Technical Notices

WHAT IS CHANGING?

The UK Emissions Trading Scheme (UK-ETS) will be expanded to include the shipping sector, starting on 1 July 2026. As a result, regardless of the Flag state, ships of 5,000 gross tonnage and above calling at ports under UK jurisdiction will be required to surrender allowances corresponding to their annual greenhouse gas (GHG) emissions.

This is similar in concept to the EU ETS for shipping, but it is a separate UK system.

WHAT EMISSIONS ARE COVERED?

Operators will need to account for:

• Carbon dioxide (CO₂)
• Methane (CH₄)
• Nitrous oxide (N₂O)

WHAT DOES THIS MEAN IN PRACTICE?

If a ship is in scope, will need to:

1. Monitor and report emissions using approved MRV processes
2. Buy UK-ETS allowances for your reported emissions
3. Surrender allowances annually to the UK ETS authority

In simple terms:
➡️ More emissions = higher carbon cost

HOW MUCH WILL THIS COST?

• Costs depend on:
  • Fuel consumption
  • Carbon intensity
  • UK-ETS allowance prices (market-based)
• There are no free allowances planned for shipping

Operators should start budgeting and forecasting carbon costs now.

 WHAT SHOULD OPERATORS DO NOW?

We recommend the following early actions:

✔ Identify which vessels fall within scope
✔ Review your emissions monitoring and reporting systems
✔ Start estimating future UK-ETS carbon costs
✔ Align UK-ETS planning with EU ETS (if applicable)
✔ Consider fuel efficiency and emissions-reduction measures

Early preparation will reduce compliance risk and cost exposure.

HOW DOES THIS INTERACT WITH EU ETS?

• UK-ETS and EU ETS are separate systems
• Some voyages may fall under both regimes
• Operators trading in both regions will need careful coordination to avoid compliance gaps

IMPLICATIONS FOR SHIP OPERATORS

Carbon Costs

In-scope operators will incur carbon costs through the purchase of UK-ETS allowances covering their ship emissions. This introduces a new operating cost tied directly to greenhouse gas emissions.

Incentives for Decarbonisation

The expansion is intended to strengthen financial incentives for:

• Use of low-carbon and zero-carbon fuels
• Investment in energy efficiency technologies
• Adoption of operational best practices that reduce emissions