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

Lord Weir of Ballyholme Excerpts

Thursday 12th March 2026 Lords Chamber

[Lord Weir of Ballyholme (DUP)]

The noble Baroness referenced the good work of the Scotland Office in lobbying to ensure that Scotland was exempted. Does she agree that this stands in sharp contrast to the Northern Ireland Office, which was instead lobbying parties in Northern Ireland to back this order and ensure that it was implemented?

[Baroness Hoey (Non-Afl)]

The noble Lord almost pre-empts what I was about to say, so I thank him. As if this is not enough to give politics a bad name, the events of last week, I am afraid, leave a nasty taste in the mouth. The Northern Ireland Assembly’s DAERA scrutiny committee met last Thursday and heard from Stena Line, the key ferry company linking GB to NI, and the UK Chamber of Shipping. All parties there, bar the Alliance, expressed concerns. The Minister is an Alliance member, of course. The committee was ready to reject the order but was told that there was a Northern Ireland-specific impact assessment around, and agreed to postpone its decision until Monday this week so that members could read the impact assessment. On Monday, the committee met again and was presented with no NI impact assessment because no such impact assessment existed. Officials suggested that the impact on Northern Ireland was already assessed but, again, this is not true.

The Frontier Economics study often cited was commissioned in 2023 by Whitehall departments, not the NI department. It mentions Northern Ireland a few times but provides no quantified estimates of the impacts on Northern Ireland’s consumers or business. It also spends a lot of time emphasising cruise liner shipping, which is not even covered, and barely touches on freight routes. The Government have acknowledged that Northern Ireland is more exposed to cost transmission through maritime freight but surely then there should have been a dedicated economic impact assessment carried out. Did the Secretary of State for Northern Ireland ever even discuss it with Secretary of State Miliband to point out the unfairness? Sometimes we almost question the role and purpose of the Northern Ireland Office. The impact assessment statement was just a ruse to prevent a vote last Thursday that would have gone the wrong way, and to buy the Government time.

Over the weekend, Northern Ireland officials lobbied MLAs very hard. Even the Secretary of State was engaged in texting and maybe even telephoning party leaders with the argument that had never been mentioned in the other place when this was discussed, saying that the entire EU reset would be threatened if the Assembly blocked the SI. The people of Northern Ireland expect their Secretary of State to at the very least put forward the arguments as to why they should not be subject to discriminatory treatment, leading to higher fares. It is clear that Northern Ireland does not have a Northern Ireland Office that works for the people of Northern Ireland the way in which the Scotland Office does.

The committee voted by five votes to four to approve the SI. One MLA, Michelle McIlveen, described these events in the following terms in the Assembly. She stated:

“What happened was, frankly, disgraceful. Last-minute pressure was placed on parties by UKG. A new dimension associated with CBAM and impact on EU negotiations was introduced. No facts, detail or proper briefing, just smoke and mirrors. That is not the way that we should do our politics, and interference at such a late stage is highly suspicious”.


The EU reset argument is nonsense. It played on the suggestion that if this order is not passed, that would be the end of any discussion on maritime greenhouse gases. In truth, however, as noble Lords know, regulations are pulled fairly regularly to make corrections and replaced a few days later with a new set of corrected regulations with “(No.2)” added at the end. The order that we are discussing is blatantly discriminatory and I call on the Government to commit at the very least to withdraw it and table a draft (No.2) order, which can have the same wording as the current order but applies the same exemption to Northern Ireland or Scotland. I appreciate that there may be noble Lords who wish to mention some other areas of the United Kingdom that have not been exempted.

Stena Line and the UK Chamber of Shipping have asked for reasonable adjustments: a 12-month delay to allow them to prepare, a Northern Ireland-specific economic assessment, a phased introduction period, and revenues raised to be targeted towards maritime decarbonisation. All those seem eminently sensible to me, as I hope they do to other noble Lords. I support the regret amendment from the noble Lord, Lord Moynihan, but I feel very strongly that we are fed up with regretting things—regret does not change anything. That is why, unless we get a very strong response from the Minister—although I appreciate that he is not making these decisions—I believe that, for the sake of the people of Northern Ireland and for the sake of decency and fairness, I will be forced to push this to a vote.

I will mention something that came up in the other House. The honourable Member for North Antrim and the honourable Member for South Antrim both spoke against this and the Conservative Members voted against it in Committee, but of course with the huge Labour majority it went through the House. The 50% reduction was raised, which Northern Ireland is of course getting. The Minister there responded by saying:

“I wanted to clear up a couple of points … 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”.—[Official Report, Commons, Second Delegated Legislation Committee, 3/2/26; col. 13.]


Of course, the Republic of Ireland is under the EU’s 50% reduction. The honourable Member for North Antrim responded:

“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”.—[Official Report, Commons, Second Delegated Legislation Committee, 3/2/26; col. 14.]


That tells us something. I beg to move.

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[Earl Russell (LD)]

There is a reduction in place in Northern Ireland. There is not specific legislation around that.

[Lord Weir of Ballyholme (DUP)]

The noble Lord gave one of his key considerations as a test of economic fairness. Perhaps he could explain to the House how it is economically fair to have an 100% exemption for Scotland but 50% for Northern Ireland. How is that fair?

[Earl Russell (LD)]

It is not for me to respond to what is a question for the Minister. The Government’s impact assessment estimates central abatement investment of around £22 million, with administrative costs of £179 million over the period. The allowance-purchase cost is largely a transfer to the Exchequer and devolved Administrations, with many operators being non-UK based. Carbon pricing must therefore be matched with a credible transition plan. Without that, this becomes not a nudge for transition but could simply be a tax. However, the Government have announced £448 million for the UK Shipping Office for Reducing Emissions—UK SHORE—between 2026 and 2030, the largest public investment yet in commercial maritime.

Phase 2 will support larger projects through the Clean Maritime Demonstration competition and the Zero Emissions Vessels and Infrastructure competition. That is the industrial policy that must sit alongside carbon pricing. At the same time, the measure is expected, on the Government’s central estimate, to generate around £1.9 billion in allowance-sale revenue: around £95 million a year. Will the Minister confirm that a material share of ETS maritime revenues will be reinvested in maritime decarbonisation, including cleaner vessels, shore power, alternative fuels, and support for local transition in coastal and island communities, rather than simply disappearing? Will the Minister commit to publishing annually how much is raised from maritime ETS and how much is invested in maritime decarbonisation?

The cruise industry is an important and growing part of our economy, calling at some 50 UK ports and making over 2,500 calls a year, supporting tens of thousands of jobs and adding billions to the UK-wide economy. The industry’s concern on ETS is that revenues are not being visibly recycled into cleaner fuels and infrastructure specific to their industry. We only have a handful of onshore connections for cruise liners at the moment, so will the Minister tell us what investment will be made as a result of this scheme to bring shore power, and on what timetable for the cruise industry?

The Government and the UK ETS have done substantial preparatory work, including consultations, a digital monitoring platform and voluntary onboarding since November 2025, ahead of the July 2026 start. The Government’s impact assessment estimates an average administrative cost of around £5,700 per operator per year. This may be modest, but it has real implications for real firms. We recognise that this should reduce over time.

We welcome the formal review at the end of 2028 to assess emissions outcomes, administrative burdens and any needed adjustments to scope or thresholds. We have a number of specific concerns about any plans to expand the scope to international voyages. My noble friend will address the specific issues relating to Northern Ireland aspects. We believe the right approach is to keep these provisions under review and match carbon pricing with practical support, not to abandon maritime decarbonisation. Extending the UK ETS to domestic maritime emissions also helps keep our scheme aligned with greater integration with the EU. In turn, a genuinely linked system will help strengthen our trading relationship.

The fatal and regret Motions both reflect genuine anxieties about costs, competitiveness, and the union, but neither justifies rejecting this order. The suggestion that there is no alternative is not borne out by the evidence. Improved operating practices, routing efficiency and gradual fuel switching all represent viable abatement pathways.

Near-zero emission fuels remain expensive and infrastructure is incomplete. But that is exactly why revenue recycling and UK SHORE matter. The right course is to pair a robust carbon price with predictable investment that keeps the maritime sector on its net-zero path, while keeping the UK economy competitive. To call this measure simply a tax misunderstands how the ETS works. It is designed to minimise the cost of meeting our climate goals, to give business flexibility and to limit carbon leakage: this is a practical measure. It becomes a tax only if the Government pocket the proceeds and fail to reinvest them. Revenue is a byproduct: the purpose is to cap and reduce emissions over time. We are supportive of the extension of emissions trading to domestic maritime. Done well, emissions trading drives real reductions, supports innovation and underpins our net-zero transition.

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[Lord Greenway (CB)]

My Lords, following on from the noble Lord who has just spoken, it is my understanding that the new ferry on the Isle of Wight service which he mentioned has considerable battery capacity. During her voyages, those batteries can be charged, allowing her to operate without shore power when she is in port. She is an advanced ship, one of the first in this country.

The noble Lord has very well covered the Isle of Wight scene. Given the Government’s slavish following of the EU, I find it strange that the EU can derogate ferry services to islands until 2030 but we are not doing the same. Why not? It would save a lot of the problems we are discussing today. It would also give ferry companies more time to invest more in decarbonising their vessels.

I am not going to mention Northern Ireland, because I think that it has been covered very well. I would just like to say a few words about the emissions trading scheme, which seems rather a vague thing. Nobody ever mentions it; we do not hear anything about it. I only learned yesterday that there have been some problems with it—some malpractices, one might say. I do not know whether the Minister is aware of that, but it is something that we should take into consideration.

Traditionally, maritime regulation has come from the International Maritime Organization, based across the river. People think that shipping has not taken much notice of reducing emissions, but huge strides have been made and millions, in fact billions, of pounds have been spent. The main container operators are hedging their bets because there is no silver bullet to replace the internal combustion engine, so they are producing hybrid vessels that can run on normal diesel fuel, liquefied natural gas or methanol. Companies are also looking at ammonia. In the smaller fields, especially Norway, which has been very advanced in this area, there are electric ferries and hydrogen ferries. In order to cut down their emissions, the shipping companies are looking at all ways of reducing fuel use, even going back to wind—modern computerised sails, 100 feet high, can help to reduce fuel costs considerably with the right conditions.

Likewise—this is the only mention of Northern Ireland that I will make—somebody might have noticed a ship with something that looks like an old-fashioned factory chimney sticking up in the air. A German invention of the 1920s called the Flettner rotor has been resurrected. It is a rotating cylinder that has high pressure on one side and low pressure on the other and produces force to drive something. Bulk carriers up to 400,000 tonnes can have five of these things. At over 100 feet high, they can fold down when the vessel is working in port. They are coming into increasing use. The maritime industry has not been standing still. I heartily agree with the comments that the funds—call it a tax, if you like—gained from this system should be ploughed back into the industry and not disappear into the maws of the Treasury.

As regards shore power, which the noble Lord, Lord Berkeley, mentioned, we certainly have three ports that have it—Aberdeen, Portsmouth and Southampton—and the Government have been assisting with the UK SHORE unit, which has considerable funds available. A scheme has been put into operation in Portsmouth. The Government put in £20 million and I think that the local authority put in another £5 million. What happened? The two French ferries that use the port will not use it. Why? Because the cost of electricity is too high in this country. If that is not shooting yourself in the foot, I do not know what is. Certainly, there are many other ports looking into this. Take Dover-Calais, one of the major ferry routes in this country. Calais has already committed to funding three berths by 2030 and Dover is looking to form a partnership to try to do something similar. But I think Dover, as a trust port, has a problem in that it has to have an Act of Parliament to be able to deal with electricity.

Cruise ships have been mentioned. There are two berths in Southampton, but only one can be used at a time because of lack of capacity in the grid. The real problem, as I see it, is that we have to increase capacity in the grid. The Minister might be able to tell us that some things are beginning to take place, but I would have thought that, before investing billions in offshore wind, it would have been more sensible to have upgraded the grid, which would have avoided a lot of these problems.

This could well be the last time that I address your Lordships, as I shall be leaving shortly, so I would like to add my regret on another matter. I have been talking on maritime matters for over 50 years in this House. When I came in, we had a very sizeable merchant fleet and a sizeable Navy. What do we have today? In terms of trading vessels, we are number 31 or 32 in the world. That is a great regret and an utter disgrace.

[Lord Weir of Ballyholme (DUP)]

My Lords, it is an honour and a privilege to follow the noble Lord in what may be his valedictory speech. It is perhaps a little disappointing that it was on this SI, which seems to have been based on false premises. A range of factors that were not available in the other place were introduced only at a late stage. Also, it has been sold on the grounds of the consent of the devolved institutions. Where consent is obtained through duress and blackmail, as we have heard detailed today, how genuine is it?

It is clear that this SI will be deeply detrimental to the ferry companies. Even at this late stage, they have not been given all the technical information that they need to implement it in full. They have been given a six-month window to introduce and implement it, when even the EU gave a three-year period for introduction and implementation for a similar scheme.

The SI is deeply disproportionate. Domestic ferries account for around 1% of the UK’s carbon footprint and, as outlined by the noble Baroness, Lady Hoey, and others, we are not even in a position to take action immediately to counteract that 1%. But this clearly goes beyond the implications for ferry companies. There are implications for passengers, haulage companies and companies in Northern Ireland and the Isle of Wight—and companies in Great Britain looking to send their goods there—because, inevitably, the only way this can be dealt with is to pass those costs on to the consumer and the companies concerned.

As the noble Baroness, Lady Hoey, highlighted, Northern Ireland relies on 90% of its goods coming in and out by ferry. That is not simply a convenient choice; it is a necessity. Let me give an example from my own life—I think the term in vogue today is “lived experience”. In the last two years, I have on two occasions had to get my electric wheelchair sent back to the manufacturer for adjustments. It happened once in London and once in Belfast. In London, I could get the wheelchair to the manufacturer in Birmingham; I could have arranged for it to be picked up or got a car to take it there. As it happens, I brought it there by train. In Northern Ireland, there was no such alternative. The only opportunity that I had was to ship it by freight to Birmingham. I suppose that I could have tried driving it there, but I would have got a little wet in the meantime. The reality is that that is the level of dependence we have.

This could not come at a worse time. Because of the conflict in the Middle East, we are faced with rising fuel and transport costs and a clear knock-on effect on the cost of living, with inflation set to increase. To be fair to the Government, they will say that those are all factors outside their control. But this measure is a self-inflicted wound on top of all those factors, which will impact different parts of this United Kingdom disproportionately. We are sometimes, somewhat erroneously, referred to as an island nation. That is not accurate. We are a nation of islands. There is rightly an exemption of 100% for the Scottish islands, but to have only a 50% exemption for Northern Ireland and similar problems for the Isle of Wight is not treating all parts of the United Kingdom fairly.

I had a number of questions, nearly all of which were covered by my noble friend Lord Dodds, but I will add one. There is widespread concern that there has not been much specific assessment of the economic impact on Northern Ireland. Will the Government give a commitment today that when they review the trading scheme in 2028 there will be a Northern Ireland-specific economic impact assessment? Many of us fear this will add to an already difficult situation for many companies and many consumers in Northern Ireland. The Government must face up to that.