New proposals put forward by the UK ETS Authority outline its intention to expand the UK’s current emissions trading system (ETS) to include domestic shipping from 2026.
The UK Government has today announced its proposals for an expanded ETS that will include the maritime sector. When implemented following a consultation process, the enlarged scheme will also include additional emissions regulations for non-pipeline means of transporting captured carbon to geological sequestration sites, such as by ship, road or rail.
Under the current UK ETS, which replaced the European Union’s scheme in the UK in 2021, certain sectors (power, industry and aviation) must pay a market-determined carbon price per tonne of CO2 that is emitted above a certain limit. At present this scheme accounts for approximately one third of emissions produced by British industry.
As a result of expanding the scheme to include the maritime sector, shipowners (or third-parties who manage the ship) will be required to obtain emissions allowances for every tonne of CO2 they emit in the course of their operations within the UK. The government intends for the scheme to incentivise businesses to reduce their emissions and to ensure that the that the price of fuels used by the sector better reflect their environmental impacts.
In today’s announcement, the UK Government says that it recognises the importance of carbon capture and storage (CCS) technology to achieving net zero targets, in particular for hard-to-abate sectors, such as steel cement and chemicals. Those sites without a direct pipeline connection to carbon sequestration sites will require the use of ship, road or rail transportation, all of which will now fall under the UK ETS.
In a 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 Minister for Aviation, Maritime and Security, Mike Kane MP commented on the proposals:
“Today’s publications are 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.”
The announcement follows the UK Government’s confirmation of funding for the UK’s first carbon capture sites, which the government states will create 4,000 jobs and attract £8 billion in private investment in the North West and North East of England.
Source: UK ETS Authority