UK emissions allowances could embrace maritime operations by 2026, if proposals from the regulatory body are adopted. A consultation process has begun.

Since the United Kingdom left the European Union (EU), the government in London has gone its own way with emissions legislation. That post-Brexit regime has been in operation since 1 January 2021, and the UK ETS Authority has regulated it. Now, that body is proposing to extend the scheme to include maritime transport.

The authority was established to address the UK government’s stringent net-zero carbon ambitions, setting a goal of 2050 for the UK as a whole. The UK ETS may be making sweeping decrees, but parts of the UK have set even more challenging targets – including Scotland by 2045; and Wales, with the most radical of all, aiming for net zero by 2035. However, shipping has remained largely out of the firing line for carbon reduction legislation, until now.

Frequent auctions for allowances

A complex carbon trading scheme exists within the high-emissions sectors of the UK economy. These include energy generation and aviation. Now, the UK Emissions Trading Scheme Authority has proposed to expand the plan to cover emissions from the maritime sector. The proposals come even though, according to the parliamentary Climate Change Committee, shipping activity accounts for just three per cent of UK emissions.

The sector is already involved in significant emissions reduction initiatives, such as the recently demonstrated WingSail technology, currently on test in UK waters. Other transport sectors, especially rail freight, loudly heralrd their green credentials already.

Nevertheless, if the proposals are implemented, the maritime sector will have to account for its emissions and participate in the frequent auctions for carbon allowances. Typically the auctions take place every two weeks, and result in an active trading market.

Encourage investment into clean technologies

Responsibility for transport and environmental matters is largely devolved to the regional governments in Scotland, Wales and Northern Ireland (the UK government takes direct responsibility for affairs in England). For that reason, each government is a member of the UK ETS Authority, and administers policy as they see fit for their individual nations. The Authority therefore has multiple spokespeople, representing its constituent members.

In their joint statement, UK Emissions Trading Scheme Authority ministers Sarah Jones MP, Huw Irranca-Davies MS, Gillian Martin MSP, Andrew Muir MLA, James Murray MP and Mike Kane MP said the proposals are all about engaging and providing clarity for business, and incentivising them to lower emissions as we transition to a greener future. “Expanding the UK ETS to include maritime and recognising non-pipeline transport for carbon capture and storage will encourage investment into clean technologies, a vital growth industry in the UK,” said the statement.

Consultation and attract investment

A two-part consultation has been launched, to inform how the Authority will expand to include maritime emissions, outlining the definition of a domestic voyage under the scheme, and 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.

Secondly, the consultation process will look at how the UK ETS will recognise the “non-pipeline transport” of CO2 using shipping, road or rail to permanent geological storage. “This will mean emitters storing CO2 in this way would not have to pay a carbon price for CO2 they successfully capture,” said the Authority.

This comes after the UK Government confirmed funding to launch the UK’s first carbon capture sites. The government claims this will create 4,000 jobs and attract £8 billion in private investment around the proposed sites in the North West and North East of England.