UK formalises inclusion of international aviation and shipping in climate budgets to close accounting gaps

The UK is set to bring international aviation and shipping into its future carbon budgets, a move that formalises a long-running assumption in climate planning and closes off a potential accounting gap in the path to net zero.

In a letter to Transport Select Committee chair Ruth Cadbury, climate minister Katie White confirmed that the Government will legislate to count emissions from both sectors alongside the rest of the economy through to 2050. A separate instrument will set the use of international carbon credits for the Fifth Carbon Budget, covering 2028 to 2032, at zero.

The changes will be debated later in the current parliamentary session alongside the Carbon Budget Order. Ministers have stressed that the new rules do not tighten sector-specific targets or alter the UK’s climate commitments. Instead, they codify an approach that has already been built into policy assumptions for some time.

The move follows repeated pressure from Parliament and the Climate Change Committee, which has argued that aviation and shipping should be fully reflected in the UK’s carbon budgeting framework. For industrial decarbonisation planners, the significance is less about the accounting change itself than about the clarity it brings to long-term sectoral expectations.

Aviation remains one of the most difficult transport segments to decarbonise. Government planning assumes the sector can cut emissions by up to 6.3 million tonnes of CO2 equivalent by 2040, with sustainable aviation fuels expected to do much of the heavy lifting. Under the UK’s SAF mandate, introduced last year, suppliers must blend 10% SAF by 2030, rising to 22% by 2040.

But the policy signal is running ahead of market readiness. Demand has yet to catch up with projected supply, some production projects are under financial strain, and critics continue to question whether all SAF pathways deliver the lifecycle emissions cuts needed to support net-zero claims. Airport expansion is adding further pressure. The Environmental Audit Committee warned last October that growth plans could undermine climate goals, while Luton Airport aims to serve 32 million passengers a year by 2043 and Gatwick is seeking permission for as many as 100,000 additional flights annually by the late 2030s.

Shipping faces a different but equally complex set of barriers. The sector’s emissions have fallen by 30% since 1990, yet it still accounted for 7.9% of UK transport emissions in 2022, according to Government data. The updated maritime strategy sets interim milestones towards net zero by 2050, requiring vessel owners to cut emissions by 30% by 2030 and 80% by 2040 compared with a 2008 baseline.

The challenge is that shipping is a global market, with investment decisions shaped by international regulation, fuel availability and uncertainty over which low-carbon technologies will prove commercially viable. The UK plans to include domestic shipping in its Emissions Trading Scheme from 2026, but industry groups have warned that the system may be arriving before the sector is ready. The UK Chamber of Shipping has recently called for a delay, arguing that businesses still lack the support needed to prepare.

At international level, the debate is far from settled. Talks at the International Maritime Organisation over a possible global carbon levy were delayed last year after opposition from the US, while European states continue to back a worldwide carbon price. As negotiations resume this week, the prospect of another round of diplomatic friction remains very real.

For Government, the latest instruments are as much about credibility as they are about arithmetic. By placing aviation and shipping inside the carbon budget framework, ministers are signalling that neither sector will sit outside the UK’s core climate planning, even if the route to decarbonisation remains expensive, politically sensitive and technically unresolved.