The UK Emissions Trading Scheme (ETS) Expands to include the Maritime Sector in 2026
Written by Alanna Loder-Symonds, Director at Eqonic Sustainability
The UK Emissions Trading Scheme (ETS) is expanding to include the maritime sector in 2026. What is the UK ETS, how will the scheme work and who will be impacted?
From 1 July 2026, the UK’s Emissions Trading Scheme (UK ETS) will expand to include domestic maritime emissions, from this date the owners of vessels over 5,000 gross tonnage (GT) will need to monitor, report and pay for their emissions on voyages between UK ports and also include emissions while at anchor and while moored at UK ports.
What is the UK ETS?
The UK ETS is a cap-and-trade scheme. Under the scheme the UK government sets a cap on the total amount of greenhouse gases that certain industries can emit. Companies in relevant industries must hold a carbon allowance for every tonne of CO₂ (or equivalent gases) they emit. Companies can buy or sell these allowances, creating a market price for carbon emissions. The emissions cap decreases over time. Firms are therefore incentivised to reduce their emissions so they can then sell their excess allowance of carbon credits and not have to purchase more carbon credits.
Britian’s ETS scheme was launched in January 2021, designed to put a price on greenhouse gas emissions from power, industry and aviation, while helping the UK achieve its Net Zero target. It currently covers approximately 25% of UK territorial emissions.
How will the UK ETS work for the marine sector from 2026?
From 2026 the registered owners of vessels will be responsible for compliance with the UK ETS. Emissions of carbon dioxide (CO₂), methane (CH₄), and nitrous oxide (N₂O) from maritime operations will need to be monitored, reported and verified much like the existing UK ETS regime. Vessel owners will need to prepare an emissions monitoring plan, appoint independent verifiers, submit annual emissions data, and finally buy permits to cover those emissions. Vessels under 5,000 gross tonnage (GT) are initially excluded from the scheme, as are military, coast guard and police vessels, although ships performing these duties are expected to decarbonise to meet the governments net zero commitments.
The first “partial” scheme year runs 1 July – 31 December 2026, after this the scheme will shift to calendar years. Participants must submit verified reports by 31 March and surrender allowances by 30 April. Non-compliance with the UK ETS - for example operating without a required permit or failing to submit a verified emissions report - would result in civil penalties.
Who will be impacted?
This will clearly impact the owners of large ships who should monitor the emissions of their vessels, review their fuel strategy and consider alternative fuels like HVO or biofuel blends now. Ports will also face indirect pressure to help vessel operators cut emissions, for instance, by offering shore power (“cold ironing”), LNG or hydrogen refuelling infrastructure, and low-carbon port operations. Businesses who use maritime freight may face rising shipping costs as operators pass on ETS compliance costs. Fuel suppliers are expected to see to see increased demand for low-carbon fuels (biofuels, ammonia, hydrogen). Ship building firms should see an opportunity for growth as operators seek to reduce ETS costs through efficiency upgrades and retrofits.
