher disposal costs, increased energy pressures and greater scrutiny of end-of-life carbon impacts, all of which will shape decision-making across the supply chain in the coming years.

Key points from the update include:

• Higher Energy from Waste (EfW) and residual waste gate fees, meaning the cost of sending flooring waste to disposal will increase.
• Rising energy costs passed through from ETS, as higher carbon prices increase operating costs for waste facilities.
• End-of-life carbon impacts feeding directly into LCAs and EPDs, with products sent to EfW performing worse than those reused or recycled.

Together, these changes make it clear that how flooring products are designed, specified and disposed of will matter more than ever.

Understanding the ETS scheme

The UK ETS is a market-based system designed to reduce greenhouse gas emissions in line with the UK’s legally binding commitment to reach net zero by 2050.

Under the scheme, the UK Government sets an annual cap on total emissions. Businesses covered by the ETS must hold an allowance for every tonne of CO₂ they emit. This “cap and trade” approach means that, as the cap reduces each year, the cost of emissions increases.

Launched in 2021, the UK ETS currently applies to energy-intensive industries, the power sector and aviation. However, from 2028, it will expand to include waste incineration and Energy from Waste (EfW) facilities — a major turning point for the flooring industry.

Why is 2028 a turning point for flooring waste?

Each year in the UK, more than 200,000 tonnes of carpet and textile flooring waste are sent to EfW facilities. The inclusion of resilient flooring waste is expected to add a further 50,000 tonnes.

Once EfW facilities fall under the UK ETS, operators will be required to monitor, report and verify their carbon emissions. Crucially, they will also need to purchase and surrender ETS allowances for every tonne of fossil-based CO₂ emitted.

In simple terms, the more fossil-derived material is incinerated, such as many flooring products, the higher the cost of disposal. These costs will be directly linked to carbon market prices rather than remaining fixed.

The cost impact

Disposal costs are expected to rise sharply. Current estimates suggest an additional £49 per tonne – at today’s carbon prices – will be added to existing EfW gate fees of around £110 per tonne, before transport costs are included.

By 2028, this could mean £200 per tonne or more to dispose of most types of flooring waste.

Local authorities are already preparing for this shift. At a household recycling conference hosted by the CLAIRE Group in Wales in 2024, UKSFA highlighted the urgent need to reduce synthetic, fossil-based waste entering disposal sites to avoid unsustainable costs. In Wales, councils may also face financial and regulatory pressures linked to national carbon reduction targets.

Under the ETS, allowance prices are set through auctions and secondary market trading and are influenced by supply, demand and the Cost Containment Mechanism (CCM). The CCM allows the UK ETS Authority to intervene if prices rise sharply for a sustained period, helping stabilise the market. However, once EfW facilities are included, disposal costs for fossil-derived flooring waste will inevitably fluctuate in line with carbon market conditions.

Impacts on LCAs and EPDs

From a commercial perspective, the UK ETS will also feed directly into Life Cycle Assessments (LCAs) and Environmental Product Declarations (EPDs). Both account for carbon impacts at a product’s end of life, meaning flooring products sent to EfW are likely to score worse than those designed for reuse or recycling.

This will become an increasingly important consideration for manufacturers, specifiers and clients, both in the UK and internationally.

How the flooring sector should respond

The flooring industry has both a duty of care and a commercial incentive to reduce reliance on fossil-based materials and improve waste management. Treating waste as a resource rather than simply a cost can unlock opportunities for efficiency, innovation and compliance.

Key actions businesses can take now include:

• Regular waste audits

Understand what materials are being discarded, in what volumes and from which sources. This can highlight opportunities for prevention, reuse and recycling.

• On-site segregation

Where space allows, separating materials such as carpet, underlay, vinyl, LVT and wood-based products makes recovery easier and more cost-effective.

• Using take-back schemes

Many manufacturers now offer take-back schemes for their own products, and some accept other brands. These are particularly effective for packaging and clean off-cuts.

• Partnering with reuse and recycling specialists

Segregated materials, especially by fibre type such as polypropylene, nylon or wool, are increasingly in demand. UKSFA’s reuse and recycling directory can be found at www.uk-sfa.com/reuse-and-recycle

• Thinking circular

Choosing recyclable materials, modular systems and alternatives to traditional backings and adhesives can significantly reduce future disposal costs. Products designed for disassembly and recovery will perform better under the ETS.

How UKSFA can support you

Adapting to the UK ETS, alongside wider sustainability requirements, can be complex. UKSFA is here to support members through this transition.

We provide guidance on waste audits, take-back schemes, circular product design, LCAs, EPDs and sustainability reporting. We also connect members with trusted partners in recycling, reuse and material innovation.

UKSFA actively tracks UK ETS developments and waste-sector consultations to keep members informed of future scope changes and cost risks. By acting early, businesses can reduce costs, minimise environmental impact and futureproof against rising carbon-related charges.

For support or to discuss next steps, contact info@uk-sfa.com

Reference: Taking part in the UK Emissions Trading Scheme markets – GOV.UK