Draft Greenhouse Gas Emissions Trading Scheme (Amendment) (Extension to Maritime Activities) Order 2026
(1 day, 19 hours ago)
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The Committee divided: - Ayes: 12 / Noes: 4 - Question accordingly agreed to.
The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Chris McDonald)
I beg to move,
That the Committee has considered the draft Greenhouse Gas Emissions Trading Scheme (Amendment) (Extension to Maritime Activities) Order 2026.
I am grateful to you, Sir Jeremy, and to the Committee for its consideration of the draft order, which was laid before Parliament on 13 January 2026. The UK ETS was established under the Climate Change Act 2008 by the Greenhouse Gas Emissions Trading Scheme Order 2020 as a UK-wide greenhouse gas emissions trading scheme contributing to the UK’s emissions reduction targets and net zero goal. The scheme was established to increase the climate ambition of the UK’s carbon pricing policy, while protecting the competitiveness of UK businesses.
The scheme is run by the UK ETS Authority, a joint body involving the UK Government and the devolved Governments. Under the scheme, a cap is set on the amount of certain greenhouse gases that may be emitted by the sectors it covers, and the cap is reduced over time so that total emissions must fall. Under the UK ETS, operators participating in the scheme are required to monitor, report on and surrender allowances in respect of their greenhouse gas emissions.
The scope of the UK ETS is being expanded to maritime activities as part of the Government’s strategy of decarbonising all sectors of the UK economy to meet our net zero target by 2050. The draft order is an effective lever to reduce emissions and delivers on a key commitment in the UK’s maritime decarbonisation strategy. We expect it to help to overcome key barriers to maritime decarbonisation by incentivising low-carbon fuels, fuel-efficient technologies and fuel-efficient operating practices.
The statutory instrument amends the legislation that gives effect to the UK ETS. It expands the scheme to cover carbon dioxide, methane and nitrous oxide from domestic voyages and in-port activities in the UK. Effective from 1 July 2026, maritime operators are required to participate in the scheme and allowed to bid at auction for UK allowances. The instrument will apply to ships of 5,000 gross tonnage and above, but a small number of exemptions apply, such as for Government ships, including military and law enforcement ships, and ferries operating services to Scotland’s islands and peninsulas.
The provisions set out in the instrument require the maritime operator of a ship—either its registered owner or the company responsible for its compliance with the international safety management code—first to obtain an emissions monitoring plan in which it will document the processes used to ascertain their ships’ emissions. For each scheme year, maritime operators will be expected to monitor, independently verify and report their maritime emissions to the relevant regulator, and surrender an equivalent level of allowances.
The instrument also introduces the concept of surrender deductions, reducing by 50% the number of allowances for surrender in respect of voyages between Great Britain and Northern Ireland, to deliver equivalence in carbon pricing on routes across the Irish sea. Operators will be assigned to a UK ETS regulator based on the location of their registered office or place of residence. This is the same approach as for aircraft operators. One emissions monitoring plan will cover all the ships for which the maritime operator is responsible, and emissions must be monitored using one of the four methods prescribed in the instrument.
Maritime operators will be required to report emissions from all ships for which they are responsible through an annual emissions report, which must be submitted to the regulator on or before 31 March in the year following the scheme year to which it relates. Maritime operators have an obligation to verify their annual emissions report. The verification must be carried out by an impartial and accredited verifier, independent from the maritime operator. If satisfied, the verifier will draft a verification report, which will be submitted to the regulator alongside the annual emissions report.
Maritime operators will also be required to surrender a level of allowances equivalent to their emissions by 30 April in the year following the scheme year. However, the instrument introduces the concept of double surrender, whereby the date by which allowances must be surrendered in relation to the first scheme year, 2026, is 30 April 2028 and not 30 April 2027, as would otherwise be the case.
These changes follow comprehensive engagement and consultation with stakeholders. The UK and devolved Governments carried out a consultation in 2022 on the development of the UK ETS, including whether to include maritime activities in the scheme. A second consultation ran between 28 November 2024 and 23 January 2025, seeking views on the details of how maritime would be incorporated in the UK ETS from 2026. The relevant responses to those consultations were summarised in the interim and main authority responses published in July and November 2025, respectively.
The expansion of the UK ETS to cover maritime activities will support its role as a fundamental pillar of the UK’s climate policy. It plays a key part in the Government’s strategy of decarbonising all sectors of the UK economy to meet our net zero target by 2050. It also delivers on a key commitment within our maritime decarbonisation strategy, and I commend the draft order to the Committee.
Andrew Bowie (West Aberdeenshire and Kincardine) (Con)
It is an absolute pleasure to serve under your chairmanship this morning, Sir Jeremy. The draft order affects the implementation of the UK emissions trading scheme, which replaced our participation in the EU ETS from 2021. As the Minister set out, the scheme was established under the Climate Change Act 2008 by the Greenhouse Gas Emissions Trading Scheme Order 2020.
In the draft order, the Department seeks to expand the scope of the UK ETS in line with the Secretary of State’s net zero agenda. We saw just last week an instrument brought with the effect of reducing the free allowances under the scheme, increasing the carbon tax on industry from 2027 onward. The increasing cost on industry per tonne of greenhouse gas emitted is a burden that weighs on the UK’s industrial competitiveness. Food manufacturers, oil refineries, power stations and more are all subject to this framework. As the levy on emissions increases, naturally prices paid by end consumers are also driven up. That is why we have said that when we are re-elected to Government in three years’ time, we will repeal the ETS framework and begin to undo the great damage to Britain’s industrial base being done by the actions of this Government. We only hope that it will not be too late.
The draft order requires maritime operators to participate in the scheme, enacting a requirement on ship operators to produce an emissions monitoring plan. The nominal purpose of this extension is to encourage decarbonisation in the maritime sector, which is a laudable aim—not that it will have any impact on global maritime emissions, given the fact that the USA, China, India and others have no plans to curb their emissions in the maritime sector. As a result, this mechanism will actually function purely as a carbon tax. To pretend otherwise would be this Government at their absolute abject worst. This is not a mechanism to decarbonise; it is a pernicious tax being levied on one of our most successful industries.
Access to alternative fuels is not sufficient to decarbonise at the level required by the scheme. The infrastructure that the UK maritime industry requires to transition to low carbon simply does not exist at the scale that will be required. Worse, the industry is expected to comply in three months’ time, while still awaiting guidance to be published on how they can implement it. Even for this Government, that is either incompetence of the highest order, a deliberate attempt to squeeze a hard-pressed industry even more to make up for the shortfall in Treasury receipts as businesses and individuals up sticks and get out of the United Kingdom.
The Department’s own impact assessment quotes an £85 million cost to British business as a result of this mechanism and we have not even turned to the burden that this mechanism is going to place on operators. This emissions monitoring plan represents a ridiculously onerous administrative burden on maritime businesses. Article 18 of the order details the facts to be logged on each voyage for ships completing fewer than 300 voyages per year, including:
“(a) port of departure;
(b) date and hour of departure;
(c) port of arrival;
(d) date and hour of arrival;
(e) total amount of each type of fuel consumed;
(f) emission factor for each type of fuel consumed;
(g) amount of each greenhouse gas emitted.”
The burden then falls on the maritime operator to produce a risk assessment to identify potential sources of error in data flows. I recite that content only to illustrate the extent of the burden that this regulation imposes on the sector.
This instrument extends the ETS burden to the UK shipping industry to the tune of £175 million in administrative costs alone. That is utterly absurd. This is without doubt one of the worst pieces of legislation I have seen come before us in three Parliaments and nine years on Government Front and Back Benches and now in opposition. For every £1 spent on decarbonisation as a result of the framework, £8 will be spent on bureaucracy. That is insane. That does not support businesses or growth. The only thing growing here is the burden of red tape—the Government’s favourite colour—on UK industry.
I take this opportunity to put on record my support for the specific exemptions made for fishing vessels and ferry services providing essential connectivity for Scottish islands. It is vital that they are exempt from the burden of the restrictions, albeit it is to be for only one year. One questions why the Isles of Wight and Man and the Scilly Isles are not afforded the same level of concern. 1 would argue, and I know my hon. Friend the Member for Isle of Wight East will argue, that the connections to those islands are just as vital as connections to the Scottish isles.
Believe it or not, Sir Jeremy, it gets worse. Although the extension is a major blow to the maritime industry and UK shipping competitiveness overall, it is another death knell for the oil and gas industry, which is yet again being totally shafted by this Government. This instrument includes in its definition of offshore vessels those that support the oil and gas industry, which are not protected by the 5,000 GT threshold. The Government estimate that more than 145 oil and gas support vessels will be impacted by this instrument, but we know they do not care, because most of the vessels sail out of the port of Aberdeen, which is already suffering job losses as a direct result of the Government’s policies on oil and gas. Aberdeen city and shire have no Labour MPs or MSPs, so we know the party does not care about the fate of that city, its industry, economy or people. Those of us who live there feel that every day.
What impact does the Minister think the extension will have on the north-east of Scotland and the UK oil and gas sector—a sector already suffering blow after blow from the Labour Government? What impact will that have on energy security? May I also ask the Minister what assessment he has made of the risk of carbon leakage in the maritime sector and whether he believes the safeguards under this instrument are sufficient? We do not simply oppose this instrument; we will vote against it. We oppose the UK ETS and carbon taxes that are crippling UK manufacturing and businesses and deindustrialising Britain at a criminal rate. On behalf of all those who this Government are harming by their reckless actions, we ultimately oppose this Government.
The Chair
There are Members standing who are not members of this Committee. It is perfectly in order for them to speak, and in due course I will call them to do so, but just to give them advance warning, as and when the matter is pressed to a vote, they will not be able to participate. I call Joe Robertson.
Joe Robertson (Isle of Wight East) (Con)
It is a pleasure to serve under your chairship, Sir Jeremy. I associate myself with all the wide-ranging arguments made by my hon. Friend the shadow Minister about this piece of legislation, but I wish to focus on something more specific: the impact on ferries and the cost of travelling to UK islands.
The Government know that this legislation will increase the cost of travel to islands. They know it will have an adverse impact on UK islands, which is why they exempted travel to Scottish islands from this punitive levy. What they have not done is extend that exemption to all UK islands, which means my constituents on the Isle of Wight now face additional cost in getting to and from home. There is no way to travel to the Isle of Wight other than by ferry. There is no other way of getting goods to the Isle of Wight, and when I say goods, I do not just mean things like building materials. I mean bread, butter, eggs—our supermarkets are stocked with produce that comes across only by ferry because there is noother way to get anything to or from the Isle of Wight.
Just last year, in response to a question from me, the Prime Minister said from the Dispatch Box that he knows that Isle of Wight ferries have not been good enough—that is in the context of price and frequency. Indeed, the maritime Minister has set up a series of meetings, led by an independent chair, to explore ways to improve travel to the Isle of Wight, including its cost. Yet at the same time the Government are increasing the cost of travel to the island.
We start from a position of disadvantage compared with Scottish islands. Our ferries are already more expensive than those that serve the Scottish islands. Our ferries do not have public subsidy, unlike those to the Scottish islands, and they are not ultimately publicly owned. In fact, they are owned by private equity interests, which fill the coffers of pension funds overseas. They are entirely unregulated, and Isle of Wight residents are entirely at their mercy, but while we seek support from the Government to ensure that the companies give us a fairer deal, the Government make our travel more expensive. I am not asking for anything special, or a special Isle of Wight exemption; I am asking for the exemption that the Government already give dozens of islands to include the island of which I represent a part.
No impact assessment had been done on the effects on the economy of my constituency, or of other islands that are not covered by the exemption, but the Government do accept that this measure will increase costs. They have access to a report by the Independent Commission on Neighbourhoods, which is general and not in direct relation to this order, and which ranked my constituency the second in England for having the most people in left-behind neighbourhoods—that is, second bottom on the pile.
That ICON report is not some unusual or niche interest piece that has been put together; the Government themselves said they would base the delivery of their five missions on it. How has the ETS legislation fallen out of their five missions? Surely, the entire delivery of the Government’s programme is based on their five missions, yet they have set aside and ignored the report that they said they would rely on. Again, I am not making a parochial argument, representing some small, faraway place in the United Kingdom. I am basing my argument on the Independent Commission on Neighbour-hoods report that the Government say they are using and relying on to deliver a fair programme of government.
The UK Chamber of Shipping has said that, given what has happened in Europe, the cost of tickets could go up by around 15%. Ultimately, global warming will not be solved by making it more expensive to travel to the Isle of Wight, or to any other island in the United Kingdom. I urge the Government to think again, and extend their exemption to all UK islands.
Sammy Wilson (East Antrim) (DUP)
The impact of the measure will have a disproportionate cost, especially in Northern Ireland, which relies on sea transport for the import of goods from GB, and for the export of goods from Northern Ireland to GB. Although the order is regarded as a domestic measure, it nevertheless affects an important part of our economic infrastructure, all to deal with an issue that results in about 1% of the UK’s total emissions. The order does not deal with a huge amount of carbon emissions, but it will have a disproportionate cost for Northern Ireland. That is on top of the costs that Northern Ireland already experiences as a result of the protocol and the Windsor framework, which has already added significantly to the cost of bringing goods in from GB and taking goods from Northern Ireland to GB.
The order’s impact on emissions will not be all that great anyway. It is not as if the measure will be an incentive for operators to change their behaviour, as they cannot: there are no alternatives other than sea transport. Therefore, whatever additional costs are imposed will have to be borne by consumers. I know the Minister talked about the reduction in emissions and working towards net zero and everything else. Given the nature of sea transport and its importance for transport between Northern Ireland and GB, as well as the lack of alternatives, this policy cannot lead to transport providers changing how they behave. They cannot go for alternative fuels; near-net zero fuels would simply price them out of the market because they are four to five times dearer than the fuels they use. They cannot opt for the electrification of ships; first of all, it is quite expensive, and secondly, the port infrastructure facilities are not even available.
It is also significant that there is no support package either. There was no talk anywhere in the Minister’s comments of the revenues raised being used to help the transition to different ways of transporting goods. The administrative costs that will be imposed through this order have already been mentioned by the shadow Minister, the hon. Member for West Aberdeenshire and Kincardine. The assessment gives us a range of between £103 million and £287 million. I think that shows that it is just a guess, and it indicates that the Government do not have a clue what the administrative costs will be. That is only the direct administrative costs for the operators, by the way. On top of that are the regulatory costs, which, again, the impact assessment says will be passed on to the operators anyhow. That is before any mitigation measures; those are just the administrative costs. What will the total cost of this be?
Those costs are bound to have an impact in many ways. The one thing Members can be sure of is that they will be passed on in higher freight rates, including in the freight rates between Northern Ireland and GB. Some may argue, “Well, that simply means that Northern Ireland producers will look elsewhere. They may look to the Irish Republic, for example, for supplies instead of bringing them from GB, if the routes are more costly”, but the fact remains that we are dependent on GB, our main supply route is from GB to Northern Ireland and most of our goods are going from Northern Ireland to GB, so there is not even an alternative to switching, even if that were desirable, and it is not desirable because firms choose the GB market because it is profitable for them and they choose GB suppliers because they are the best suppliers that they can use for their businesses.
The Government will probably say, “Well, yes, but we have made a 50% allowance for Northern Ireland”. I suppose the Minister will argue that that is a recognition that there is a special case for Northern Ireland. My argument is this: if the 50% allowance has been put in place, it is only because the Government recognise the disproportionate impact that the measure will have on Northern Ireland. According to the operators, that 50% allowance will go nowhere near to wiping out the costs.
It has not even been mentioned that this measure will have to be in place by July. There is not even any clear guidance available yet to the operators about what they will be required to do, and the EU is reviewing its emissions trading scheme simply because it recognises that there are technical details that need to be ironed out, yet the Government will load their scheme on to operators in three months’ time.
I have already mentioned the fact that this policy will first of all not reduce emissions because there are no alternatives, and secondly, the revenue that we raise from it will not be used to help operators transition from the methods that they use at present. There is nothing in this order about making money available for retrofitting, fuel experimentation and development, or putting power facilities on port sites to enable ships to use an alternative means of propulsion. This is simply a tax. It will not even achieve what the Government want—namely, to reduce emissions. It will have an impact on an economy—on a part of the United Kingdom —already burdened by actions that the previous Government took with the Windsor framework, which has been continued by this Government. This will be yet another cost on top of that. There is a case for saying that this measure should not be applied to domestic transport; we have heard about the impact on ferries to the islands. There is certainly a case for looking at the speed with which it is being implemented. I urge the Committee to consider those points.
I know that I will not have a vote on this measure. I suspect that even if I did have a vote and we tried to pack the place, it would not make any difference. I just ask that these serious issues are considered. This is not just a whinge and saying, “We don’t like this applying to Northern Ireland.” The measure will have serious impacts on our main trade routes with GB. The freight rates for those routes will not achieve the result that the Minister outlined. I ask that the issue be reconsidered with two solutions in mind. First, I am asking for a delay to allow further review and assessment of the impact. Secondly, given the likely impact on Northern Ireland and other isolated parts of the United Kingdom, I ask that the domestic application of the measure be dropped.
Jim Allister (North Antrim) (TUV)
This is the United Kingdom of Great Britain and Northern Ireland. Northern Ireland is one of those parts of the United Kingdom that, far in excess of elsewhere, depends on maritime transport for its economic survival. The Scottish islands is another, and there arises the first glaring unfairness of this proposal. As ferries are their critical economic infrastructure, the Scottish islands will rightly be exempt, but Northern Ireland, which equally relies on its ferries as its essential economic infrastructure, will not be exempt. Where is the fairness? Where is the justification for that? I respectfully suggest that there is not and cannot be any.
When one puts upon the essential economic infra- structure —namely, maritime transport—this additional tax burden, the inevitable result is that Northern Ireland consumers will pay for this carbon tax. My constituents will have this extra levy passed on to them via their goods, which have already been made more expensive by the iniquity of the Irish sea border and the costs of checks. On top of that, they now have this maritime carbon tax. That point cries out so forcefully about the patent and inherent unfairness of the measure that, if the Government cared about the whole United Kingdom, they would not just listen to it, but act on it. Sadly, I fear they will not, as they took the convenient approach of slipping the ETS into the Finance Bill. Instead of separate legislation that we could have debated and drilled into in the House, we get an unamendable regulation slipped through this Committee. It is part of the Government’s indifference to what they are doing to a part of their own United Kingdom.
Let us never forget that maritime transport is already the most carbon-efficient mode of mass freight transport. Our domestic maritime emissions are 1% of total UK emissions, and yet we will selectively—in particular in respect of Northern Ireland—put this extra cost on the consumers of Northern Ireland. We will also do that in a context where the maritime operators have no alternative: “Six months, get your house in order”—how do they do it?
Net zero fuel is four to five times more expensive. Shoreside electricity infrastructure just does not exist, and will not exist within six months. There is no support whatever for the transition. The coffers of Government will be expanded by this carbon tax, but will they spend that money by putting it back into the sector? No, they will greedily hold on to it, and force the sector and thus the consumers to pay for the carbon tax, with all that it means.
I mentioned the Scottish islands. I represent a constituency that also includes an inhabited island, Rathlin island. As for the Isle of Wight East, there is no concession for Rathlin island. Why are my constituents who live in Rathlin island less important to this Government than those who live in the Scottish islands?
Jim Allister
No votes—probably. That is probably the same answer in respect of the whole of Northern Ireland. When the Minister gets a chance to listen, I say to him: I do not accept lesser service for my constituents than he obtains for his or any other Member of this House. If we are a United Kingdom, then we need to be a United Kingdom of equals, not with those who are taxed while others are not, and not with consumers who pay more while others do not—but that is the product of what this Government are doing to Northern Ireland and the Rathlin islanders as well.
It is not enough for the impact assessment to recognise that consumers in Northern Ireland are more exposed—but if they are, what will the Government do about it? The impact assessment recognises that Northern Ireland consumers are more exposed, but the Government turn their face away and will not do anything about it. That is neither tenable nor tolerable.
Furthermore, the Government say, “You must do this in six months.” What planet of unreality are they living on? They like to ape so much of what the EU does, but even the EU with its ETS has a three-year transition. Indeed, the EU is also reviewing what it is doing. Impossibly, however, we are saying to the maritime sector in the United Kingdom, “You have five months to get this sorted out, and then your consumers start to pay for our indulgence and for our self-congratulation that we are dealing with carbon emissions.” That is not an acceptable way to go. Because there is no investment and no transition, it is inescapable that this is but a tax, a carbon tax on my constituents, on the people of Northern Ireland, on the people of Rathlin island and on all those who have not been given the equality of treatment of exemption that has been accorded to others.
Chris McDonald
I thank all right hon. and hon. Members for their contributions to the debate. I hope to be able to respond to them.
We heard, from the shadow Minister, the hon. Member for West Aberdeenshire and Kincardine, the Opposition’s clear objections to the emissions trading scheme. We also heard them last week, in a statutory instrument debate about the emissions trading scheme and the future introduction of the carbon border adjustment mechanism. This is clearly a significant change in policy from the Opposition, as they line themselves up with the climate deniers in the hope that they might scrounge some votes back from Reform, but—[Interruption.] It absolutely is a desperate measure.
The shadow Minister talks about protection for industry. We discussed that extensively in this Committee Room last week. Of course, the carbon border adjustment mechanism is precisely there to protect British industry from unfair competition from imports from more polluting industries in countries without such regulations. The Opposition’s objections to the carbon border adjustment mechanism, which we heard in this room last week, actually put British industry on the block. I do wonder whether they have fully thought through their policy, because when the statutory instrument went to the Lords, their spokesperson was not clear about whether the Opposition opposed the carbon border adjustment mechanism. Perhaps the shadow Minister might want to say whether that is Opposition policy.
Chris McDonald
No, the shadow Minister does not. Well, perhaps he needs to think about it a bit longer.
The shadow Minister talked about the administrative burden placed on maritime companies, which is of course something of which the Government are very conscious. He mentioned some of the information that would need to be recorded, such as port of departure, fuel use and so on. I do not know when he last spoke to somebody who actually operates a vessel, but a lot of this information is routinely recorded. Perhaps his ignorance of maritime operations is second only to his ignorance of the United Kingdom.
Andrew Bowie
As somebody who served in the Royal Navy for four years after I left school, I have full awareness of maritime operations and of the importance of our United Kingdom. I was talking about the gross unfairness of this legislation and the impact it is having on some communities around this kingdom, whether on the Isle of Wight or in Northern Ireland. The Minister has the audacity to claim that CBAM is protecting British industry, when his Government’s policies are doing more to undermine British industry than any policy of any Government in recent history. The deindustrialisation we are seeing in this country is something of which his party, which still laughably calls itself the Labour party, should be utterly ashamed. I ask him to withdraw his remark about the ignorance of maritime affairs.
Chris McDonald
I commend the hon. Gentleman for his service in the Royal Navy, and I am happy to withdraw that remark. Perhaps there was an oversight on his part in relation to that particular issue. I absolutely do withdraw that remark.
On the shadow Minister’s comment about the United Kingdom, the Isle of Man is a Crown dependency, as I am sure he knows, so it is not covered by the scheme. He mentioned the Isles of Scilly. The vessels to the Isles of Scilly are not covered by the scheme either, because they are below 5,000 gross tonnage.
The shadow Minister also mentioned the Isle of Wight, and I want to respond to the comments from the hon. Member for Isle of Wight East. I looked very carefully at the issues around the Isle of Wight before we tabled this statutory instrument, because those were a significant concern for me as well, and I am happy to offer some additional information now. I am grateful to my colleague my hon. Friend the Member for Isle of Wight West (Mr Quigley), who requested a meeting with me before this statutory instrument was laid. I was happy to have that conversation with him, and I offer that courtesy to the hon. Member for Isle of Wight East as well, if he would like to have such a meeting after this debate.
Perhaps I can in some way put the hon. Gentleman’s mind at rest. First, regarding the situation on the Isle of Wight versus the ferry operators in Scotland, one of the key considerations for us was that the population on the islands in Scotland is considerably lower than that of the Isle of Wight. There is also no competition generally between the ferry operators, but there are there are a number of routes operating to the Isle of Wight, as the hon. Gentleman will know very well. The scheme will affect only two vessels, from one operator, on the Isle of Wight: one is a diesel vessel and one is a hybrid vessel. Clearly, the impact of the scheme will be felt more on the diesel vessel than the hybrid vessel, and that is because of the 5,000 gross tonnage limit. I am sure that I am not telling the hon. Gentleman anything that he does not know, but I want to be clear that we have thought very carefully about this.
The hon. Gentleman and a number of Members mentioned the opportunity for decarbonisation. In my opening remarks, I mentioned a number of ways that that could be done, including more fuel-efficient operating practices and various other things. We have set aside £448 million of Government funding to support that, which was announced previously. If the hon. Gentleman would like to meet with me to go through more of that in detail and represent the views of his constituents, I would be happy to do that.
Joe Robertson
I welcome the offer to meet, and I wish to take the Minister up on it. As he will know, the hybrid vessel he refers to that travels across the Solent has electric capability, but it cannot be used because there is no grid capacity at Portsmouth. The Solent is one of the busiest shipping areas in Europe and the vast majority of pollution will be from large container ships going in and out of Southampton—and, of course, the Royal Navy operates out of Portsmouth. Putting any cost on a boat travelling to the Isle of Wight to allow to people to go to and from home fails to meet any sort of reasonableness test, but I thank the Minister for the offer of a meeting.
Chris McDonald
I appreciate the hon. Gentleman’s comments. Perhaps we can go through some of the assessments of the impact of cost inflation in more detail when we meet. Our modelling shows that that could largely be eaten up by normal inflation and normal operating practices, but there are decisions there for the operators to take into account. The hon. Gentleman made some pertinent points about the operators, and we can discuss those in more detail. He also mentioned international shipping through the Solent. Clearly, international shipping is not covered currently by this measure, but it is covered in the EU ETS.
Finally, I come to the points raised by the right hon. Member for East Antrim and the hon. and learned Member for North Antrim. The hon. and learned Member for North Antrim might be surprised to know that there are actually quite a number of things on which we agree, and one of them, for certain, is that the United Kingdom must be the United Kingdom of equals. I am quite clear about that.
I wanted to clear up a couple of points about the situation with Northern Ireland. The 50% reduction that applies to Northern Ireland is there to create parity between vessels that operate between Great Britain and Northern Ireland and those that operate between Great Britain and the Republic of Ireland. If we had not offered the 50% reduction, Northern Ireland would be disadvantaged in that way, and I want to be clear about why that is.
Jim Allister
The Minister is telling the Committee that parity with the Republic of Ireland is more important to him than parity with the rest of the United Kingdom. Really?
Chris McDonald
That is not what I am saying at all. I am saying that it was important to us that Northern Ireland was not in any way disadvantaged, which is why the 50% reduction was offered. The hon. and learned Member mentioned Rathlin island in his constituency; I remind him of the 5,000 gross tonnage limit and how that applies.
The hon. and learned Member, the right hon. Member for East Antrim and the shadow Minister all made a general point about the cost associated with the changes. There is a cost to not tackling climate change. If operators of vessels were spilling oil into the Solent or the Irish sea, then I am quite sure that the hon. and right hon. Members’ constituents would be clamouring for the Government to introduce regulations to do something about it. The fact that this pollution is not observable to the naked eye does not make it any less important to tackle it. These environmental regulations—and the Government’s policy on net zero—are about tackling that pollution and providing a stable and predictable regime so that industry can invest.
Sir Julian Smith (Skipton and Ripon) (Con)
Will the Minister clarify what the Northern Ireland Office’s submission in the write-round said about the impact of the measure on Northern Ireland, or give a sense of those discussions? Baroness Foster runs Intertrade UK, a committee that was designed during the Windsor framework negotiations to look at the very issue of trade. Has he had conversations with Baroness Foster? Having listened to Northern Ireland colleagues, will he look again at how this will impact the Union? On top of the Windsor framework—which I would argue was the best deal we could get—this measure is an additional burden.
Chris McDonald
I can tell the right hon. Gentleman that this measure will need the support of the Governments of all four parts of the United Kingdom.
Carla Lockhart (Upper Bann) (DUP)
Northern Ireland is and will be disadvantaged if we proceed down this track. What engagement has the Minister had with the individuals concerned, as the right hon. Member for Skipton and Ripon outlined? Will he extend the invitation he gave to the hon. Member for Isle of Wight East to the Members for Northern Ireland who feel very deeply about this and are very aggrieved, to discuss the real impact—not just the impact in his brief?
Chris McDonald
Yes, I am very happy to extend that invitation for a further meeting with any Members of the House who wish to discuss the matter. Of course, there has been extensive consultation on this statutory instrument.
Chris McDonald
I have given way multiple times, which I am sure the right hon. Gentleman will appreciate. I think it is time I brought the debate to a close.
These changes have the support of all four Governments of the United Kingdom, and consensus in advancing carbon pricing policy to include domestic maritime is key to delivering our decarbonisation goals and driving green investment across the United Kingdom. I commend the draft order to the Committee.
Question put.