Reed Smith partners Tallat Hussain and Nick Austin and counsel Julie Vaughan discuss the evolving landscape of emissions trading systems (ETS) and their impact on the maritime sector. Key topics include the EU ETS, the International Maritime Organization’s carbon intensity rating scheme, and the UK government’s proposal to extend its ETS to maritime emissions. They explore the implications for shipping entities and the potential for monetizing emissions reductions in the sector. ----more---- Transcript: Intro: Trading Straits brings legal and business insights at the intersection of the shipping and energy sectors. This podcast series offers trends, developments, challenges and topics of interest from Reed Smith litigation, regulatory and finance laws across our network of global offices. If you have any questions about the topics discussed on this podcast, please do contact our speakers.  Julie: Hello everyone and welcome back to Trading Straits. I'm Julie Vaughan, environmental counsel in the Energy and Natural Resources team at Reed Smith in London. I'm joined today by my colleagues Tallat Hussain, an environmental lawyer, and Nick Austin, a shipping lawyer, both partners based in our London office. In this podcast today, we'll be firstly recapping where things stand with implementing the EU emissions trading system for the maritime sector, including looking ahead to some changes that are approaching, and also touching on the role of the IMO, the International Monetary Organization's Carbon Intensity Rating Scheme and some challenges that it's facing. And then secondly, we're going to talk about the recent proposal by the UK government to extend the UK's emissions trading system that operates in Great Britain post-Brexit to also include maritime emissions. We'll be discussing some of the key features of that proposal and also potential international implications. So Nick, if we could come to you first, perhaps you could give us an overview of the current EU maritime ETS and highlight some of its central points for us.  Nick: Yeah, I mean, last year we were talking on previous episodes of Trading Straits about changes to the EU ETS and its extension to shipping last year during the fourth phase of the EU ETS scheme running until 2030. And by way of recap, what has happened is that the maritime sector has been brought in to the scope of EU ETS, the wider EU ETS from the 1st of January last year, initially for ships, commercial ships of more than 5,000 gross tonnes. And listeners of this podcast will remember that what ETS does is impose obligations on the so-called shipping companies who have needed to set up new compliance procedures, open accounts, and ultimately buy and surrender EU allowances annually to cover emissions from voyages which are caught within the scope of the scheme. So I think my sense is that it remains a really big show in town, and it's having a significant impact in the sector, not the least of which, of course, is cost. And we've been working with clients on all of the mechanics of that, from setting up the accounts, making necessary registrations, negotiating charter clauses to suit the needs of owners and charterers. And I think that will continue throughout 2025, because, in fact, this year heralds a couple of new developments for EU ETS in shipping. First from January of this year, the 1st of January, the scope of EU ETS will expand further to include offshore vessels over 5,000 tonnes, which are calling it EU ports. And I think new challenges are remaining for the vessels which have been subject to the ETS already since 2024 in what I would call the next stage of compliance. And that means that the emissions data for the 2024 year has to be reported on and verified by an accredited verifier by the 31st of March this year, just some weeks away. And ship owners and operators then have a further six months until the 30th of September to submit the correct number, hopefully correct number,