How can the EU Emissions Trading System drive the plastics sector’s zero-carbon transition?

The policy brief examines the role of the EU Emissions Trading System (EU ETS) in decarbonising the plastics sector. It highlights that while oil refining and bulk chemical manufacturing are covered, waste incineration remains excluded. The author argues that free allowance allocations have historically created windfall profits for refineries (4.6 billion EUR) and petrochemicals (1.7 billion EUR) between 2008 and 2015, hindering emission reductions. To drive a zero-carbon transition, the document recommends increasing the CO2 price signal, phasing out free allowances, recycling auction revenues into climate innovation, and including Municipal Solid Waste (MSW) incineration in the EU ETS to discourage the burning of 20-30 million tonnes of plastic waste annually.

• Plastic production is a major industrial emission source, accounting for approximately 20% of the chemical industry's total greenhouse gas emissions in the EU, with annual direct emissions from petroleum refineries and chemical manufacturing totaling around 13.4 million tonnes of CO2.
• The EU ETS's free allocation of emissions allowances between 2008 and 2015 resulted in significant windfall profits for the industry, totaling 4.6 billion EUR for refineries and 1.7 billion EUR for petrochemicals, which contributed to stagnant emission levels.
• Waste incineration is currently not included in the EU ETS, despite the fact that 20-30 million tonnes of plastic waste are incinerated in Europe each year, producing between 50-80 million tonnes of CO2 annually.
• To achieve a zero-carbon transition, the document recommends four primary EU ETS reforms: strengthening the CO2 price signal, cancelling free allowances to enforce the polluter-pays principle, using auction revenues for climate-friendly recycling research, and adding Municipal Solid Waste incineration plants to Annex I of the Directive.

APA

Carbon Market Watch (n.d.). How can the EU Emissions Trading System drive the plastics sector’s zero-carbon transition? https://carbonmarketwatch.org/wp-content/uploads/2021/04/How-can-the-EU-Emissions-Trading-System-drive-the-plastics-sectors-zero-carbon-transition.pdf

Chicago

Carbon Market Watch. How can the EU Emissions Trading System drive the plastics sector’s zero-carbon transition? n.d. https://carbonmarketwatch.org/wp-content/uploads/2021/04/How-can-the-EU-Emissions-Trading-System-drive-the-plastics-sectors-zero-carbon-transition.pdf.

Wikipedia

{{cite report |author=Carbon Market Watch |title=How can the EU Emissions Trading System drive the plastics sector’s zero-carbon transition? |url=https://carbonmarketwatch.org/wp-content/uploads/2021/04/How-can-the-EU-Emissions-Trading-System-drive-the-plastics-sectors-zero-carbon-transition.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{carbonmarketwatchndhow, author = {{Carbon Market Watch}}, title = {{How can the EU Emissions Trading System drive the plastics sector’s zero-carbon transition?}}, institution = {Carbon Market Watch}, url = {https://carbonmarketwatch.org/wp-content/uploads/2021/04/How-can-the-EU-Emissions-Trading-System-drive-the-plastics-sectors-zero-carbon-transition.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }