Carmichael raises concerns on emissions trading scheme impact on local ferries

Orkney and Shetland MP, Alistair Carmichael, has today raised concerns about the potential impact of new emissions trading rules applying to domestic ferry services. From 2026, the UK domestic maritime sector will be included in the UK Emissions Trading Scheme (ETS), applying to all vessels of 5000GT and above.

Without an exemption, the UK Chamber of Shipping estimates that annual fuel costs would increase by up to 25-50%, potentially limiting in the capability of domestic ferry operators to invest in green technology and decarbonisation measures, as well as leading to fewer services for island communities and higher ticket prices.

The Chamber has proposed that an exemption to the scheme is put in place until 2030, with a review based on the availability of alternative low or zero carbon fuels and infrastructure. The EU currently has a derogation for lifeline ferry services until the end of 2030. The minister responding agree to meet and discuss the matter further.

Speaking in the House, Mr Carmichael said:

“He may be aware that there are many in the shipping industry who are concerned that including lifeline ferry services, such as those that serve my constituency, in the emissions trading scheme could hinder rather than help the process of decarbonisation. The EU has already recognised that by giving its lifeline ferry services a derogation until 2030.

“Will the shipping Minister engage with operators in Scotland and elsewhere to ensure that we are not hit by the law of unintended consequences?”

Responding for the government, transport minister Anthony Browne MP said:

“I very much welcome that question. The right hon. Member for Orkney and Shetland is a doughty champion for ferries in those islands and I know how important ferry services are for residents there. We have been very careful, across our transport decarbonisation plan, not to damage industries or sectors. We have given many billions of pounds in support for the whole range of different transport sectors and domestic ferries are very much a part of that.

“I am very happy to engage with the sector and to meet him to ensure that the ferries can carry on transporting passengers throughout Orkney, Shetland and elsewhere in the British Isles.”

Reacting after the exchange, Mr Carmichael said:

“The response from the minister was constructive and that is to be welcomed. We all want to see transport decarbonised, including in our ferry links, but it has to be done in a pragmatic way. That is particularly true of lifeline services like those for the isles.

“The last thing we need is a reason for ticket prices to go up or connections to be cut back. I will be following up with ferry companies and with the minister to ensure that local concerns are heard and we come to a fair solution for ferries services going forward.”