Overview 

What is the domestic UK ETS

The UK Government has formally extended the UK Emissions Trading Scheme (UK ETS) to cover domestic maritime transport on ships of 5000 GT or more, from 1 July 2026. See The Greenhouse Gas Emissions Trading Scheme (Amendment) (Extension to Maritime Activities) Order 2026. 

This means shipping companies will be legally required to monitor, report and surrender UK ETS allowances for greenhouse gas emissions (carbon dioxide (CO₂), Methane (CO4) and Nitrous Oxide (N2O)) from qualifying ships operating on domestic UK routes and in UK ports. 

Scope of the domestic UK ETS 

The domestic UK ETS will apply to any companies operating a ship carrying cargo or passengers which: 

  • Undertakes a voyage between two UK ports. 
  • Undertakes activities in a UK port, irrespective of whether the preceding or next voyage is UK domestic or international. In‑port activities include hotelling, cargo operations, and all movements within a UK port of call. 

The following ship types are exempt from the domestic UK ETS: armed services ships, law enforcement vessels, government surveillance/marine protection vessels, navigation/safepassage support vessels, fishing and fishprocessing vessels, publicly funded research vessels, coastguard and  searchandrescue vessels, medical emergency response vessels, nonmechanically propelled ships, primitive wooden ships, Scottish ferry services and offshore vessels (the exemption for offshore vessels is only until 31 December 2026). 

Each year regulated companies must purchase and surrender UK allowances equivalent to: 

  • 100% of emissions from UK domestic voyages and in‑port activities 
  • 50% of emissions from voyages between Northern Ireland and Great Britain 

Regulated Entities  

The regulated entity is the registered owner by default, but may be delegated to the ISM company, where a written agreement between them assigns ETS responsibilities to the ISM company, and the regulator accepts the evidence. 

UK ETS regulators 

Responsibility for administering the UK ETS depends on where the operator is based: 

  • Environment Agency (EA) – England & all nonUK operators 
  • Natural Resources Wales (NRW) – Wales 
  • Scottish Environment Protection Agency (SEPA) – Scotland 
  • Department of Agriculture, Environment and Rural Affairs (DAERA) Chief Inspector – Northern Ireland 

These regulators will approve monitoring plans, receive emissions reports, enforce compliance, and impose penalties. 

What is required? 

Development and maintenance of an emissions monitoring plan 

Each maritime operator must apply for an Emissions Monitoring Plan (EMP) within 42 days of performing its first maritime activity. This EMP must be compiled at a company level (not per ship) and must detail: 

  • Company details and contacts 
  • Voyage and in‑port monitoring procedures 
  • Fuel measurement method 
  • Emission factors  
  • Data management and gap‑filling procedures 
  • Ship details (IMO number, GT, flag, engines, fuel types) 

The EMP once compiled must be approved by the relevant regulator.

NOTE: Verifiers are not involved in the approval of the EMP. Applications for an approved EMP must be made through the UK Manage your Emissions Trading Scheme (METS) platform.  

The Environment Agency is supporting early onboarding of shipping companies into the UK ETS METS to get early approval of EMP before 1 July. For further information use this link or contact etmaritimehelp@environment-agency.gov.uk. Early onboarding at this stage is free. 

Annual monitoring of voyage and port fuel consumption and emissions  

Ships are required to monitor emissions on voyages and port activities in scope. Operators must record for each voyage: 

  • Port of departure/arrival + timestamps 
  • Amount of each fuel used 
  • Emission factors 
  • Amount of CO₂, CH₄, N₂O emitted 

Alternative simplified monitoring is permitted for ships performing >300 voyages per year, if the ship only undertakes voyages in scope. 

In-port data consists of reporting both the fuel consumed + GHG emissions for hotelling and manoeuvring. 

Approved monitoring methods 

  • Method A: BDN + tank stocktake 
  • Method B: Daily tank readings 
  • Method C: Flow meters 
  • Method D: Direct emissions measurement (exhaust stack) 
    Combinations allowed with regulator approval

Annual reporting and verification of data 

Data reporting 

Operators must annually report their emissions data  including: 

  • Fuel consumed per type 
  • Separate totals for voyages, in-port, and NI–GB voyages 
  • Aggregated emissions (CO₂, CH₄, N₂O) 
  • Emissions reduction claims (eligible fuels) 
  • Total emissions minus surrender deductions (GB-NI route 50% emissions) 

Data verification 

Annual reports must be verified by an accredited verifier (UKASaccredited, ISO 14065/17029). 
Materiality thresholds: 

  • 5% (<500,000 tCO₂e) 
  • 2% (≥500,000 tCO₂e) 

Deadlines 

From 1 July 2026 - Each maritime operator must apply for an Emissions Monitoring Plan (EMP)  

From 1 July 2026 – Each maritime operator must start collecting data as per their EMP for voyages and port activities in scope of the scheme. 

From 1 January 2027 (and each year thereafter) - A verified Annual Emissions Report must be submitted to a UKAS accredited verifier.  

By 31 March 2027 - Verification of the data must have been completed and reported in the UK METS platform. (We recommend submitting the data to LR by [date] to ensure verification takes place on time). 

By 30 April 2028  – UK ETS allowances must be surrendered in the UK ETS registry and should cover all company emissions from 1 July 2026 to 31 December 2027 (i.e. first 18 months of the domestic UK ETS). 

By 30 April 2029 (and each year thereafter) – UK ETS allowances must be surrendered in the UK ETS registry covering the company emissions from 1 January to 31 December of the immediately preceding year.  

How is it enforced? 

Civil penalties may be applied where a company does not comply with the requirements of the domestic UK ETS, including: 

  • Not applying for a monitoring plan 
  • Failure to comply with monitoring plan content 
  • Failure to monitor or report emissions correctly 
  • Insufficient allowance surrender 

The civil penalty cost is: £20,000 plus an additional £500 per day to a maximum fine of £45,000. 

Penalties for insufficient allowance surrender 

In the case of insufficient allowance surrender in any year to the UK ETS Registry, the regulator will step in and calculate emissions and required allowances, using conservative assumptions that are likely to increase total emissions.  

In addition, to surrendering allowances to cover the estimated emissions, the shipping company will also be liable to pay a penalty calculated as: 

£100 × inflation factor × number of missing allowances. 

In certain cases where the regulator determines that the reported verified emission figure was wrong (because it was submitted with uncorrected non-material misstatements identified by the verifier, or because the surrender deduction e.g., NI - GB 50% deduction) is calculated incorrectly), the regulator will step in and calculate your emissions and required allowances.  

In this instance a shipping company may instead be liable to pay a reduced penalty calculated as: 

£20 × inflation factor × number of missing allowances. 

In any instance where the regulator calculates emissions to be surrendered, their calculation becomes the legally binding figure used to check compliance and to work out penalties. 

Publication of NonCompliant Operators 

Regulators will publish names of operators who are subject to emissions penalties.

UK METS and the UK registry 

METS 

The scheme refers to a Maritime Emissions Trading System (METS) for reporting and data management within the UK ETS architecture. 

Registry 

Upon approval of an EMP, the operator’s maritime holding account is created in the UK ETS Registry, where: 

  • Verified emissions are recorded 
  • Allowance surrenders are tracked 
  • Transfers and compliance status are maintained 

Reporting & surrender process 

  • Operators report emissions through METS 
  • Allowances are surrendered via the UK ETS Registry 
  • Registry administrators update accounts within one month of regulator determinations 

Onboarding into METS 

For international companies and companies located in England, the regulator will be the UK Environment Agency. Early onboarding into METS with the Environment Agency for UK ETS is open. It is therefore recommended that operators to take part in this early onboarding process. To do so, use this link or contact etmaritimehelp@environment-agency.gov.uk. Early onboarding at this stage is free, and doing so now will save money and help to effectively launch the scheme from July 2026. 

Our solutions 

Our range of verification services 

Our services are designed to help minimise the risk of non-compliance against the MRV & ETS Regulation, giving you peace of mind. As a globally trusted and experienced verifier, you can be sure that your data is in safe hands. LR is accredited by the Hellenic Accreditation System (E.S.Y.D) and this accreditation remains valid. As an accredited verification body according to the requirements of ISO 14065, you can be sure that your data will be verified by experienced industry experts. 
  
Monitoring Plan Assessment 

As an accredited and experienced verifier we can perform monitoring plan assessments as required by the regulation. We will work with you to assess your monitoring plans to ensure they comply. The outcome of our assessment will be presented in a Monitoring Conformity Assessment Report. 
  
Emissions Report Verification 

We can perform the required annual emissions verification for your vessel and we will work with you to verify your data and information so that a Document of Compliance can be issued. Once the verification is successfully completed the final Verification Report and Document of Compliance will be available to your company. 
  
Pre-Verification Gap Analysis 

We can provide a beneficial gap analysis against either your monitoring plans or your emissions report data, or both. This can be tailored to your specific needs. For example, we can focus on specific areas of concern or take a general overall approach. This will identify any gaps, provide confidence in your approach, and smooth the path to compliance.