UK ETS Maritime - The Regulatory Plan

A New Regulatory Reality

For shipowners, commercial charterers, and ship managers, carbon pricing is no longer just an EU matter, but is now also a domestic UK legal obligation. Regardless of a ship’s flag state, every commercial vessel with a gross tonnage (GT) of 5,000 or more that calls at a port under UK jurisdiction is legally required to monitor and report greenhouse gas (GHG) emissions and surrender emission allowances.

1. Key Principles: Scope, Geography, and Exemptions

The UK ETS for shipping is structured around precise vessel metrics, definitions of greenhouse gases, and geographic voyage parameters. Operators must understand these boundaries to accurately calculate their compliance obligations.

Ships falling within the scope

• Cargo and passenger ships: The scheme strictly applies to cargo and passenger ships of 5,000 GT and above, effective July 1, 2026.
• Offshore vessels: The inclusion of offshore vessels (5,000 GT+) has been intentionally deferred until January 1, 2027. This strategic delay explicitly aligns the UK’s timeline with the expansion of the EU ETS to offshore vessels, to prevent market disruptions or ships rerouting to avoid the scheme.

Emissions coveredby the scope

• Gases covered: Compliance extends beyond carbon dioxide alone and includes carbon dioxide (CO₂), methane (CH₄), and nitrous oxide (N₂O).
• Calculation framework: Emissions are assessed on a “tank-to-wake” basis, taking into account both combustion and fuel loss. To ensure accuracy in accordance with international reporting standards under the Paris Agreement, methane and nitrous oxide are reported on a carbon dioxide equivalent (CO₂e) basis, using the Global Warming Potential (GWP) figures from the IPCC’s Fifth Assessment Report (AR5) (CH4 = 28; N2O = 265).

(source: UK ETS: Scope Expansion – Consultation on Emissions from International Maritime Travel (accessible webpage) – GOV.UK )

Geographic Voyage Matrix

The regulations calculate a company’s total UK Allowances (UKA) based on specific voyage profiles:

Exemptions from the UK ETS

The UK authority has established explicit legal exemptions from the UK ETS in a selective scenario—

1. Non-commercial government activities: Military, customs/border control, police, coast guard, search and rescue, firefighting, humanitarian aid, and government research vessels are fully exempt from reporting or surrender obligations.
2. Commercial fishing: Fishing vessels and fish-processing vessels are excluded to maintain alignment with the EU ETS, where fishing fleets remain outside the scope of CO₂ pricing.
3. Scottish ferry infrastructure: Ferries exceeding 5,000 GT that serve the Scottish islands and remote communities on the peninsula are exempt from the scheme. This protects vital supply lines from the impact on ticket and freight prices, in accordance with the legal provisions of the Islands (Scotland) Act 2018.

These core exemptions, along with the 5,000 GT threshold, are not permanent. The UK authority has commissioned a comprehensive system review in 2028, during which a formal assessment will be conducted to determine whether the general maritime threshold can be lowered to 400 GT.

Definition of the operator / responsible entity

A crucial step for a shipping company is to determine which legal entity bears the obligation toward the UK government.

• The default entity: Legal and financial responsibility for compliance rests solely with the registered owner of the vessel.
• The delegation mechanism: The registered owner may choose to formally delegate all compliance obligations under the UK ETS to an external ship management company—specifically the ISM company or the holder of the Document of Compliance (DOC).
• The mandate document: For the delegation to be recognized, both parties must sign a legally binding, signed written agreement (mandate document). This mandate must be uploaded to the digital compliance system. If the regulator deems the documentation insufficient or missing, responsibility reverts to the registered owner.

(reference link: METS Section 4.2 Delegation of UK ETS Responsibility )

The UK ETS Operational Workflow

To prevent non-compliance, maritime operators must adopt a rigorous data management cycle.

Step 1: Developing the Emissions Monitoring Plan (EMP)

Each maritime operator must prepare a technical Emissions Monitoring Plan (EMP) that defines fuel measurement instruments, source data recording, and vessel-specific parameters.

• At the company level, not the vessel level: Operators do not submit separate plans for each vessel. They maintain a single company-wide EMP that lists and consolidates all of the company’s vessels covered by the scheme.
• The approval process: Unlike traditional MRV and EU ETS systems, independent external verifiers are not required to review or approve the monitoring plan. The EMP is submitted directly via METS to the designated UK regulator, which has sole authority to grant approvals.
• The 42-day rule: For every ship that joins a company’s fleet for the first time or commences an active voyage under British jurisdiction, the operator must formally request an amendment to or the creation of an EMP no later than 42 days after the start of that first maritime activity.

(reference link: METS Part 4 EMP Account Information, METS Part 4.1 Emissions Monitoring )

Changes to the Management Plan: Significant versus Non-Significant Changes

Amendment to the EMP, following approval

Once an EMP has been approved, future changes are classified into different regulatory categories:

• Significant changes (application required14 days in advance): Substantial changes require a formal application to amend the EMP, which must be submitted 14 days before the change takes effect. These include, among other things, adding a vessel to the fleet, introducing new or alternative fuel types (including sustainable biofuels), updating the fuel monitoring method, changing default emission factors, or using eligible fuel mechanisms for an Emission Reduction Claim (ERC).
• Non-significant changes (annual deadline: December 31): Minor administrative adjustments, such as updating internal business procedures or changing the contact information for regulatory affairs, may be bundled and submitted as a single amendment request no later than December 31 of the calendar year in which they occur.

Step 2: Preparing the Annual Emissions Report (AER)

Operators must continuously track data throughout the calendar year to prepare an aggregated annual emissions report (AER). Like the monitoring plan, the AER is prepared strictly at the company level. It provides a detailed overview of fuel consumption figures per vessel, after which the company’s total emissions footprint is calculated mathematically.

Step 3: Independent Third-Party Verification

Before an AER can be submitted to the government, it must be reviewed and approved by an independent, commercial verifier that is explicitly accredited by UKAS (United Kingdom Accreditation Service). Verifiers review voyage logs and bunker delivery notes to confirm that the reported emissions align with the parameters in the monitoring plan approved by the regulator.

Timeline, Phasing, and the Grace Period for “Dual Submission”

The UK ETS uses a special onboarding schedule designed to give shipping companies ample time to adapt to the digital portals before significant financial expenditures occur.

The first shortened scheme year

• Voluntary phase (through June 30, 2026): The METS portal is fully accessible for creating accounts, familiarizing yourself with the software, and uploading EMPs for free. Monitoring plans that are “in principle” approved during this phase will automatically become formally active upon launch.
• Official start (July 1, 2026): Compliance obligations for the shipping industry take legal effect. Operators must maintain records for a shortened regulatory year of six months running through December 31, 2026.
• Standardization (starting in 2027): The scheme returns to a normal 12-month calendar cycle (January 1 through December 31).

Operational Action Plan for Operators

To ensure that everything is fully prepared before government enforcement takes effect, fleet directors and ship managers should immediately work through the following checklist:

• Establish internal responsibility: Formally determine whether the registered owner or the ISM ship manager will act as the designated “maritime operator” for each vessel in the fleet.
• Fully establish the legal mandates: If responsibility is delegated to an ISM manager, formal written mandate documents must be drafted and signed by the boards of directors of the companies involved.
• Register for access to METS: Complete the online registration forms to create the company profile and gain immediate access to the portal. (Reference links: METS Part 1 Create an Account, METS Part 2 Log In 1 )
• Onboard data providers: Formally select the company’s UKAS-accredited third-party verifier within the METS platform to enable automated data workflows.
• Create a MOHA account: Complete the registry administrator’s onboarding steps to create a Maritime Operator Holding Account in the UK Emissions Registry in preparation for future purchases of emission allowances.
• Develop the EMP at the company level: Collect technical specifications of the fleet and fuel recording methods to develop the aggregated monitoring plan at the operator level for approval. (reference link: METS Part 4 EMP Account Data, METS Part 4.1 Emissions Monitoring )
• Update commercial charter agreements: Review all active time charter contracts to include transparent clauses regarding the allocation of carbon costs and data sharing.