Government consults on expanding UK ETS scheme to maritime sector
The government is seeking views on plans to expand the UK Emissions Trading Scheme (UK ETS) to include emissions from the maritime sector, as well as recognising non-pipeline transport methods for moving captured carbon into geological storage.
It has also confirmed that it will make changes to free allocation rules to ensure participants who permanently cease their operations cannot benefit from surplus free allowances in their final year. This will ensure their free allocation in their final year is proportionate to their activity levels.
The changes include an exemption for sites who are ceasing activity to decarbonise. This aims to support the UK ETS’s objective of incentivising a move to more carbon efficient production across the UK’s industrial sectors.
Launched in 2021, the UK ETS helps the UK to decarbonise across aviation, power and industry by setting a limit on emissions, with allowances that can be traded, creating a carbon price that incentivises businesses to reduce their emissions.
Domestic shipping in scope of UK ETS
By expanding the scheme to include the maritime sector, businesses with ships operating domestic voyages would need to obtain allowances for every tonne of carbon they emit. The consultation seeks views on the definition of a domestic voyage under the scheme, details of the threshold for ships, proposed exemptions, including to Scottish island communities, and the greenhouse gases to be covered. It also considers how the expansion could interact with regional and international emissions pricing. Proposed changes would come into effect from 2026.
Carbon capture and storage
A separate consultation seeks views on how to recognise companies’ carbon capture and storage initiatives. Sites without direct pipeline connections will require alternative transport options, such as road, rail, or ship, to access carbon capture and storage technology.
The proposed changes mean that emitters storing CO2 in this way would not have to pay a carbon price for CO2 they successfully capture.
Information and advice
The Maritime consultation and the Non-pipeline transportation (NPT) consultation can be found on the gov.uk website.
Concept supports companies with UK ETS compliance. If you would like advice on the latest changes to the scheme, get in touch.
