Developments around the United Kingdom’s Emission Trading Scheme (UK ETS) are progressing. Based on the latest news, it is expected its scope will soon also include maritime transportation, meaning that from 2026 shipping companies calling ports in the UK will be faced with a new carbon regulation. This date is approaching very soon; however, the regulation is not yet finalised by the UK. What do we know so far?

Same same but different

In many ways, UK ETS’ scope is similar to that of EU ETS. It will include ships over 5,000 gross tonnes, transporting cargo and/or passengers for commercial purposes. Exemptions for certain vessels apply, in line with the exemptions under EU MRV reporting. In addition to carbon dioxide, UK ETS will address methane and nitrous oxide emissions. With EU ETS’ scope expanding to also include these greenhouse gases from 2026, the two schemes will be aligned.

There are also some key differences. UK ETS’ scope seems to be more limited and focused on domestic voyages, travelling from one UK port to another UK port. Important though, is that under the UK's definition all emissions at berth at UK ports are considered in scope, regardless whether the stay is part of a voyage to/from the UK or within the UK. Allowances will need to be surrendered for 100% of the emissions during these domestic voyages and all UK port calls. Voyages between the UK and Crown Dependencies or British Overseas Territories are not included under the definition of a domestic voyage. To avoid carbon leakage, exemptions for voyages to and from Northern Ireland and ferries to Scottish islands are still under discussion. One solution that hasn’t been ruled out yet is to increase the scope to also include 50% of emissions from international voyages between the UK and the European Economic Area.

Carbon trading across the channel

May 19th marked an important milestone in the preparations for the maritime sector’s inclusion in UK ETS. During the UK-EU Summit in London, the parties agreed on exploring linking their emission trading systems. Although these explorations are still in early stages, there are signs of what this linking would look like. While there will be separate UK allowances and a separate UK Registry, EU allowances will also be recognised for compliance. Vice versa, companies will be allowed to surrender allowances issued under UK ETS in the EU’s Union Registry. This coupling should ensure a level playing field and a more stable and liquid carbon market. More importantly, it makes life much easier for shipping companies that call both the EU and the UK.

To be continued

We’re closely following the developments in the UK. In the meantime, we are preparing our product for a new year of emissions management. When UK ETS for shipping enters into force in 2026, you will be able to plan and monitor your UK ETS exposure and handle invoicing, trading and payments just like you’re used to for EU ETS. Smart, reliable, and intuitive emissions management - all in one place.