UK ETS: A crucial policy for the shipping sector

The legislation for expanding the UK ETS to cover domestic shipping and port emissions has now passed all the necessary legislatures. Starting July 2026, vessels of 5,000 gross tonnage and above will be brought into the scheme. This is the first time the UK’s shipping sector will pay for its emissions and the climate impact they have.

This represents a significant step forward in addressing emissions from a sector that has benefited from no tax on its fuel or emissions, despite its substantial contribution to transport emissions and heavy reliance on fossil fuels of the dirtiest kind. The UK ETS can generate revenue for investment in green shipping technologies, such as electrification, e-fuels and onshore power, accelerating the transition to cleaner vessels and fuels.

Most importantly, this essential first step paves the way for further regulatory progress to incentivise the sector's emissions reduction; any delay risks that progress.

Key Stats

• Today, the shipping industry pays no tax on the fuel it uses or its emissions. In comparison, road users paid £25 billion in the 2024/25 financial year in fuel duty

• A fuel duty on shipping would cost the sector ~£1 billion annually. The UK ETS is estimated to raise a fraction of this (£250 million) from domestic shipping and port calls

• The money raised is crucial for providing the Government with a revenue stream to invest in green shipping technology, providing growth and jobs in coastal communities

• The UK ETS will have minimal impact on consumer costs, with it increasing the costs of large goods like TVs and refrigerators by just pence

• The EU already has an ETS covering both domestic and international emissions, raising revenues and allowing investment in green shipping solutions, leaving the UK to cede first-mover advantage on green tech if we don’t act

• The expansion of the UK ETS to the domestic shipping sector has been on the agenda since 2022, providing ample time for industry to prepare.

Download our UK ETS factsheet for more information. 

NB: This contents of this page were updated on 13th March 2026