On 21 July 2025, the UK ETS Authority (the "Authority") published an interim response to its November 2024 consultation (the "Consultation") on the expansion of the UK Emissions Trading Scheme (the "UK ETS") to include emissions from the maritime sector from 1 July 2026 (the "Interim Response"). The Interim Response includes policy decisions for some of the proposals in the Consultation to enable maritime operators and regulators to prepare for the expansion of the UK ETS to the maritime sector. The Authority will issue a full response to the Consultation in due course.
The Interim Response confirms some of the proposals outlined in the Consultation, such as:
- the expansion of the UK ETS is intended to launch on 1 July 2026;
- the UK ETS will initially apply to ships of 5,000 gross tonnage ("GT") and above for domestic journeys and all in-port emissions in the UK;
- the registered owner of a ship will be responsible for compliance unless this has been delegated through a legally-binding agreement; and
- outlining the regulatory regime for the maritime sector, including the monitoring, reporting and verification ("MVR") requirements, and how it will align with the other UK ETS sectors and the existing UK MRV regime.
The full response to the Consultation will include:
- policy decisions for the remaining proposals in respect of the expansion that were not covered in the Interim Response;
- decisions for proposals regarding the potential further expansion of the UK ETS to additional maritime emissions; and
- further guidance on the points covered in the Interim Response.
Scope
Voyages
The Authority confirmed that the UK ETS maritime regime will include coverage of domestic journeys and all in-port emissions in the UK. Domestic voyages will include voyages to and from UK ports (whether to and from the same or different UK ports). All emissions within a voyage will be in scope, including those emitted while at anchor / moored. In the Consultation, the Authority had proposed to include all in-port emissions within UK ports of call from ships that are travelling internationally, and the Interim Response confirmed that they intend to proceed with this proposal. Stakeholders raised concerns that this may overlap with the International Maritime Organisation Net Zero Framework, which the Authority will consider when developing the policy on this point.
Emissions
In alignment with the EU ETS, carbon dioxide emissions, as well as methane and nitrous oxide emissions, will be included in the scope of the UK ETS. In addition to strengthening climate ambitions, this would also avoid creating an incentive to switch to fuels with lower carbon dioxide emissions but higher methane or nitrous oxide emissions. Methane and nitrous oxide will be calculated on a carbon dioxide equivalent basis, using Global Warming Potential figures based on the Intergovernmental Panel on Climate Change Fifth Assessment Report. The Authority stated that it will provide further guidance on calculating emissions from these gases, although it has given no indication as to what the guidance will include.
Exemptions
Government non-commercial maritime activity will be exempt from the UK ETS. The Authority will provide a list of such activities, which will include military and police activities, coastguard activity and government research activities. An exhaustive list will be provided in the full response.
Exempted activities will not be subject to the UK ETS reporting or surrender requirements.
Entity responsible for compliance
The obligation to comply with the UK ETS will be applied to the registered owner of a ship, who will be the maritime operator for the purposes of the UK ETS. This can be delegated through a legally binding agreement in certain circumstances. The option to delegate this compliance responsibility will give registered owners the flexibility to determine which entity (such as a technical manager or bareboat charterer) is best placed to comply with the UK ETS obligations.
Regulatory regime
The first scheme "year" for the maritime sector in the UK ETS will run from 1 July 2026 to 31 December 2026, with subsequent scheme years running from 1 January to 31 December. Participants must monitor their emissions for each year, then report these by 31 March and surrender the relevant number of certificates by 30 April in the following scheme year. Although this aligns with the wider UK ETS regime, it does not align with that of the EU ETS (under which the deadline for the surrender of certificates is 30 September). This is despite almost half of stakeholders expressing a preference for alignment with the EU ETS deadline.
Other aspects of the UK ETS (such as emissions monitoring plan requirements and the penalty regime) will apply to operators in the maritime sector in the same way as for the wider UK ETS regime.
MRV
The existing UK MRV regime (see guidance on the regime here) governs the MRV requirements for ships over 5,000 GT which transport cargo and passengers for commercial purposes to and from UK ports. It was adapted from the EU MRV regime. The UK MRV is separate from the UK ETS, but the principles of the UK MRV regime will be used as the basis for the MRV requirements for the UK ETS, with certain differences:
- The UK ETS MRV scope will be wider: it will also include maritime activities, voyages and ships in scope of the UK ETS. The final scope will be outlined in the full response to the Consultation. The UK ETS MRV will also cover the emissions in scope, as outlined above, as opposed to the UK MRV regime, which only covers carbon dioxide emissions.
- Emissions monitoring plans ("EMPs") will be approved by the UK ETS regulators rather than by accredited verifiers.
- One EMP and one annual emissions report will be required per operator rather than per ship.
- The Authority intends to zero rate sustainable fuels of both biological and non-biological origins to incentivise their use. Further details will be provided in future guidance.
- Emissions from all maritime fuels will be considered on a Tank-to-Wake basis from the start of the scheme. This means only the greenhouse gas emissions generated by operating ships will be considered. The Authority also confirmed the use of standard emissions factors for conventional fuels in line with the rest of the UK ETS.
The UK MRV regime will continue to exist alongside the UK ETS MRV. Many stakeholders supported the proposed changes and are of the view that the UK MRV regime should be amended to align with the envisaged UK ETS MRV regime as they believe it would be helpful for the two regimes to be aligned to avoid additional administrative burden. The Authority confirmed that the Department for Transport will set out further information on this in due course.
Key decisions for the full response
As outlined above, the Authority is expected to provide decisions for the remaining Consultation proposals in its full response. Key decisions will address:
- how the UK ETS cap will be adjusted once the maritime sector is included;
- when and how guidance and support on compliance with the UK ETS will be provided by the Authority;
- the disparity in the carbon pricing obligation on routes between Northern Ireland and Great Britain, and Republic of Ireland and Great Britain caused by differing emissions coverage under the UK ETS and EU ETS;
- the potential introduction of (1) a de minimis emissions threshold, or (2) a simplified compliance process for small emitters;
- the full list of exempt activities;
- the proposed future review of the 5,000 GT threshold in 2028 and the potential to introduce MRV requirements for ships above 400 GT; and
- the potential expansion of the UK ETS to cover emissions from international voyages.
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