The United Kingdom Emissions Trading Scheme (UK ETS) came into effect in 2021 to limit greenhouse gas (GHG) emissions from key sectors in support of the UK’s 2050 net-zero target. The scheme caps total emissions across designated sectors, requiring one allowance to be surrendered per tonne of carbon dioxide equivalent (CO2e) emitted, with the cap reduced annually to drive decarbonization.

Maritime shipping was not part of the original scheme. In 2023, the UK ETS Authority announced it would expand the scheme to include domestic shipping beginning in 2026, covering emissions from vessels of 5,000 gross tonnage (GT) or more when at berth, at anchor, or traveling between UK ports. The UK government is also considering extending coverage to international voyages originating or ending in the United Kingdom—an option the ICCT supports and encourages, and which this analysis is designed to inform.

The 2026 scope covers just 15% of UK-related shipping emissions. In 2025, the European Commission and UK government announced negotiations to link the EU ETS and UK ETS, signaling interest in aligning allowances and carbon prices—a step that could significantly expand coverage. But as this analysis shows, there is considerably more that can and should be done.

2026 UK ETS scope covers only 15% of emissions
In 2023, ships sailing on UK-related voyages emitted 16.4 million tonnes (Mt) of CO2e. Vessels of 5,000 GT or more emitted nearly 80% of total CO2e, mostly during voyages between UK and international ports. Vessels under 5,000 GT emitted the remaining 20%.

The 2026 UK ETS scope — in-port and domestic voyages from ships ≥ 5,000 GT — covers just 2.5 Mt, or 15% of total emissions. Voyages between the United Kingdom and international ports account for 12.1 Mt—the largest share by far, but fall outside of current UK ETS coverage. In-Port and Domestic voyages account for the remaining 4.3 Mt and are partially covered.

From £173 million to £710 million: The case for expansion
The 2026 scope covers a small share of all CO2e emissions associated with UK ship activity. Expanding to cover a portion of international voyages and then including smaller vessels would substantially increase both coverage and revenue. Covering 50% of international voyages of ships 5,000 GT or more is the larger step and could triple current emission coverage. Expanding to also include vessels less than 5,000 GT would increase coverage to four times higher than the 2026 scope.

Following this roadmap, the UK ETS Authority could quadruple coverage from 2.5 to 10.3 Mt of CO2e and revenue from £138–£173 million to £570–£710 million annually. An estimated 3.3 Mt of CO2e would remain unregulated—primarily the other 50% of international voyage emissions not covered by the UK ETS—until other jurisdictions establish their own programs. The UK ETS Authority should also be aware that without broader scope, operators may divert to non-covered ports or build smaller vessels to avoid the size threshold — undermining the scheme’s effectiveness.

Key takeaways
• 15% of UK-related shipping emissions are currently covered by the UK ETS. The 2026 expansion is an important first step, but the majority of emissions, which are concentrated on international routes, remain outside the scope of any ETS.
• Expansion could quadruple both coverage and revenue. Including international voyages and ships below 5,000 GT could bring total coverage to 10.3 Mt CO2e and generate £570–£710 million annually to support maritime decarbonization.
• International voyages are the biggest opportunity. Including 50% of UK–International emissions from ships of 5,000 GT or more alone could more than triple current emissions coverage and generate £290–£360 million in annual revenue.
• Broader scope reduces gaming and leakage risks. Without coverage of international voyages and smaller vessels, operators may have financial incentives to restructure routes or vessel sizes to avoid the scheme.

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Source: International Council on Clean Transportation