The scheme, set to apply to shipping from summer 2026, will require companies exceeding emissions thresholds to buy allowances for each tonne of CO2 emitted. Wightlink estimates the policy could add up to GBP 1 million annually to its costs, compounding recent increases in National Insurance contributions and business rates. This, the company says, could jeopardize planned investments, such as a GBP 30 million commitment to sustainable technologies, including a hybrid ferry order slated for 2026.

While the maritime industry is pursuing greener alternatives, Wightlink highlighted limitations in the UK's electrical grid infrastructure as a barrier. A British Ports Association report indicated that 70% of UK ports are at or near their power capacity limits, potentially leaving operators with few low-carbon options. In response, European peers like P&O Ferries and DFDS have introduced surcharges on passenger tickets to offset EU ETS costs.

Under the UK's proposed structure, smaller vessels – which fall below the emissions threshold and thus avoid charges – may become more economically viable than larger hybrid or electric ferries, despite the latter's potential for lower overall emissions per passenger. Wightlink argues this dynamic could undermine the scheme's environmental goals.

The operator has called for exemptions similar to those granted to Scottish island ferry services, noting the Isle of Wight's reliance on these routes as essential links for residents accessing healthcare, education, and the mainland. Northern Ireland, meanwhile, receives a 50% reduction in ETS surcharges to align with EU rules, prompting questions about regional equity.

Wightlink CEO Katy Taylor stated: “We’ve invested over GBP 30 million in sustainable technology, yet we face an impossible challenge: there simply isn’t the grid capacity to make our services greener. Instead of supporting long-term emissions reductions, the current approach penalises operators like us without offering solutions. The ETS may aim to cut emissions, but in practice it risks doing the opposite and it will be island communities who will pay the price.

“Wightlink remains firmly committed to sustainability and will not take any action that increases emissions but the Government’s current approach makes it more difficult for maritime companies to invest and risks undermining the UK’s green ambitions.

”The Department for Transport (DfT) has defended the ETS expansion as a key tool in meeting net-zero targets, emphasizing that it incentivizes innovation across the sector. In a statement to Parliament earlier this year, Transport Secretary Louise Haigh noted that the policy includes transitional measures and support for vulnerable routes, with ongoing consultations to address grid constraints. The DfT added that exemptions for Scottish islands were tailored to their unique remote status, but reviews for other lifeline services, including the Isle of Wight, remain under consideration.

Local MPs have echoed calls for fairness. Conservative MP for Isle of Wight East, Joe Robertson, who addressed the issue in the House of Commons, said: “It is highly disappointing that the Isle of Wight has not been granted an exemption from the upcoming UK ETS maritime expansion like Scottish islands have. Yet again, the Government overlooks the Isle of Wight, and instead places further cost on our ferry travel. Ferries are our Island’s only connection to the mainland and are essential for accessing vital services such as the NHS and higher education. They are the very definition of a lifeline service and it is therefore incomprehensible that they have not been recognised as such, along with Scottish islands.

“This policy, imposed on us by the Government, offers no meaningful incentive for ferries to actually reduce emissions because there is insufficient grid capacity and instead risks imposing a green tax on Island life and our local economy. I have urged the Government to rethink this unfair decision and I will continue to raise it with Ministers.

”Labour MP for Isle of Wight West, Richard Quigley, expressed support for the ETS's broader objectives while urging adjustments: “The UK ETS is a hugely important mechanism to reduce the UK's carbon emissions across the economy. However, while I wholly support the Government's ambitions for cleaner transport, I am concerned that the Isle of Wight has not been granted an exemption at this stage.

“Without adequate investment in local grid capacity, this policy makes the low-carbon transition for ferry operators incredibly difficult. I would welcome further consideration of how these measures can best reflect the unique circumstances of our island community, and I look forward to working collaboratively with ministerial colleagues to ensure we reach a balanced and practical solution for everyone.

”The Maritime and Coastguard Agency is scheduled to finalize implementation details in early 2026, with industry groups continuing to lobby for targeted relief. As the policy rolls out, stakeholders on both sides stress the need for infrastructure upgrades to align economic pressures with environmental priorities.