UK extends emissions trading to shipping
ETS in a nutshell An emissions trading scheme is a way of putting a price on emissions without prescribing exactly how to reduce them. The regulator sets a cap on the total greenhouse gases that can be emitted by the sectors in the scheme. That cap is divided into allowances, with one allowance broadly representing ...
The United Kingdom has extended its emissions trading scheme (ETS) to include shipping, with the new regulations coming into effect from July 1, 2026. The UK ETS applies to ships of 5,000 gross tonnage and above, regardless of their flag, for emissions from domestic voyages and in-port activities. This move follows the EU's Emissions Trading System, which was the world's first carbon market and remains one of the largest globally.
The UK's ETS uses a cap-and-trade system, where a cap is set on total greenhouse gas emissions and divided into allowances that represent the right to emit one tonne of carbon dioxide equivalent. Operators must monitor their emissions and surrender enough allowances to match them. Compliance is the responsibility of the maritime operator, typically the registered owner, or an ISM company with proper certification.
The UK ETS has its own administrative cycle and compliance infrastructure, separate from the EU ETS, with costs associated with setting up a METS account, applying for an emissions monitoring plan, and submitting verified reports. The UK ETS Authority is also considering extending the scheme to cover 50% of international voyages to and from the UK by 2028 and potentially lowering the 5,000 GT threshold in the future.
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