UK ETS for the Maritime Sector in Shipping Law News 11/02/2026 In November 2025, the UK Emissions Trading Scheme (UK ETS) Authority issued the main response to its earlier consultation on extending the UK ETS to the domestic maritime sector (UK-UK port voyages), with the implementation date scheduled for 1 July 2026. We examine the implications of the Authority’s main policy decisions for the maritime sector and review the recent proposal to expand the scheme to international voyages from 2028, subject to negotiations with the EU. UK ETS The UK ETS was introduced on 1 January 2021 under the Greenhouse Gas Emissions Trading Scheme Order 2020. It operates on a “cap and trade” principle: each year, a limit is set on the total volume of certain greenhouse gases that sectors covered by the scheme may emit. Participants receive a number of free allowances and/or purchase emissions allowances at auction or on the secondary market. The cap is designed to decrease over time, creating an incentive for participants to reduce emissions in order to remain within their allocated limits. The UK ETS broadly mirrors the structure of the EU ETS and, following Brexit, replaced the UK’s participation in the EU framework. It now operates as a separate, domestic scheme with its own cap and governance structure. Nonetheless, many of the EU ETS’s core features have been retained, including the cap-and-trade system, the free allocation and auction mechanisms, and, specific to the maritime sector expansion, many of its technical definitions which are explored below. The approach around the UK ETS falls in line with the joint announcement made on 19 May 2025 by the European Commission and the UK Government, committing to linking their respective emissions trading systems to enhance bilateral cooperation. Maritime UK ETS Main Response In step with the Authority’s ongoing mission to reduce emissions in all economic sectors, the consultation “UK ETS scope expansion: maritime sector” was launched in November 2024 to assess expanding the scheme to the previously excluded maritime sector. This resulted in an interim response and a main response setting out the final proposals for the expansion. The key features are summarised below. Commencement Date The first “year” of the scheme will run from 1 July 2026 to 31 December 2026 (six months). Subsequent years will run from 1 January to 31 December each year (Calendar Year). Reporting Period and the “Double-Surrender” Exception The reporting period covers one Calendar Year. A verified emissions report must be submitted by 31 March (of the year following the reporting period) to the regulators through the Manage Your UK Emissions Trading Scheme (METS) system. Emissions allowances must be surrendered by 30 April of the year following the reporting period. As noted above, the first reporting period will cover only six months, from 1 July to 31 December 2026, with the deadline for the verified report set for 31 March 2027. To facilitate the smooth implementation and to allow maritime operators sufficient time to adapt to the reporting duties, a one-off “double-surrender” concession will apply to the 2026 and 2027 scheme years. Under this concession, maritime operators must still submit annual reports on time, but the emissions allowance for 2026 will not need to be surrendered until 30 April 2028, together with the 2027 allowance. From 2027 onwards, the reporting period will align with the Calendar Year. The second reporting p