A new cost of carbon for maritime: UK Emissions Trading Scheme extends to maritime emissions

The UK’s push towards net zero continues at pace, with the maritime sector now firmly in scope.

From 1 July 2026, the UK Emissions Trading Scheme (UK ETS) will extend to cover certain maritime emissions, introducing a new carbon cost alongside enhanced monitoring, reporting and verification obligations. This expansion aligns maritime with other carbon-intensive sectors already subject to emissions pricing, including power, aviation and heavy industry. Those in scope should ensure appropriate compliance frameworks are place at company level to meet monitoring, reporting and verification requirements or risk enforcement, including financial penalties.

Scope and requirements

The UK has had its own domestic ETS since 1 January 2021, following Brexit. The EU ETS still operates, and entities could be caught by both. Like the EU ETS, the UK ETS sets limits on the amount of green house gas (GHG) emissions from major industries. Those caught by the regulations must monitor GHG emissions and surrender carbon allowances for relevant emissions. For relevant entities that successfully reduce emissions there is the option to sell leftover allowances, while those that exceed the cap must buy additional allowances on the open market. The GHG emissions covered are aligned with those under the EU ETS. The aim of the extension to the maritime sector is to incentivise fuel efficiency, fleet upgrades and adoption of low carbon fuels. It is a big shift for the sector putting onerous compliance requirements on those deemed maritime operators in a previously unregulated area.

The UK ETS will apply to relevant maritime operators of ships of 5,000 gross tonnage and above from 1 July 2026. Initially, the regime will capture emissions from domestic voyages between UK ports, including emissions generated at sea and while vessels are at berth or at anchor. Offshore vessels will be brought within scope from 1 January 2027. The UK Government is also considering extending coverage to a proportion of international voyages from 2028, which would further align the UK regime with the EU ETS. Certain vessels and routes will remain outwith scope, including non-commercial government vessels and services operating lifeline ferry routes to Scotland’s island and peninsula communities.

Responsibility for compliance with UK ETS lies with the maritime operator, which by default is either the registered owner of the ship or by delegation, where there is a legally binding agreement with the registered owner, assigning UK ETS compliance obligations. The ‘first year’ of the scheme will run from the 1st of July to the 31st of December 2026 and will operate annually thereafter.

Maritime operators within scope will require to submit an Emissions Monitoring Plan (EMP) to the regulator for approval. This will include details of vessel particulars and emission sources. An EMP can be applied for at any time but not later than 42 days after carrying out a maritime activity. 

A verified annual emission report (AER) must be submitted by the 31st of March (of the year following the reporting period) to the regulators through the Manage Your UK Emissions Trading System (METS) which can be accessed here. Operators will need to engage an independent verifier to verify their AER (the verifier requires to be accredited by UKAS.

As the marine sector embarks on the UK ETS, it is crucial to determine if the scheme applies, and to understand the extent of the legal obligations or risk enforcement for non-compliance.

Regulators and penalties

Responsibility for enforcement will sit with the relevant environmental regulator, depending on jurisdiction:

• England and offshore waters: Environment Agency
• Scotland: Scottish Environment Protection Agency (SEPA)
• Wales: Natural Resources Wales
• Northern Ireland: Northern Ireland Environment Agency

Failure to comply with emissions reporting requirements may, at the regulator’s discretion, result in the imposition of civil penalties. Further detail on how these penalties will be calculated for the maritime sector is awaited. Where an operator fails to meet the applicable surrender deadline or does not surrender sufficient allowances to cover its emissions, it will be subject to a mandatory penalty of £100 per tonne of CO₂ (as adjusted for inflation). In addition to this financial penalty, maritime operators remain under an ongoing obligation to acquire and surrender the allowances necessary to cover any shortfall in reported emissions, reinforcing the importance of timely compliance and accurate emissions reporting.

Given the potential financial and regulatory exposure, it is important that maritime operators understand their obligations under the UK ETS and take steps to ensure ongoing compliance. Key to successful compliance will be:

• Understanding the scope of the UK ETS and whether you may be regarded as a maritime operator
• Registering with METS (or confirming any delegation or responsibility)
• Establishing a robust compliance framework and allocating roles for reporting, verification and allowance management ahead of the first compliance deadlines
• Developing accurate EMPs, gathering relevant reporting data, and producing and submitting accurate AERs

Our Disputes and Regulatory team have significant shipping/maritime sector and ETS compliance experience and can support and consider any preparatory actions to ensure compliance. If you would like to discuss how this change may affect your business, or require support with your compliance arrangements, please do not hesitate to get in touch with our team.

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