The UK ETS Authority (the "UK Authority") released an interim response[1] 21 July 2025 (the "UK Interim Response"), following its November 2024 consultation (the "UK Consultation"), about expanding the UK ETS to cover maritime emissions starting 1 July 2026.
The expansion of the UK ETS into maritime is part of the UK Government's Net Zero Strategy[2]. The UK Interim Response outlines certain policy decisions to help maritime operators and regulators prepare for the sector's inclusion in the UK ETS. The UK Authority will provide a comprehensive response to the UK Consultation in the future.
The first scheme year will run from 1 July 2026 to 31 December 2026, with subsequent years from 1 January to 31 December[3] , which will constitute the compliance period.
Inclusion of methane and nitrous oxide emissions
The UK Authority decided to include emissions of methane and nitrous oxide, as well as those of carbon dioxide. This applies to emissions from both the combustion and slippage[4] of these gases. Methane and nitrous oxide emissions would be calculated on a carbon dioxide equivalent (CO2e) basis, based on their Global Warming Potential (GWP). Further details on the measure of calculating emissions from these gases will be provided in guidance in the future.[5] For the purposes of this article, the term “emissions” includes carbon dioxide emissions as well as emissions of methane and nitrous oxide.
Application
The EU ETS will apply to ships of 5000 gross tonnage (GT) and above, with plans to review this by 2028.[6]
Scope
Domestic voyage
The UK Authority intends to proceed with the proposed definition of domestic voyage, which would include voyages from one UK port to another UK port and voyages that start and end at the same port in the UK. This will include all emissions within a voyage, including while at anchor and while moored. Clearer guidance around emissions at anchor and defining the start and end of a voyage will be provided in future guidance.[7]
Emissions produced during voyages to and from Crown Dependencies and Overseas Territories (CDs & OTs) are not planned to be included in the scope of the UK ETS, however, UK Authority will monitor and review the scheme and may consider this in the future.[8]
International voyage
Questions about the inclusion of some emissions from international voyages will also be addressed by the UK Authority. The UK Authority will also address questions about including some emissions from international voyages in the future.[9]
Excluded maritime activity
Government non-commercial maritime activity will be exempted from the UK ETS. The UK Authority provided a list of activities which will be fully exempt from the UK ETS, meaning that there will be no reporting or surrender requirement. Further details will be outlined in legislation, but this will include the following:
- Military activities
- Customs / Border Force activities
- Police activities
- Coastguard and other government search & rescue activity
- Emergency/medical ships
- Government research activities
- General Lighthouse Authority activity
Ships performing these activities are still expected to decarbonise their operations in line with net-zero commitments across the UK, and the UK Authority receives about the importance of a robust decarbonisation strategy for government ships.[10]
Regulatory regime
The UK Authority has considered the stakeholder responses and acknowledges that stakeholders called for UK ETS deadlines to align with EU ETS deadlines, particularly the EU surrender deadline, which is 30 September, as opposed to 30 April each year. However, the UK Authority will progress the proposed position of aligning the proposed regulatory provisions, including the compliance dates, with the rest of the UK ETS. UK emission allowances (UKAs) may be purchased via auctions or on the secondary market throughout the year, meaning that operators can choose to purchase such UKAs at any point in the year in preparation for surrender.[11]
Monitoring, Reporting and Verification (MRV) requirements
The UK Authority will use the principles of the UK MRV regime as the basis for the UK ETS, with deviations for the purpose of the UK ETS MRV requirements. However, to be clear, the UK ETS MRV requirements will be separate from the UK MRV regime. The UK ETS MRV requirements will include the monitoring and reporting of in-port emissions, whether travelling domestically or internationally, as well as the monitoring of emissions of methane and nitrous oxide, in line with the decisions outlined above.[12]
However, the UK Authority has decided on a standardised approach. This will also require one emissions monitoring plan (EMP) and ) per operator, and not per ship. The EMP requires the ships in which maritime activities are performed to be listed and the emissions from each ship, as well as aggregated data, to be reported in the AER.
The UK Authority intends to incentivise the use of sustainable fuels of both biological and non-biological origin through zero-rating from the start of the scheme. Further details on the treatment of sustainable fuels and on how to make an Emissions Reduction Claim, will be provided in future guidance. The UK Authority will consider emissions from all maritime fuels on a Tank-to-Wake basis from the start of the scheme. There was also strong support for the use of emissions factors in line with industry standards. The use of standard emissions factors for conventional fuels will be in line with the rest of the UK ETS.[13]
Compliance
The Maritime Operator in respect of a ship is to be its Registered Owner, except where the ISM Company has entered into a legally binding agreement with the Registered Owner to assume the responsibility for compliance with the obligations of the UK ETS instead. Where an ISM Company has assumed from a Registered Owner the responsibility for compliance with the UK ETS in respect of one or more ships, evidence will be required, to the satisfaction of the regulator, of the agreement in place between those two entities. Where the person that has performed a maritime activity is not known, including where the regulator could not be satisfied that the ISM Company had duly assumed responsibility for UK ETS compliance in respect of the relevant ship, the Registered Owner will be deemed to have performed that maritime activity, and so to be the Maritime Operator in respect of that ship.[14]
This method is consistent with that adopted by the EU ETS. The approach should also mitigate additional administrative burden for most operators who will be participating in both schemes, many of whom will also have established contractual responsibilities in relation to emissions trading. It should provide flexibility for the relevant stakeholders to determine, for each ship, which entity is best placed to comply with the obligations of the UK ETS. For example, it will enable the entity with the existing responsibility for compliance with the EU ETS and EU MRV, and/or the IMO Fuel Oil Consumption Data Collection System (DCS), to assume also the responsibility for compliance with the obligations of the UK ETS.[15]
Next Steps for the UK ETS
The UK Authority will issue a full response to all questions included in the “UK Emissions Trading Scheme Scope Expansion: Maritime” consultation, as well as additional guidance, in due course.
Linking the EU and UK emissions trading systems
The European Commission released a final recommendation on 16 July 2025 for a Council Decision authorising the opening of negotiations between the European Union (EU) and the UK on a common sanitary and phytosanitary area between the EU and the UK in respect of Great Britain and linking the UK and the EU’s greenhouse emissions trading systems.[16]
The Annex to the above-mentioned Council Decision[17] sets out in more detail how the EU ETS and the UK ETS should apply.
The intended agreement linking the UK and the EU’s greenhouse gas emissions trading systems should cover the territories defined by the Treaties for the EU, and Great Britain for the UK, with Northern Ireland included, except regarding wholesale electricity markets, which remain governed by the Windsor Framework. The UK must also match the EU's territorial scope for maritime transport emissions trading.
Some of the goals of an agreement between the EU and the UK to link their respective emission trading systems are as per the Council Decision and its Annex mentioned above are the following:
- The agreement should address all elements related to the connection of emission trading systems, including those under the EU ETS Directive[18], which establishes a greenhouse gas emission allowance trading system within the Union and its related legislation.
- The agreement should clearly define its scope, covering sectors such as electricity generation and both domestic and international maritime transport. It must ensure that the UK aligns dynamically with relevant EU rules to prevent carbon leakage and competitive distortions. A procedure should also be included to expand the list of covered sectors as needed.
- The agreement should additionally guarantee dynamic alignment of the UK with the EU’s financial regulatory and supervisory framework governing the trade of EU ETS allowances and associated derivatives.
- The agreement must ensure the UK’s cap and reduction pathway matches or exceeds that of the EU. The agreement should not limit the ability of the EU or the UK to pursue higher environmental standards in accordance with their international obligations.
- The agreement must contain provisions requiring each party to acknowledge emission allowances issued under the other party's emissions trading system.
- The agreement should enable goods from the EU and the UK to receive mutual exemptions from their respective Carbon Border Adjustment Mechanisms, provided they comply with the respective legislation.
[3] Page 5 of https://assets.publishing.service.gov.uk/media/687de724a5561a5a7e726bd9/uk-ets-maritime-interim-authority-response.pdf
[4] Slipped and fugitive emissions are emissions caused by the amount of fuel that does not reach the combustion chamber of the emission source or that is not consumed by the emission source because they are not combusted, vented or leaked from the system.
[5] Page 8 of https://assets.publishing.service.gov.uk/media/687de724a5561a5a7e726bd9/uk-ets-maritime-interim-authority-response.pdf
[6] Page 7 of https://assets.publishing.service.gov.uk/media/687de724a5561a5a7e726bd9/uk-ets-maritime-interim-authority-response.pdf
[7] Page 6 of https://assets.publishing.service.gov.uk/media/687de724a5561a5a7e726bd9/uk-ets-maritime-interim-authority-response.pdf
[8] Page 6 of https://assets.publishing.service.gov.uk/media/687de724a5561a5a7e726bd9/uk-ets-maritime-interim-authority-response.pdf
[9] Page 7 of https://assets.publishing.service.gov.uk/media/687de724a5561a5a7e726bd9/uk-ets-maritime-interim-authority-response.pdf
[10] Pages 9 and 10 of https://assets.publishing.service.gov.uk/media/687de724a5561a5a7e726bd9/uk-ets-maritime-interim-authority-response.pdf
[11] Page 11 of https://assets.publishing.service.gov.uk/media/687de724a5561a5a7e726bd9/uk-ets-maritime-interim-authority-response.pdf
[12] Page 14 of https://assets.publishing.service.gov.uk/media/687de724a5561a5a7e726bd9/uk-ets-maritime-interim-authority-response.pdf
[13] Pages 14 and 15 of https://assets.publishing.service.gov.uk/media/687de724a5561a5a7e726bd9/uk-ets-maritime-interim-authority-response.pdf
[14] Page 17 of https://assets.publishing.service.gov.uk/media/687de724a5561a5a7e726bd9/uk-ets-maritime-interim-authority-response.pdf
[15] Pages 17 of https://assets.publishing.service.gov.uk/media/687de724a5561a5a7e726bd9/uk-ets-maritime-interim-authority-response.pdf
[16] https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52025PC0408 and https://ec.europa.eu/transparency/documents-register/detail?ref=COM(2025)408&lang=en
[17] https://ec.europa.eu/transparency/documents-register/detail?ref=COM(2025)408&lang=en