UK Shipping Warns ETS Extension Could Backfire

The UK shipping industry has stepped up its criticism of government plans to extend the UK Emissions Trading Scheme (UK ETS) to domestic maritime from July 1, 2026, warning that the policy could raise costs, hit island communities and undermine competitiveness without delivering meaningful emissions reductions. According to the industry group UK Chamber of Shipping, the extension of the UK ETS to domestic maritime could 'backfire' and lead to 'perverse outcomes' that undermine the government's own climate goals. The group argues that the policy would put UK shipping at a disadvantage compared to international competitors not subject to the ETS, potentially driving cargo away from British ports. 'The government needs to think very carefully about the unintended consequences of this policy,' said UK Chamber of Shipping CEO Bob Sanguinetti. 'Extending the ETS to domestic maritime risks pricing UK shipping out of the market, harming island communities and doing little to cut emissions.' The UK government has defended the ETS expansion, stating that it is a necessary step to drive decarbonization in the maritime sector. However, the industry warns that the policy must be carefully designed to avoid negative impacts, such as by providing free allowances or other support measures to maintain the competitiveness of UK shipping. This debate over the UK ETS extension comes as the global shipping industry faces increasing pressure to reduce its environmental footprint. The International Maritime Organization has set targets to cut the sector's greenhouse gas emissions by at least 50% by 2050, compared to 2008 levels. Policymakers and industry groups are exploring a range of measures, from alternative fuels to market-based mechanisms, to achieve these goals.