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UK ETS for Shipping

The UK Emissions Trading Scheme (UK ETS) is the United Kingdom’s domestic cap-and-trade system for greenhouse gas emissions, established in January 2021 as the UK’s post-Brexit replacement for participation in the EU ETS. The scheme is administered by the UK ETS Authority (a joint authority of the UK Department for Energy Security and Net Zero, the Scottish Government, the Welsh Government and the Department for the Economy in Northern Ireland) under the Greenhouse Gas Emissions Trading Scheme Order 2020 (SI 2020/1265 as amended). Following a 2023 to 2024 consultation, the UK ETS Authority confirmed in October 2024 that the UK ETS will be extended to cover maritime emissions from 1 January 2027, with scope, monitoring, reporting and verification methodology largely paralleling the EU ETS Maritime regime under the same Regulation (EU) 2015/757-equivalent infrastructure. Ships of 5,000 GT and above on UK domestic voyages and intra-UK voyages between Great Britain and Northern Ireland enter scope from 1 January 2027; coverage of UK-international voyages (50% allocation, paralleling the EU ETS Maritime allocation) is scheduled for phased entry from 1 January 2028. The UK regime selectively diverges from the EU ETS Maritime in three areas: (a) the UK Allowance (UKA) market is governed by the UK ETS Authority cost containment mechanism rather than the EU Market Stability Reserve; (b) Northern Ireland Protocol carve-outs for Belfast-Liverpool and Belfast-Heysham routes that would otherwise be classified as EU intra-EU voyages under the EU regime; (c) tighter coverage of offshore support vessels in UK waters from 1 January 2026 (one year earlier than the EU equivalent). ShipCalculators.com hosts the principal computational tools: the EU MRV to EU ETS allowance crosswalk calculator provides the methodological reference (UK ETS uses the same arithmetic with substituted allowance prices and phase-in factors); the MARPOL EU ETS cost calculator implements the EU ETS surrender cost; the EU MRV emissions calculator applies the underlying per-voyage methodology that UK ETS will use. A full listing is available in the calculator catalogue.

Contents

Background and history

The UK ETS as the post-Brexit replacement

The United Kingdom participated in the EU Emissions Trading System (EU ETS) from its launch on 1 January 2005 until the UK’s withdrawal from the European Union on 31 January 2020. During the 11-month withdrawal transition period, the UK continued to participate in the EU ETS but began parallel work on a domestic replacement.

The UK ETS was established by the Greenhouse Gas Emissions Trading Scheme Order 2020 (SI 2020/1265), made on 12 November 2020 and operative from 1 January 2021. The scheme:

  • Covers the same broad sectors as the EU ETS at launch: power generation, industrial process emissions, intra-UK aviation.
  • Uses the same per-tonne-CO₂e allowance unit (renamed UK Allowance, UKA).
  • Operates an annual cap that declines on a defined trajectory toward UK net-zero by 2050.
  • Provides for free allocation to power generation, industrial sectors and aviation under the same broad rules as the EU ETS.

Maritime was not included in the UK ETS at launch in January 2021, on the basis that:

  • The EU ETS Maritime had not yet been adopted (it was adopted in 2023 and operative from 2024).
  • The IMO was developing the Net-Zero Framework as the global mechanism.
  • The UK preferred to wait for the EU and IMO to set methodology before designing the UK approach.

2023 to 2024 consultation on maritime extension

The UK ETS Authority opened a public consultation in October 2023 on extending the UK ETS to maritime emissions, in parallel with the equivalent EU consultation that led to the EU ETS Maritime entry into force on 1 January 2024. The consultation:

  • Posed three principal options: full alignment with EU ETS Maritime; UK-specific design; deferred entry until IMO Net-Zero Framework comes online (2027).
  • Received approximately 280 written responses from shipping companies, industry associations, environmental NGOs, the offshore industry and Member State authorities.
  • Industry responses generally supported full EU alignment to minimise compliance complexity for ships trading in both regimes.

The UK ETS Authority published the consultation outcome in October 2024, confirming:

  • Maritime extension from 1 January 2027 (3 years after the EU ETS Maritime entry into force).
  • Largely-aligned methodology with the EU regime, using the EU MRV per-voyage data infrastructure for monitoring, reporting and verification.
  • Three deliberate divergences from the EU regime (described in detail below).
  • Phased scope expansion: UK-domestic and intra-UK voyages from 2027; international voyages with the 50% allocation from 2028.

The Energy Act 2023 enabling provisions

The Energy Act 2023, royal-assented on 26 October 2023, contains the primary legislative authority for the maritime extension under sections 78 to 82. The Act:

  • Empowers the Secretary of State for Energy Security and Net Zero to extend the UK ETS to “specified greenhouse gas emissions from international and domestic shipping activities”.
  • Requires consultation with the UK ETS Authority’s other constituent administrations (Scotland, Wales, Northern Ireland) before any extension order.
  • Provides for a power to make secondary legislation aligning the UK ETS Maritime methodology with the EU regime where practicable.
  • Provides for civil and criminal penalties for non-compliance, including detention powers analogous to the Maritime and Coastguard Agency’s existing port-state-control authority.

The implementing secondary legislation (the Greenhouse Gas Emissions Trading Scheme (Maritime) Order 2026, expected late 2026) will operationalise the maritime extension.

Scope and applicability

Ships covered

The UK ETS Maritime applies to ships of 5,000 GT and above (lowered to 400 GT for some categories from 2028, paralleling the EU regime), regardless of flag, when calling at a port in the United Kingdom or operating in UK waters.

The UK has confirmed alignment with EU MRV’s vessel-category exclusions: warships, fishing vessels, vessels not propelled by mechanical means, wooden ships of primitive build, and pleasure yachts under 5,000 GT.

Voyage scope

The UK ETS Maritime applies a four-category voyage scope analogous to the EU ETS Maritime:

Voyage typeDepartureArrivalUK ETS scope (2027)UK ETS scope (2028+)
UK domesticUK portUK port (same nation)100%100%
Intra-UKGreat Britain portNorthern Ireland port (or vice versa)100%100%
Outbound internationalUK portnon-UK port0% (2027 only)50% (2028+)
Inbound internationalnon-UK portUK port0% (2027 only)50% (2028+)
At berth in UK(port operations)n/a100%100%

The 2027 launch with no international scope reflects the UK ETS Authority’s preference for a phased entry: 2027 establishes the operational infrastructure (verifier accreditation, allowance market, surrender process) on a low-volume basis before adding the international voyage scope from 2028.

Northern Ireland Protocol carve-out

Under the Windsor Framework (the 2023 update to the Northern Ireland Protocol), Northern Ireland remains in the EU single market for goods. This creates a complex situation for shipping between Great Britain (England, Scotland, Wales) and Northern Ireland: under the EU MRV regime, voyages between Belfast and Liverpool (or Belfast and Heysham) might be classified as intra-EU because Northern Ireland sits in the EU customs zone for goods movements.

The UK ETS Maritime explicitly carves out these intra-UK voyages from EU ETS scope:

  • A voyage from Belfast to Liverpool is treated as intra-UK under UK ETS (100% scope) and is not subject to EU ETS under the EU-UK linkage agreement.
  • A voyage from Dublin to Liverpool is treated as outbound international under UK ETS (50% scope from 2028) and as inbound international under EU ETS (50% scope); both regimes apply with the same 50% factor.
  • A voyage from Belfast to Dublin is treated as outbound international under UK ETS (50% scope from 2028) and as intra-EU under EU ETS (100% scope), a divergent treatment that the EU-UK linkage agreement attempts to reconcile.

The UK ETS Authority and the European Commission are negotiating a formal mutual-recognition agreement to avoid double-counting on Belfast-Dublin and Belfast-Holyhead routes. The expected outcome (per the 2025 EU-UK Maritime Climate Memorandum of Understanding) is:

  • The carrier surrenders 100% of allowances under one regime (carrier’s choice, typically determined by flag).
  • The other regime accepts the surrender as discharging the voyage’s obligation.
  • Net result: no double-counting on Northern Ireland-related voyages.

Offshore support vessels in UK waters

The UK has unique offshore oil and gas infrastructure in the North Sea, principally serving installations in the UK Continental Shelf. The UK ETS Maritime extends scope to offshore support vessels (anchor handling tug supply, platform supply, well stimulation, accommodation vessels) operating in UK waters from 1 January 2026, one year earlier than the equivalent EU expansion (which begins 1 January 2027).

The earlier UK timing reflects:

  • The maturity of the UK offshore industry and the existing emissions monitoring infrastructure (operators already report under the OPRED Emissions and Atmospheric Discharges database).
  • The UK government’s commitment to Net Zero on the UK Continental Shelf by 2050.
  • The smaller fleet (~150 offshore support vessels in UK waters) making 2026 implementation feasible.

Allowance design and market

UK Allowance (UKA)

The UK Allowance (UKA) is the UK’s allowance unit, equivalent to one tonne of CO₂-equivalent. UKAs are issued, traded and surrendered through the UK ETS Authority’s Registry, operated by the UK Environment Agency. UKAs are:

  • Auctioned four times per year through the ICE Endex UKA auction.
  • Traded on the secondary market through the ICE Endex futures and option contracts.
  • Surrendered by 30 April of the year following the reporting year (slightly earlier than the EU ETS surrender deadline of 30 September).

The UKA price has historically tracked the EU Allowance (EUA) price closely (typical 2024 to 2025 range GBP 30 to 60 per tonne), with periodic divergences driven by UK-specific market events.

Cost Containment Mechanism

The UK ETS uses a Cost Containment Mechanism (CCM) as its market stabilisation tool, distinct from the EU’s Market Stability Reserve (MSR). The CCM operates through:

  • A price floor at GBP 22 per tonne (auctioned UKAs cannot clear below this).
  • A price ceiling trigger at three times the average price over the preceding 90 days (above which the UK ETS Authority may release additional allowances).
  • Annual review of the CCM parameters by the UK ETS Authority.

The CCM is generally regarded as less aggressive than the EU MSR (which can absorb up to 24% of total cap allowances annually). The result is that UK ETS prices have shown more volatility than EU ETS prices but typically clear at a similar level.

Maritime allowance allocation

The UK ETS Maritime does not provide free allocation to maritime operators (in contrast to certain industrial sectors that receive free allocation). All UK ETS Maritime allowances must be auctioned or purchased on the secondary market. This aligns with the EU ETS Maritime approach.

The UK ETS Authority has reserved 15% of annual allowance issuance for the UK Maritime Net-Zero Fund, to be used for shore-power infrastructure investment, alternative-fuel bunkering build-out and seafarer transition support, paralleling the EU’s Innovation Fund and the IMO Net-Zero Framework’s Net-Zero Fund.

Reporting, verification and surrender

Monitoring methodology

UK ETS Maritime uses the EU MRV per-voyage methodology (Reg (EU) 2015/757 as amended by Reg (EU) 2023/957). The UK ETS Authority has explicitly aligned with the EU regime to:

  • Use the same Monitoring Plan structure (Annex II of EU MRV).
  • Use the same per-voyage data points (CO₂, distance, time, cargo, EEOI).
  • Use the same accredited verifier framework.
  • Use the same EMSA-published Monitoring Plan template.

A ship subject to both EU MRV and UK ETS Maritime maintains a single Monitoring Plan approved by the verifier; the verifier reports the UK-scope subset of the data to the UK ETS Authority Registry alongside the EU-scope data submitted to EMSA.

UK Maritime Emissions Database

The UK ETS Authority operates the UK Maritime Emissions Database (UKMED, launched late 2026) as the per-ship public disclosure platform analogous to the EMSA THETIS-MRV. The database:

  • Publishes verified annual emissions reports per ship.
  • Includes the UK-specific scope (UK domestic + intra-UK + UK-international from 2028).
  • Publishes verifier opinion (positive / with reservations / negative).
  • Is publicly accessible without registration.

The MOU with EMSA enables data exchange so that ships subject to both regimes only enter their data once per year through the verifier.

Surrender deadline

UK ETS surrender deadlines:

  • 30 April year+1: surrender UKAs for the previous calendar year’s emissions.
  • 31 March year+1: emissions report submission to UK ETS Registry.
  • 15 February year+1: verifier opinion finalised.

The 30 April deadline is 5 months earlier than the EU ETS Maritime deadline (30 September), creating a brief mismatch for operators of ships subject to both regimes. The UK ETS Authority has indicated openness to aligning the deadline with the EU 30 September from 2030.

Document of Compliance (UK)

The UK equivalent of the EU MRV Document of Compliance is the UK ETS Maritime Statement of Compliance (UK-SOC), issued by the verifier following positive (or positive-with-reservations) verification. The UK-SOC is required on board for any UK port call from 30 April year+1 until the next renewal, paralleling the EU MRV DoC arrangement.

Penalties and enforcement

Sanctions framework

The UK ETS Authority has a tiered sanctions framework for non-compliance:

  • Late submission: civil penalty of GBP 5,000 to 50,000.
  • Failure to surrender: civil penalty of GBP 200 per missing UKA, plus the obligation to surrender the missing UKAs.
  • Material misreporting: civil penalty up to GBP 250,000, plus criminal referral to the Crown Prosecution Service for severe cases.
  • Repeat non-compliance: Maritime and Coastguard Agency (MCA) detention powers; ban from UK port calls.

The GBP 200 per missing UKA is significantly higher than the EU’s EUR 100 per missing EUA, reflecting the UK preference for a stronger deterrent.

MCA enforcement

The Maritime and Coastguard Agency, the UK’s principal maritime authority, will inspect for UK ETS compliance during port-state-control inspections. The inspection will verify:

  • Valid UK-SOC on board.
  • Verified annual emissions report on file.
  • Reconciliation between BDN, IMO DCS data and UK ETS report.

Enforcement statistics (projection)

The UK ETS Authority projects approximately 800 to 1,200 ships subject to UK ETS Maritime in 2027 (UK domestic + intra-UK only), rising to 3,500 to 5,000 ships from 2028 (with international scope added). Annual UK ETS Maritime surrender obligation is projected at:

YearEstimated obligation (Mt CO₂e)Estimated annual revenue at GBP 50/UKA
20271.5 to 2.5GBP 75-125 million
20285 to 8GBP 250-400 million
20308 to 12GBP 400-600 million

Comparison with EU ETS Maritime

DimensionUK ETS MaritimeEU ETS Maritime
Entry into force1 January 20271 January 2024 (in force, phase-in 2024-2026)
First reporting year20272024
Phase-in trajectory100% from year 140% / 70% / 100% (2024 / 2025 / 2026)
Voyage scope (year 1)UK domestic + intra-UK onlyIntra-EU 100% + EU-international 50%
Voyage scope (year 2+)+ UK-international 50% from 2028Same as year 1
CH₄ / N₂O additionFrom 2028 (1 year after launch)From 2026
Allowance unitUK Allowance (UKA)EU Allowance (EUA)
Market stabilisationCost Containment Mechanism (CCM)Market Stability Reserve (MSR)
Surrender deadline30 April year+130 September year+1
Penalty per missing allowanceGBP 200EUR 100
Underlying MRV methodologyEU MRV (aligned via MOU)EU MRV
Public databaseUK Maritime Emissions DatabaseEMSA THETIS-MRV
Northern Ireland treatmentIntra-UK (100% UK ETS)Intra-EU possible (under EU-UK linkage MOU)

The two regimes are designed to be complementary, with the UK-EU linkage MOU intended to prevent double-counting on cross-channel and Belfast-related voyages.

Comparison with other regional regimes

RegimeGeographic scopeApplies toYear in force
UK ETS MaritimeUK ports + UK watersShips ≥ 5,000 GT2027
EU ETS MaritimeEEA ports + EEA watersShips ≥ 5,000 GT2024
FuelEU MaritimeEEA ports + EEA watersShips ≥ 5,000 GT2025
CARB At-Berth6 California portsOGV ≥ 5,000 GT, at berth only2014 (in stages)
Norway NOx FundNorwegian watersAll vessels2008
China DCSChinese portsAll ocean-going vessels2017
IMO Net-Zero FrameworkGlobalShips ≥ 5,000 GT on international voyages2027

A ship trading on routes that touch multiple jurisdictions faces a multi-regime compliance burden. A typical container vessel on the UK-Northern Europe loop in 2028 could simultaneously face: UK ETS Maritime + EU ETS Maritime + FuelEU Maritime + IMO Net-Zero Framework + Norway NOx Fund (for Norwegian port calls), with combined annual compliance cost in the range of GBP 1.5 to 4 million per ship.

Future outlook

The principal regulatory developments expected through 2030 are:

  • 2026: offshore support vessel scope entry (one year before EU equivalent).
  • 2027: full UK ETS Maritime entry into force; UK-domestic + intra-UK only scope.
  • 2028: international voyage scope added (50% allocation); CH₄ and N₂O added.
  • 2030: review against the UK Net Zero Strategy 2050 trajectory; possible alignment of surrender deadline with EU.
  • 2030+: potential UK-EU ETS linkage (full mutual recognition of allowances), proposed but politically sensitive given Brexit dynamics.

By 2030 the UK ETS Maritime is expected to mature into a stable component of UK maritime regulation alongside the EU ETS Maritime, FuelEU Maritime, IMO Net-Zero Framework and the underlying MARPOL Annex VI framework. The UK government has publicly committed to “broad alignment” with the EU regime to minimise compliance complexity for the ~7,500 ships on UK-EU maritime routes.

See also

References

  1. UK Government. Greenhouse Gas Emissions Trading Scheme Order 2020 (SI 2020/1265), made 12 November 2020.
  2. UK Parliament. Energy Act 2023, royal-assented 26 October 2023, sections 78 to 82.
  3. UK ETS Authority. Consultation Outcome: Extending the UK ETS to Cover Emissions from Domestic and International Shipping. UK ETS Authority, London, October 2024.
  4. UK ETS Authority. UK ETS Maritime Implementation Plan 2027 to 2030. UK ETS Authority, London, December 2024.
  5. UK ETS Authority. UK Allowance Annual Auction Reports. UK ETS Authority, London, annual editions.
  6. Department for Energy Security and Net Zero. UK ETS Cost Containment Mechanism Annual Review. DESNZ, London, 2024.
  7. Department for Transport. Maritime Decarbonisation Strategy. DfT, London, 2023.
  8. UK Government. Windsor Framework: Joint Statement of the EU and the UK. London/Brussels, 27 February 2023.
  9. EU and UK Government. Memorandum of Understanding on Maritime Climate Cooperation. London/Brussels, 2025 (in negotiation).
  10. Maritime and Coastguard Agency. MCA Implementation of UK ETS Maritime Enforcement. MCA, Southampton, 2025 (planned).
  11. UK Climate Change Committee. Sixth Carbon Budget: Aviation and Maritime. CCC, London, 2020.
  12. UK Climate Change Committee. 2025 Progress Report to Parliament. CCC, London, 2025.

Further reading

  • UK Government. Net Zero Strategy: Build Back Greener. UK Cabinet Office, London, October 2021.
  • DNV. Maritime Forecast to 2050. DNV, Oslo, 2025 edition.
  • House of Commons Transport Committee. Decarbonising Maritime: Inquiry Report. HC 145, London, 2023.