Maritime protection and indemnity (P&I) club Gard on Monday (17 August) published an article, written by lawyer Pierre Merer, highlighted UK Emissions Trading Scheme (UK ETS), its current scope, compliance requirements and a likely expansion of the scheme:
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 right to emit one tonne of carbon dioxide equivalent. Operators then monitor their emissions and surrender enough allowances to match them. As the cap reduces over time, allowances become scarcer and the commercial incentive to reduce emissions becomes stronger. In simple terms, an ETS works like a gradually tightening budget: the industry may decide where best to spend it, but the overall budget is intended to shrink in line with climate targets.
For shipping, the best-known reference point is the EU Emissions Trading System. Launched in 2005, the EU ETS was the world’s first carbon market and remains one of the largest globally. Maritime transport has been included in the EU ETS since 2024, with obligations applying to emissions from voyages involving European Economic Area ports and emissions at berth within the EEA. The EU scheme is not an isolated example. Carbon pricing is spreading through a patchwork of regional and national initiatives. Around 40 emissions trading systems in force have been identified globally, including ETS-type schemes or mechanisms in jurisdictions as diverse as Australia, Mexico or Kazakhstan.
Domestic scope for now
The United Kingdom developed its own ETS after leaving the EU. Originally limited to power generation, aviation and energy-intensive industries the UK ETS was extended to maritime transport through the Greenhouse Gas Emissions Trading Scheme (Amendment) (Extension to Maritime Activities) Order 2026.
At this stage, the UK ETS applies to ships of 5,000 gross tonnage and above, regardless of flag, in respect of carbon dioxide, methane and nitrous oxide emissions from domestic UK voyages and in-port activities from 1 July 2026. A domestic voyage means a voyage beginning and ending at a UK port of call, including a voyage beginning and ending at the same UK port of call (with the exception that the UK has introduced a 50% surrender deduction for voyages between Great Britain and Northern Ireland). In-port activity includes emissions at berth and movements within a UK port of call. Assuming that a voyage itself is international and therefore not yet caught as a sea passage under the current UK ETS, emissions while the ship is in a UK port may still be within scope.
Offshore ships will be included from 1 January 2027, and certain exemptions will continue to apply, including for specified government activities, fish-catching and fish-processing ships, and Scottish ferry services as defined in the legislation.
Note: The full article by Gard can be read here.
Photo credit: shraga kopstein on Unsplash
Published: 21 August, 2026
