UK ETS Maritime Launch: Shipping Compliance Obligations from July 2026

Key Takeaways

• The UK ETS maritime sector inclusion went live on 1 July 2026, bringing shipping emissions into the UK carbon pricing framework for the first time
• Vessels of 5,000 gross tonnage (GT) and above are in scope, covering voyages within the UK and 50% of emissions from international voyages to or from UK ports
• Shipping companies must submit monitoring plans, track fuel consumption and emissions per voyage, and surrender allowances based on annual verified emissions
• International routes face dual compliance risks where both UK ETS and EU ETS maritime provisions apply to the same voyage
• The UK approach builds on existing UK MRV regulations, but adds financial obligations through allowance surrender requirements

Scope: Which Voyages and Vessels

The UK ETS maritime expansion covers CO₂ emissions from ships of 5,000 GT and above. The scope of coverage depends on the voyage type:

• UK-to-UK voyages: 100% of emissions are covered. This includes coastal shipping, inter-island routes, and domestic freight movements
• UK-to-international voyages: 50% of emissions are covered (from the UK port to the first non-UK port of call)
• International-to-UK voyages: 50% of emissions are covered (from the last non-UK port of call to the UK port)
• Voyages between UK ports with an intermediate international stop: Treated as two separate international voyages, each at 50%

The 5,000 GT threshold captures the vast majority of commercial shipping tonnage while excluding smaller coastal vessels, fishing boats, and pleasure craft. Approximately 6,000–8,000 individual vessels call at UK ports annually above this threshold.

Responsible Entity

The compliance obligation falls on the “shipping company” — defined as the shipowner or any other organisation that has assumed responsibility for the operation of the ship from the shipowner (typically the ISM Company under the ISM Code). This aligns with the EU ETS maritime approach and the IMO framework.

MRV Requirements

The monitoring, reporting, and verification framework for maritime ETS builds on the UK Ship Emissions MRV Regulations, which have required emissions monitoring since 2024. The key elements are:

Monitoring Plans

Each shipping company must submit a monitoring plan to the UK ETS Authority covering:

• The methodology for determining fuel consumption per voyage (BDN-based, flow meters, bunker delivery notes, or tank soundings)
• Procedures for data collection, recording, and quality assurance
• Emission factors for each fuel type used
• Handling of data gaps (e.g., when monitoring equipment fails mid-voyage)

Voyage-Level Monitoring

For each voyage involving a UK port, companies must record:

• Ports of departure and arrival, with dates and times
• Fuel consumption by fuel type (HFO, VLSFO, MGO, LNG, methanol, etc.)
• Distance travelled
• Cargo carried (for intensity metric calculation)
• Time at berth and fuel consumption during port stays

Annual Reporting and Verification

By 31 March each year, shipping companies must submit a verified annual emissions report covering the preceding calendar year. The report must be independently verified by an accredited maritime emissions verifier. Based on the verified report, the company must surrender sufficient UK ETS allowances by 30 September.

Cost Impact on Shipping

At UK ETS allowance prices of £40–£55 per tonne of CO₂, the cost impact varies by vessel type and fuel efficiency:

• Container ships: £15,000–£45,000 per UK port call (round trip), depending on vessel size and distance
• Bulk carriers: £8,000–£25,000 per UK port call
• Tankers: £12,000–£35,000 per UK port call
• Ro-Ro/ferry services: £2,000–£8,000 per crossing (depending on route length)

These costs will ultimately flow through to freight rates and, eventually, to consumer prices. The competitive impact depends on whether rival ports in neighbouring countries face similar carbon costs.

Dual Compliance: UK ETS and EU ETS

The most complex operational challenge is dual compliance for vessels trading between the UK and EU. Since the EU ETS maritime provisions apply to voyages involving EU/EEA ports (with the same 50% rule for international voyages), a single voyage from the UK to an EU port could face:

• 50% coverage under UK ETS (UK departure to international voyage)
• 50% coverage under EU ETS (international voyage to EU arrival)
• Total: 100% of voyage emissions are covered, split between two carbon pricing systems

There is currently no mutual recognition between UK ETS and EU ETS allowances. A shipping company cannot use UK allowances to meet EU obligations or vice versa. This means maintaining separate monitoring, reporting, and compliance systems for each regime.

Alternative Fuels and the Path Forward

The UK ETS maritime inclusion creates a direct financial incentive for fuel switching:

• LNG: Approximately 25% lower CO₂ emissions per unit of energy than HFO, but methane slip remains a concern (not currently covered by maritime ETS)
• Methanol: Green methanol (from renewable hydrogen and captured CO₂) has zero fossil CO₂ emissions but limited availability and higher cost
• Ammonia: Zero-carbon fuel under development, with first commercial vessels expected from 2027–2028
• Wind-assisted propulsion: Rotor sails and wing sails can reduce fuel consumption by 5–30%, directly reducing ETS costs

What Shipping Companies Should Do Now

• Register with the UK ETS Authority: Ensure your company is registered and has a UK ETS operator holding account
• Submit monitoring plans: If not already submitted, prepare and submit your maritime emissions monitoring plan
• Upgrade data systems: Ensure your fleet management software can capture voyage-level emissions data in the format required for UK ETS reporting
• Appoint a verifier: Engage an accredited maritime emissions verifier for your first annual report
• Assess dual compliance: If your vessels trade between UK and EU ports, map the dual ETS exposure and establish separate compliance workflows
• Review charter party terms: Clarify who bears the ETS cost in time charter and voyage charter agreements — this is a commercial negotiation point, not a regulatory default
• Evaluate abatement options: Assess whether speed reduction, route optimisation, or alternative fuels can reduce your ETS costs below the cost of allowances

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