Shipping to be included in UK ETS from 2026

The scheme was launched in 2021 to replace the UK’s withdrawal from the EU ETS following Brexit. It is run by a the UK ETS Authority, a joint body comprising the UK government, Scottish government, Welsh government and the Department of Agriculture, Environment and Rural Affairs in Northern Ireland.

The scheme runs a process of buying and selling emissions allowances, which companies must obtain for every tonne of emissions produced per year. Businesses that successfully cull their emissions can sell any unused allowances to other companies.

In a statement, officials from the UK ETS said, “The decisions taken here will not only put us on the path to net zero, but will also support crucial industries on their path to long-term sustainability.”

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

Industry has reacted to the move. A spokesman from the trade body UK Chamber of Shipping welcomed the move stating, “This announcement is a significant step forward in the journey to reach net-zero emissions from domestic shipping in the UK, although international agreements remain the best way to deliver lasting change across the sector.”

“It is important that as the details of the scheme become clear it helps, rather than hinders, the drive towards net zero. This means ETS funds raised from domestic shipping must be used to aid the transition to net zero for the sector. This should include supporting the development of zero-emissions vessels, fuels and technology and associated port infrastructure.”