The UK should include international maritime emissions in its emissions trading scheme (ETS) from 2028 but not increase the supply cap, government advisory body the Climate Change Committee (CCC) said in a letter to government ministers.
Expanding the UK ETS to cover international maritime emissions would "strengthen alignment" with the EU ETS, aiding the country's efforts to link the schemes, the CCC said. The EU and UK aim to complete negotiations on linking the two schemes by the next EU-UK summit, for which a date has not yet been set.
The overall emissions cap should remain at 936mn allowances for 2021-30, to drive up prices and tighten supply, the CCC said.
Auction prices averaged £45/t of CO2 equivalent (CO2e) ($60/t CO2e) in 2025, which is too low to incentivise new decarbonisation measures such as carbon capture and storage, the committee said. The current supply cap is already 49mn t CO2e higher than the level required to align with the previous government's "central" assumptions to meet its legally binding target of net zero emissions by 2050, the CCC said. The existing cap could comfortably absorb projected international maritime emissions of 14.6mn t CO2e in 2028-30, the CCC said. The total would even remain below this surplus, at 36.5mn t CO2e, if accounting for a proposed extension to the scheme to cover emissions from the waste sector from 2028, it said.
Increasing the supply cap increase could put more pressure on sectors not covered by the UK ETS to decarbonise to meet the net zero goal, the CCC warned.
The CCC submitted its advice on the issue in response to a request from the government, which consulted on extending the ETS to international shipping over November-January.
The government went against the advice of the CCC when it opted to increase the UK ETS cap by 9.32mn allowances to account for the inclusion of domestic maritime in the scheme from July next year.
