Emissions Trading for Waste Incineration Plants with Energy Recovery in Sweden

Emission trading is a tool for achieving the European commitment to reduce greenhouse gas emissions. The aim is to create an effective European emissions trading market with the least possible negative impact on economic development and employment within the Union. Waste incineration plants in Sweden were added into this systemin2013andthe general situation has been a non-functioning market with a surplus of allowances where the emission cap was not tight enough to drive a significant reduction in emissions. For the upcoming trading period starting 2021 the cost for emission allowances is expected to increase due to the reformation, and the challenge is to allocate the cost for allowances in a fair and sustainable manner. The aim of this thesis is to present options on how to allocate the cost for emission allowances related to waste incineration plants with energy recovery in Sweden. The aim is further to understand how the cost allocation can result in a decrease of CO2emissions and thereby a lower climate impact. The initial idea for the research topic was proposed by the case study company and further developed in conjunction with the author, supervisor and examiner. The research is based on a case study of Tekniska Verken AB, an energy recovery company in Sweden. A case study approach was chosen as the research questions focuses on investigating a contemporary phenomenon within a real-life context. Data collection consisted of a literature review, semi-structured interviews and field visits, where the interviews were the main source of data for this research. The overall understanding is that the cost for emission allowances should be allocated further up the waste supply chain, all the way to product producers. By allocating the cost to waste providers by increased waste incineration treatment-price, the cost is pushed one step upstream. In this case, differentiating the waste providers by divide them into categories(such as municipal waste for example)and allocate the cost for emission allowances based on the performance of each category is a realistic and feasible solution aiming upstream. The cost can be allocated differently among waste providers depending on which category the waste derives from or on an overall level, tentatively using radiocarbon method. The radiocarbon method is considered reliable and practical to use compared to other options. Adopting polluters pay principle identifies the polluters and by allocating the cost for emitting carbon towards them plants an incentive to improve sorting and to decrease the share of fossil content. This can eventually contribute to a lower impact