Question to the Department for Energy Security & Net Zero:

To ask the Secretary of State for Energy Security and Net Zero, what steps he plans to take to prevent the UK ETS from operating as a pay-to-pollute scheme for maritime operators unable to access decarbonisation infrastructure.

Answered by Chris McDonald - Parliamentary Under Secretary of State (Department for Energy Security and Net Zero)

The Emissions Trading Scheme is a cap-and-trade system with a declining cap that ensures emissions from the traded sector, including the domestic maritime sector, fall in line with the United Kingdom’s statutory net zero commitments.

The scheme limits total emissions and enables reductions to occur where they are most cost effective, without prescribing specific technologies in any sector.

For maritime operators, the scheme provides a clear price signal that supports investment in cleaner vessels, operational efficiency and emerging low carbon fuels.

The Government will continue to work with industry to support the development of infrastructure and technologies needed to facilitate decarbonisation.

Question to the HM Treasury:

To ask the Chancellor of the Exchequer, whether revenues generated by the inclusion of domestic maritime within the UK Emissions Trading Scheme will be ringfenced for maritime decarbonisation.

Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)

The government is committed to maintaining an ambitious carbon pricing scheme to ensure that polluters continue to pay for their emissions. The UK Emissions Trading Scheme is our key lever to do so. This supports a cost-efficient transition toward net zero.

In July 2025, the UK Emissions Trading Scheme Authority confirmed an expansion to emissions from domestic maritime regime, commencing on 1 July 2026.

The UK does not hypothecate revenue from the UK ETS. All receipts from the UK ETS accrue to the consolidated fund, and go to funding government priorities, which includes decarbonisation support for the maritime sector.

Question to the HM Treasury:

To ask the Chancellor of the Exchequer, whether she has made an assessment of the potential merits of ringfencing UK ETS revenues generated from maritime emissions for investment in shore power, grid upgrades, vessel retrofits and alternative fuels.

Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)

The government is committed to maintaining an ambitious carbon pricing scheme to ensure that polluters continue to pay for their emissions. The UK Emissions Trading Scheme is our key lever to do so. This supports a cost-efficient transition toward net zero.

In July 2025, the UK Emissions Trading Scheme Authority confirmed an expansion to emissions from domestic maritime regime, commencing on 1 July 2026.

The UK does not hypothecate revenue from the UK ETS. All receipts from the UK ETS accrue to the consolidated fund, and go to funding government priorities, which includes decarbonisation support for the maritime sector.

Question to the Department for Transport:

To ask the Secretary of State for Transport, what assessment her Department has made of the potential impact of the UK ETS on lifeline ferry services outside Scotland, including routes serving the Isle of Wight, the Isles of Scilly and Northern Ireland.

Answered by Keir Mather - Parliamentary Under-Secretary (Department for Transport)

An Impact Assessment was published alongside the main Authority Response in November 2025, which includes analysis of regional and distributional impacts. To mitigate risks of competitive impacts with routes between Great Britain and Ireland, we intend to introduce a 50% surrender deduction on voyages between Great Britain and Northern Ireland. All ferries serving the Isles of Scilly and most serving the Isle of Wight will not be in scope of the ETS under the planned rules. Potential or realised impacts on UK islands will be considered within our 2028 review and future decisions will be based on the evidence available at that time.