UK considers adding shipping to its emissions trading scheme in 2026

The UK Emissions Trading Scheme (UK ETS) Authority has said it is seeking input on proposals to expand the scheme to the maritime sector.

The UK government announced an initial consultation period on the development of its emissions trading scheme in March 2022.

The UK ETS Authority, made up of the UK government, Scottish government, Welsh government and the Department of Agriculture, Environment and Rural Affairs in Northern Ireland, said it is seeking stakeholder views on proposals to implement the UK ETS in the maritime sector. The scheme already operates across other industries sectors in England, Scotland, Wales and Northern Ireland.

The UK said the consultation is open to all, but it is expected to be of particular interest to individual companies and representatives of the shipping industry, environmental NGOs, academics, think tanks and others interested in the expansion of the scheme or adjustments to the scheme’s cap.

Within the proposed policy that is up for review, Chapter 7 sets out proposals to expand the scope of the UK ETS to the domestic maritime sector.

"We envisage that including maritime within the UK ETS can help overcome a key barrier to decarbonising the sector, which is that the prices of maritime fuels currently do not reflect their environmental costs," the UK’s consultation announcement said.

The UK government announcement said including the maritime sector within the scheme could also strengthen the incentive to adopt low carbon fuels, support deploying fuel-efficient technologies and introducing fuel-efficient operating practices. 

"The purpose of this consultation is to provide more detail and consult on the implementation of how maritime will be incorporated in the scheme from 2026 and to propose and consult on potential future expansion of the UK ETS to additional maritime emissions," the UK said.

In particular, the UK said it is seeking views on the scope of the scheme, details around how to adjust the UK ETS cap to include emissions from the maritime sector, participating in the scheme, impacts of the scheme and potential future expansion of the UK ETS to additional maritime emissions, with a future review of the threshold and coverage of international routes.