UK MRV Monitoring Plan Assessment
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UK ETS Maritime Scheme: Key Provisions and Path Ahead
As part of its broader strategy to reach net-zero emissions, the UK Government is expanding the scope of its carbon pricing system to include the maritime sector. The UK ETS Authority has confirmed that the UK Emissions Trading Scheme (UK ETS) will apply to maritime emissions starting from 1 July 2026, initially covering domestic voyages and in-port emissions for vessels over 5,000 gross tonnage (GT). This inclusion follows detailed consultations and sets out a clear implementation framework that defines domestic journeys, outlines exemptions, sets the emissions cap, and establishes robust Monitoring, Reporting, and Verification (MRV) requirements. This marks a major step forward in aligning the maritime industry with national climate commitments.
Following the confirmed inclusion of the maritime sector in the UK ETS from 1 July 2026, the scheme will cover emissions from domestic voyages and in-port activities for vessels of 5,000 GT and above. A domestic voyage is defined as one that either travels between two UK ports or begins and ends at the same UK port, with all emissions – while sailing, at anchor, or moored – falling within scope. Although stakeholders expressed support for including Crown Dependencies (CDs) and Overseas Territories (OTs), these will not be covered at launch. However, the Authority has committed to ongoing monitoring and may revisit this decision in the future. Concerns were also raised about potential loopholes, including the risk of less than 5,000 GT threshold or reclassifying offshore operations to avoid compliance. The Authority has acknowledged these risks and confirmed that it will monitor industry behaviour and retain the right to revise the scheme as needed to close any regulatory gaps.
The UK ETS will include methane and nitrous oxide emissions from maritime activities, covering both combustion and slippage. These gases will be calculated on a CO₂eq basis using Global Warming Potentials (GWPs) from the IPCC Fifth Assessment Report (AR5) to ensure consistency with international reporting standards. The Authority has chosen AR5 figures to maintain alignment with broader UK reporting practices and obligations under the Paris Agreement.
Government non-commercial maritime activities will be fully exempt from the UK ETS, with no reporting or surrender requirements. This includes operations such as military, customs, police, coastguard, emergency response, government research, and lighthouse authority duties.
The first UK ETS maritime scheme year will run from 1 July to 31 December 2026, with all subsequent years aligning to the calendar year (1 January to 31 December). The Authority has considered the proposal to move the surrender deadline from 30 April to 30 September and acknowledges stakeholder support for aligning with the EU ETS deadline. Operators will be required to submit an emissions monitoring plan, comply with the UK ETS penalties regime, and fulfil all regulatory obligations. Allowances can be purchased throughout the year via auctions or the secondary market, providing flexibility for compliance. The Authority is also exploring the publication of a list of operators and their assigned regulators to support transparency and assist verifiers.
The UK ETS maritime MRV requirements will be distinct from the existing UK MRV regime but follow similar principles with tailored adjustments for emissions trading. Operators must submit one Emissions Monitoring Plan (EMP) and one Annual Emissions Report (AER) per company, not per vessel. The EMP must list all ships involved in maritime activities, and the AER must include both ship-level and aggregated emissions data. These plans will be reviewed and approved by the UK ETS regulator. The MRV scope includes in-port emissions, whether for domestic or international voyages, and emissions of methane (CH₄) and nitrous oxide (N₂O), in addition to CO₂. While the Authority is still reviewing whether to retain the Document of Compliance based on stakeholder feedback, it has confirmed that emissions from sustainable fuels, both biological and non-biological, will be zero-rated from the start of the scheme, with guidance on making Emissions Reduction Claims. A Tank-to-Wake (TtW) approach will be used initially, with standard emissions factors for conventional fuels.
Under the UK ETS, the Maritime Operator for a ship is defined as its Registered Owner unless the ISM Company has entered into a legally binding agreement to assume responsibility for compliance. In such cases, the ISM Company must provide satisfactory evidence of the agreement to the regulator. If no such agreement is provided or the responsible party is unclear, the Registered Owner will be deemed the Maritime Operator. This approach mirrors the EU ETS model and is supported by stakeholders for its clarity and reduced administrative burden, particularly for companies operating under both regimes. It allows flexibility for stakeholders to assign compliance responsibility to the most appropriate party, typically the entity responsible for operational decisions influencing emissions.
In conclusion, the UK ETS maritime scheme sets out a phased and practical approach to regulating shipping emissions, largely aligned with the EU ETS. It requires one Monitoring Plan and Annual Emissions Report per operator, covering in-port, methane, and nitrous oxide emissions, with EMPs approved by the UK ETS regulator. Sustainable fuels will be zero-rated based on a Tank-to-Wake method, with future lifecycle assessments under review. The Registered Owner is the default Maritime Operator unless an ISM Company formally takes responsibility. Cost recovery will be managed contractually. The scheme balances environmental goals with operational flexibility and stakeholder input.
The information provided herein is based on the current understanding of the UK ETS maritime framework and is subject to change following the final response issued by the UK Regulator.
