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UK Emissions Trading Expansion Poses Questions

[ July 17, 2026   //   ]

The expansion of the UK Emissions Trading Scheme to maritime transportation is adding another layer of emissions costs and compliance requirements for shipping companies, with BIMCO warning shipowners and charterers to review contracts governing responsibility for emissions allowances.

The UK ETS expanded to maritime activity July 1, initially covering domestic voyages between UK ports and emissions generated by vessels while in UK ports, including time spent at berth or anchorage.

The expansion creates a separate emissions trading regime alongside the European Union Emissions Trading System, raising questions about how emissions and allowance costs should be allocated when vessels operate across multiple regulatory jurisdictions.

BIMCO said its existing ETS Emission Trading Scheme Allowances Clause for Time Charter Parties, introduced in 2022 primarily in response to the EU ETS, should generally accommodate the UK system because the clause broadly defines an emissions scheme to include the EU ETS and “any other similar systems.”

Under BIMCO’s contractual framework, the party supplying and paying for a vessel’s fuel is generally responsible for providing the emissions allowances associated with that fuel consumption. Shipowners monitor and report emissions, while charterers transfer the required allowances to owners, typically on a monthly basis or at another agreed frequency.

BIMCO cautioned, however, that the clause should not be treated as a “set and forget” provision as vessels increasingly operate under overlapping emissions regimes.

A vessel operating between UK and EU ports, for example, could generate emissions falling under different trading systems during a single charter period. BIMCO said owners and charterers will need accurate emissions allocation and accounting procedures to avoid double-counting, gaps in cost recovery or disputes over which emissions allowances apply.

Differences between UK and EU compliance deadlines, reporting cycles and registry procedures could create additional complications, particularly for short-term fixtures, split voyages and charters ending before emissions data has been verified.

BIMCO recommended that charter parties explicitly identify the UK ETS where applicable and address the type of allowances required, treatment of voyages involving multiple emissions regimes, standards for emissions data, late transfers and reconciliation when vessels are redelivered.

The UK expansion adds to the growing regulatory cost of carbon emissions in commercial shipping. While BIMCO said its existing clause provides a workable framework for allocating those costs, it urged owners and charterers to review both existing and future fixtures as the operational details of the UK system develop.

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