Last year, the Department of Energy Security and Net Zero launched a consultation proposing an expansion of the UK Emissions Trading Scheme (ETS) to include the maritime sector. In addition to the UK’s updated ambitious target to reduce carbon emissions by 81% by 2035 (announced as the curtains closed on COP29: see our review here), the government is maintaining its commitment to having mechanisms in place that can be used to link the UK and EU carbon pricing systems. 

The UK proposal to include maritime emissions in the carbon cap-and-trade system is also meant to reflect the government’s concern that the price of maritime fuels does not reflect their environmental costs. Under this “comply or pay” approach to maritime emissions, allowances will need to be secured for each tonne of CO2 equivalent emissions from domestic maritime activity, including emissions caused by vessels both “while at anchor and while moored” and by vessels “both at sea and at offshore structures”. The UK policy aims to align with the maritime changes to the EU ETS and to address any potential disparity in treatment of ships travelling between the Republic of Ireland and the UK. The proposal is similar to the expanded approach to maritime emissions implemented under the EU ETS, which includes coverage of 50% of emissions from voyages both departing from or arriving in an EU port, to or from a port outside of an EU member state.

The consultation also proposes incorporating other greenhouse gases, such as methane and nitrous oxide, in order to avoid reliance on fuels with lower CO2 emissions but higher global warming potential (GWP). The emissions calculation, including emissions from combustion, leakage and any fugitive or vented emissions, would be on a CO2 equivalent basis (eg, GWP of 1 per tonne of CO2; GWP of 28 per tonne for methane; and GWP of 265 per tonne for nitrous oxide).

Like the EU ETS, the UK changes are aimed at incentivising the adoption of low-carbon fuels, fuel-efficient technologies, and operational practices for ships of 5,000 gross tonnage (GT) or higher, without increasing the administrative burden of monitoring and reporting.

Here is access to the consultation and supporting documents. The consultation will remain open until midnight on 23 January 2025.

This post was co-authored by Benedikt Corkill.