Greenhouse Gas Emissions Trading Scheme (Amendment) (Extension to Maritime Activities) Order 2026

Lord Mountevans Excerpts

Thursday 12th March 2026 Lords Chamber

[Lord Jackson of Peterborough (Con)]

My Lords, I strongly support the amendment in the name of the noble Baroness, Lady Hoey, and congratulate her on her indefatigability and persistence on these issues, although that is usually on the basis of debating the Windsor Framework, which we are not doing today. I commend my noble friend Lord Redwood on his tour de force speech, and the forensic interpretation outlined by my noble friend on the Front Bench Lord Moynihan. I have a rule of thumb: if I agree with the noble Lord, Lord Empey, I am on the right track. It may be that I am cynical, but he is right to draw out the issue of constitutional propriety and whether central government has shown proper respect for the devolved Administrations, particularly the Northern Ireland Assembly and the Northern Ireland Executive, on this occasion.

We all remember that at the time of Brexit, a senior official called Martin Selmayr stated that the two imperatives for the EU after Brexit were that Brexit should be as painful as possible for the United Kingdom, and that the European Union should never have a competitive disadvantage vis-à-vis the economy and commerce of the United Kingdom. Therefore, as a student and fan of true crime, I see all these pieces of the jigsaw puzzle coming together, because I have to repeat the question raised by the noble Lord, Lord Dodds: why the rush? Why are we in a position where what has been told to individual Members of Parliament by Ministers in the other place is different from issues that were raised in the Northern Ireland Assembly and its committees?

I read the deliberations of the committee in the Northern Ireland Assembly, as well as the Delegated Legislation Committee that met last month. The fact is that this is a pernicious carbon tax, and it does not present that sector with an opportunity to adapt in a timely way. It has a disproportionate impact on Northern Ireland, as we have heard: on supply chains, on inflation, on food prices and on transport costs. There is obviously an unfairness between the way that the Scottish island ferries have been treated and Northern Ireland. I challenge the Minister, once again—and going back to the comments from the noble Lord, Lord Dodds of Duncairn—as to what is the rationale for the different treatment between Scotland and Northern Ireland. Incidentally, Scotland does not get off scot free: as I understand, 145 gas and oil supply and support vessels will also be caught by this order. If the oil and gas industry has not already been clobbered almost into oblivion by the abysmal policies of this Government, and the zealotry of the Secretary of State in seeking to destroy that industry and reduce the employment prospects in Aberdeenshire and other places, this will be another nail in the coffin.

I must ask whether this is linked to wider negotiations with the European Union, in terms of the timescale and timeframe, because that is an important question about the propriety or otherwise of these proposals. At the moment, there is no evidence of likely behavioural change as we run up to the implementation of the order in July this year. As we have heard, the revenue that will accrue from this carbon tax, imposed disproportionately on Northern Ireland but across the sector, is non-hypothecated. As we know, His Majesty’s Treasury is always keen to see an income stream but not to disburse that back to a hypothecated source of the income.

I finish with some questions for the Minister. When will the Government produce clear, technical guidance on the scheme? What support will be provided to the industry to source alternative fuels in a timely and cost-effective way? What analysis has been done by His Majesty’s Government as to the availability of appropriate sector infrastructure to enable the maritime industry to transition to a low-carbon or net-zero regime? What estimate has been made of the costs of compliance annually, particularly the administrative costs, such as producing risk assessments? What impact will there be on the 145 oil and gas support vessels supporting operations in the North Sea? Why have His Majesty’s Government not included measures in the order to support retrofitting, or alternative quayside power supplies at ports, to facilitate the use of alternative modes of propulsion? That issue was raised very astutely by the noble Lord, Lord Berkeley. What discussions has he had, along with his ministerial colleagues, with the EU interlocutors on the timescale of this order, on securing the legal effect of it, and how might this impact on negotiations following the UK-EU common understanding in May 2025?

The Minister needs to listen to the widespread disquiet across this House and the consensus that this order is inappropriate to be laid at the moment. There are too many issues which are unresolved and too many questions still to be answered about the impact on Northern Ireland and the wider economy. I have to say to the Minister that he needs to pause the order and tell our friends in the EU that our pre-eminent priority is British interests, not the arbitrary timetable imposed by the European Union.

[Lord Mountevans (CB)]

My Lords, it is a pleasure to follow the noble Lord, Lord Jackson of Peterborough, who had more of a maritime emphasis, particularly in his questions. I acknowledge the strong contribution made by my noble friend Lord Greenway. The reality is that the SI before the House is not suitable in its current form. I will talk particularly from a maritime aspect.

Many of the leading international and, indeed, local ship owners in the industry are committed to net zero by 2050. The UK Chamber of Shipping called for the global shipping industry to reach net-zero emissions by 2050—prior, in fact, to the UK Government and the IMO. The industry has consistently supported the effective mechanisms to cut emissions. Across the sector, owners have invested in new technologies and pioneering innovation such as new hybrid vessels, and invested to enable shore power connections to meet commitments and lead the drive towards net zero. But the SI inflicts significant new expenses on the ship owner and operator, without the Government committing to invest the substantial sums raised in net-zero-related investment, as has been agreed by the EU.

An obvious potential use for the funds might be in shore power. Significant investments have already been made by ferry operators and cruise ship owners in ships that are already fitted to link up to shore power, with obvious benefit to the environment and the atmosphere. But, as we have heard from the noble Lords, Lord Berkeley and Lord Ashcombe, there is very little installed power in the UK. These significant costs on the owner are expected to curtail the scope for further investment on the ships side in measures and equipment that will reduce emissions.

Let us be very clear: there is an immediate impact on costs. The Government’s own impact assessment calculated, as we heard, the administration cost of the scheme at £179 million, far exceeding the estimated abatement investment of £22 million, implying that, for every £1 spent on decarbonisation, £8 is spent on admin and bureaucracy. Does this sound like good business sense?

The additional costs will impact on businesses and communities. We should not forget that these businesses and communities are located on islands or along the coast, which are already recognised, typically, as economically disadvantaged. Surely, the Government do not wish to further disadvantage these communities. Estimates show that, without exemption, annual fuel costs may increase by up to 25% to 30%. The EU ETS has increased intra-EU maritime and transport costs by around £1 billion annually, with ticket price impacts estimated at up to 15%. Similar outcomes are expected under the UK ETS.

We know that the challenges faced by the Scottish islands have been recognised, and they are excluded from the scheme; and I certainly support the view that the Isles of Scilly, in the case of a larger ship, and the Isle of Wight should also be excluded.

Introducing new monitoring requirements alongside responsible emissions from 2026 adds administrative burden, compliance burdens and risk, and working capital costs. At the same time, vessels cannot yet access alternative fuels, onshore power or adequate grid capacity to reduce emissions, none of which exists in meaningful degree in UK ports today. Without a clear commitment on the part of the Government to recycle the revenue from maritime, the UK ETS will simply divert capital from decarbonisation investment in vital infrastructure, shore power and alternative fuels—and, as has been noted, it may very well just disappear into government coffers.

The industry wants rule introduction to follow that of the EU in, for example, timelines, enforcement mechanisms and data systems, to avoid divergence that could hinder linkage. The recommendation of the industry is for a phased implementation for the necessary data reporting, like the EU did and the UK has, in fact, already done for the waste incineration industry. Phased introduction in allowances to surrender, which start at 40% obligation in the first year and are 70% in year two, rising to 100% in year three, would also be a suitable introductory system.