Expansion of UK Emissions Trading Scheme into the domestic maritime sector: Final Business and Regulatory Impact Assessment 2026

Section 4: Implementation considerations

Enforcement and compliance

SEPA will lead enforcement and compliance activities for the expansion of the UK ETS to domestic maritime in Scotland. Compliance will be monitored through the UK ETS Registry and submissions made via the Manage your Emissions Trading Scheme platform (METS). This allows SEPA to assess emissions data and operators to meet allowance surrender obligations.

Registered vessel owners are primarily responsible for compliance, with the option to delegate to an ISM Company via legal agreement. All in-scope vessels must submit Monitoring, Reporting and Verification (MRV) data in line with UK ETS MRV principles and their Emission Monitoring Plan. This includes emissions from domestic voyages and time spent at anchor or moored. Non-compliance may result in financial penalties, suspension from the scheme, or other enforcement actions as outlined in the UK ETS regulatory framework. A “double-surrender” mechanism for 2026 and 2027 provides operators with additional time to comply, with final surrender deadlines extended to April 2028. SEPA will provide guidance and support to help operators understand and meet their obligations.

UK, EU and International Regulatory Alignment and Obligations

Intra-UK Trade

We anticipate no material impact on intra-UK trade, as these policy changes have been developed collaboratively with the UK Government and other Devolved Administrations through the Authority. Nonetheless, we will monitor implementation closely to identify any unintended regional effects or disproportionate impacts on Scottish businesses and intra-UK trade and take corrective action if required.

International Trade

The expansion of the UK ETS to domestic maritime may have a marginal adverse effect on international trade and investment. However, the overall impact is expected to be low. The expansion will increase the cost of international trade with the UK via shipping, as emissions produced while at berth in UK ports during international journeys fall within the scope of the scheme. UK ETS allowances equivalent to these emissions will need to be surrendered. This has the potential to cause some trade diversion or alternative modes of transport being used. Emissions produced at berth in UK ports represent a small proportion of total emissions associated with international journeys. Data from the DfT Maritime Emissions Model suggests that, of the 165,000 port calls made by vessels over 5,000GT in 2019, the mean CO2e produced while at berth in UK ports was just under 12 tonnes^[37].

Using the DESNZ forecast ETS allowance price value for 2026 (£87/tCO2e^[38]), this would add approximately £1,000 to the transport costs of each international journey to the UK.

Data from Clarksons’ Shipping Intelligence Network covering the dry bulk, tanker, container, and gas carrier sectors, suggest that average shipping operating costs (including crew costs) have ranged from $7,000-7,300 per day since 2023^[39]. Average earnings for those sectors, as represented by the ClarkSea Index, have been approximately $23,600-25,000 per day in the same period. For spot voyages, earnings are net of brokerage commission, fuel, port, EU ETS and Fuel EU Maritime (where appropriate) costs. For time charter contracts, fuel and port costs are not borne by the ship owner.

The additional cost associated with UK ETS compliance therefore is not expected to significantly affect the relative costs or earnings of international shipping operations. Transport costs represent a small proportion of the final costs of goods. As transport is typically a derived demand, created by demand for traded goods, it tends to be price inelastic^[40]. This implies a limited behavioural response to a small increase in price, and therefore any impact on trade volumes would be expected to be minimal. The Frontier Economics research concluded that, overall, a significant change in UK domestic maritime traffic is not likely following expansion of the UK ETS.

Data suggests there has not been a major change in overall EU maritime activity following the phased expansion of the EU ETS to the maritime sector, including 50% of international journeys, from 1^st January 2024. Total EU port calls from 1^st January to 31^st December 2024 were 0.25% higher than over the same period in 2023^[41]. This supports the expectation that significant impacts are unlikely to result from the expansion of the UK ETS to domestic maritime.

Overall, the analysis suggests that the expansion of the UK ETS to domestic maritime is unlikely to have a material impact on international trade. The cost implications for shipping are modest relative to overall operating costs and earnings, and transport costs remain a small component of final goods prices. Evidence from the EU ETS rollout and the Frontier Economics research further supports the conclusion that trade volumes are unlikely to be significantly affected.

EU Alignment

The Scottish Government supports ongoing negotiations to link the UK ETS with the EU ETS, therefore plans to include domestic maritime, and future inclusion of international maritime, does not pose a risk to these negotiations. The policy aligns with EU ETS, supporting carbon pricing equivalence across the Irish Sea and reducing the risk of competitive disadvantage or carbon leakage. World Trade Organization compliance is not expected to be an issue, and the risk of trade distortion across these routes is low due to the international structure of the sector and targeted exemptions.

Legal Aid

No specific impacts on the legal aid fund have been identified arising from this policy. While the proposals do create new legal responsibilities on operators vessels of 5,000 gross tonnage (GT) or above in relation to maritime emissions, this largely impacts organisations and corporate entities rather than individuals and is intended to become part of normal operations in this sector.

Digital Impact

The expansion of the UK ETS to include maritime emissions will rely on digital infrastructure for emissions monitoring, reporting, and compliance. The METS platform will be the primary digital tool used by vessel operators to submit MRV data and manage allowance obligations. Integration with the UK ETS Registry ensures secure, real-time tracking of emissions and allowance transactions. The system is designed to be interoperable with existing maritime data systems and aligns with EU ETS digital standards to reduce administrative burden.

SEPA will assess the digital readiness of affected operators and provide support to ensure smooth onboarding. Risks related to digital exclusion are considered low due to the commercial scale of in-scope vessels (5,000 GT and above), which typically have established digital capabilities. However, ongoing monitoring will ensure that technological changes do not create unintended barriers to compliance.

Business forms

No new standalone business forms will be introduced as part of the maritime expansion of the UK ETS. All compliance and reporting obligations will be managed through existing digital platforms, primarily the METS system and the UK ETS Registry. Vessel operators will be required to complete and submit Emissions Monitoring Plans and annual emissions reports via METS. These digital forms will follow the UK MRV framework and will be pre-structured to ensure consistency and ease of use. SEPA will provide templates, guidance, and technical support to assist operators in completing these forms accurately. All submissions will be stored securely within the digital systems, with access restricted to authorised users.