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ARTICLE · 22 SEPTEMBER 2026

New EU Emissions Trading Rules May Affect The Waste-to-energy Sector

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The European Commission has proposed significant amendments to the EU Emissions Trading System (ETS) Directive, introducing new requirements for free allocation of allowances conditional on EU-based decarbonisation investments and gradually extending the system to cover municipal waste incineration from 2031.

DenmarkEnvironment
Johan Weihe
Johan Weihe
Kristian Raun Larsen
Kristian Raun Larsen
Nicolai Als
Nicolai Als
Agnete Nordentoft
Agnete Nordentoft
Rania Kassis Kristensen
Rania Kassis Kristensen

The European Commission intends to amend the EU Emissions Trading System (EU ETS) Directive to align the EU ETS with the EU’s 2040 climate targets. The Commission’s proposal includes the gradual inclusion of municipal waste incineration in the EU ETS from 2031, changes to the conditions for free allocation of allowances and new rules on permanent carbon removals (CDR).

On 17 July 2026, the European Commission presented a proposal to amend the EU ETS Directive (Directive 2003/87/EC, as subsequently amended) and Decision (EU) 2015/1814 on the Market Stability Reserve (COM(2026) 616).

Below, we highlight some of the elements of the proposal that stakeholders in the waste-to-energy sector should pay particular attention to.

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