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UK Government confirms major UK ETS expansions: Maritime, waste, and carbon removals to be phased in

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On 21 July 2025, the UK government published responses by the UK ETS Authority to three major consultations, announcing the planned integration of maritime emissions, waste incineration, and carbon removals into the UK Emissions Trading System (UK ETS). These developments mark significant steps in the ongoing expansion and refinement of the UK’s cap-and-trade system, aligning it more closely with the country’s 2050 net zero target and international climate policy trends. The responses detail the proposed steps for a phased inclusion of these new sectors and activities, providing timelines, technical requirements, and policy rationales for each.

Maritime emissions to enter UK ETS from 2026

The UK government published an interim response proposing that maritime emissions should be brought under the UK ETS from 1 July 2026. The proposed inclusion should apply to ships of 5,000 gross tonnage or more undertaking domestic voyages between UK ports, including round trips and all in-port emissions. Covered greenhouse gases include carbon dioxide (CO₂), methane (CH₄), and nitrous oxide (N₂O), with emissions from government non-commercial vessels (such as military and emergency services) to be fully exempt. Maritime operators will be required to develop Emissions Monitoring Plans (EMPs), appoint accredited verifiers, and submit annual emissions reports. The monitoring, reporting, and verification (MRV) framework will be operator-based, not ship-based. Standardized factors will be used to calculate emissions and the MRV framework will incentivize the use of sustainable fuels through zero-rating on a ‘tank-to-wake’ basis. The UK ETS Authority acknowledged concerns about potential overlap with the forthcoming International Maritime Organization (IMO) global carbon levy and indicated that the scheme’s scope and thresholds will be reviewed as international frameworks evolve.

Waste incineration and energy-from-waste to be included from 2028

The UK government also published an interim response proposing to include energy-from-waste (EfW) and waste incineration facilities in the UK ETS from 2028, following a two-year voluntary monitoring, reporting, and verification (MRV) period starting in 2026. The expanded scope will apply to facilities processing three tonnes or more per hour of non-hazardous waste or ten tonnes or more per day of hazardous waste, with clinical waste incinerators included and high-temperature hazardous waste incinerators exempted. During the MRV period, operators will be required to monitor, report, and verify emissions using approved methods and submit annual reports, but will not be subject to compliance obligations. The Authority will use this period to refine emissions factors and policy design. Guidance for the MRV-only period is expected to be published by the end of 2025, with further details on full inclusion and potential cap adjustments to follow.

Carbon removals set for integration from 2029

The UK government published a final response proposing to integrate greenhouse gas removals (GGRs) into the UK ETS from 2029, with legislation to be finalized by 2028.  In the initial phase, the UK ETS cap will be maintained by allowing GGR credits to replace emissions allowances on a one-for-one basis, ensuring that the overall cap level is not affected. Only domestic projects will be eligible initially, with credits issued ex-post after verified sequestration and subject to a minimum 200-year permanence requirement.  The Authority is considering differentiating between GGR and emissions allowances and is planning to introduce auctions to support market access for new technologies. The government will continue to assess the possible inclusion of high-quality nature-based removals, such as woodland, and will provide further updates as evidence and methodologies develop. The integration of carbon removals is seen as a critical step in aligning the UK ETS with long-term climate goals and providing certainty for investors and project developers. It will also feature in the upcoming negotiations as the UK and EU have committed to establish a link between their respective ETSs. 

Next steps and implementation roadmap 

The UK ETS Authority will publish a second response for the waste sector after the MRV-only period to confirm final policy design before full inclusion. For maritime, a full Authority Response will be issued to address remaining questions around exemptions, Northern Ireland routes, and cap adjustments. For carbon removals, now that the government response has been published, the next step is for the UK government to develop and lay the necessary legislation before Parliament, with further technical detail and guidance to follow ahead of the planned 2029 integration.

ETS Jurisdiction