UK Includes Domestic Shipping in ETS

The UK Emissions Trading Scheme Authority (UK ETS) – has announced that the scheme will be expanded to include domestic maritime transport from 2026.

The scheme will be applicable to vessels of 5,000 gross tons or higher.

The UK ETS is run by a joint body comprising the UK Government, Scottish Government, Welsh Government and the Department of Agriculture, Environment and Rural Affairs in Northern Ireland.

The UK ETS was launched in 2021 to replace the UK’s participation in the EU ETS. The scheme incentivizes decarbonization through a process of buying and selling emissions allowances, which companies must obtain for every ton of emissions they produce each year. Companies that are successful in reducing their emissions can sell unused allowances to other firms.

The ETS supports businesses in sectors that face significant overseas competition with free emissions allowances to ensure their efforts to decarbonize are not undermined by higher-carbon competitors – a risk known as carbon leakage.