As of 1 July 2026, the UK Emissions Trading Scheme (UK ETS) has expanded to cover domestic maritime emissions, marking a major milestone in the scheme's ongoing development. In parallel, an updated Auction Reserve Price (ARP) has taken effect, strengthening the scheme's price floor. These changes follow the policy decisions and consultations announced by the UK ETS Authority in late 2025.
Domestic maritime emissions now covered
Cargo and passenger ships of 5,000 gross tonnage (GT) and above are now required to surrender UK ETS allowances for emissions on voyages between UK ports and while docked at UK ports. The UK ETS Authority's main response to the domestic maritime consultation sets out the final policy details for the expansion, along with guidance for maritime operators on how to meet their compliance obligations.
The inclusion of domestic maritime emissions represents a significant broadening of the UK ETS's scope, which previously covered the power and industrial sectors as well as domestic and certain international aviation. The cap has been adjusted upward by approximately 9.3 million allowances to account for the addition of maritime emissions, a figure aligned with the Maritime Decarbonisation Strategy's net-zero-consistent trajectory for the sector.
Several design features have been put in place to ease the transition and ensure the scheme operates fairly. Below are some key provisions.
- Double-surrender provision: The deadline for surrendering allowances for both the 2026 scheme year (1 July–31 December 2026) and the 2027 scheme year will be 30 April 2028, giving operators additional time to adapt to the new requirements.
- Offshore ships: The inclusion of offshore ships has been delayed until 1 January 2027, aligning with the EU ETS expansion to that vessel category and avoiding competitive distortion.
- Northern Ireland provision: A 50% deduction from the UK ETS surrender obligation applies to voyages between Northern Ireland and Great Britain, to avoid a disparity in carbon pricing obligations on routes between the island of Ireland and Great Britain.
- Exemptions: Ferry services to Scotland's islands and certain peninsular communities are exempt, as are fish-catching and fish-processing ships. These exemptions, along with the 5,000 GT emissions threshold, will be reviewed in 2028.
In November 2025, the UK ETS Authority launched a consultation on expanding the scheme to cover international maritime emissions, with a proposed start date of 2028. The consultation has now closed, and responses are being analyzed.
Auction Reserve Price raised to reflect inflation
The UK ETS Auction Reserve Price (ARP) - the minimum price at which allowances can be sold at auction - has been updated. On 8 April 2026, the ARP was raised from GBP 22 to GBP 28 (approximately USD 29 to USD 37), reflecting accumulated inflation since the mechanism was introduced in 2021. From 1 January 2027 onward, the ARP will adjust annually in line with inflation, using the GDP Deflator measure published by the Office for National Statistics.
The ARP adjustment was first announced in the UK ETS Authority's December 2025 response to the Future Markets Policy consultation, which also confirmed the retention of the existing Cost Containment Mechanism. The Authority concluded that the combination of a strengthened ARP and an unchanged Cost Containment Mechanism provides sufficient price stability for a standalone UK ETS, while remaining compatible with the ongoing negotiations toward a UK–EU ETS link.
