Part one: New monitoring and reporting obligations for emissions – are you EU MRV ready?

Since 1 January 2018, ships above 5000 gross tonnage are subject to monitoring and reporting obligations of their carbon dioxide emissions for voyages from, between or to ports within the European Union (EU) territory. This is pursuant to European legislation which came into force on 1 July 2015, but became fully effective at the beginning of this year.

International maritime shipping remains the only means of transport not forming part of the EU’s commitment to reduce greenhouse gas emissions. Shipping emissions are predicted to increase between 50% and 250% by 2050 (depending on future economic/energy developments). Therefore, there is drive for measures for the reduction of such emissions.

Part one of this article considers the relevant legal framework and the key compliance dates for implementation. Part two looks in more detail at the obligations of monitoring, reporting and verification and also summarises the relevant UK legislation. 

Legal framework

The key instrument establishing the new framework is Regulation 2015/757 (as amended by delegated Regulation 2016/2071) on the monitoring, reporting and verification (MRV) of carbon dioxide emissions from maritime transport (the ‘Regulation’). Also of relevance are the delegated Regulation 2016/2072 on verification activities and accreditation, the implementing Regulation 2016/1927 on templates and the implementing Regulation 2016/1928 on determination of cargo carried for certain ship categories.

According to the Regulation, the MRV system is seen as the first step of a staged approach for the inclusion of maritime transport emissions in the EU’s greenhouse gas reduction commitment. Reductions can be achieved by applying operational measures and implementing existing technologies. For the time being, no substantial investment is required.

However, with ongoing demands for the implementation of measures to reduce emissions and fuel consumption it is likely that substantial investment might be required, thus older vessels might have to be scrapped earlier than anticipated. Currently the adoption of such measures is affected also by the lack of access to financial incentives for investment in ship efficiency and the reality that since charterers pay the fuel bills, owners are not going to benefit from investing in improving fuel consumption/efficiency.

Application

The Regulation imposes monitoring and reporting obligations on ships above 5000 gross tonnage (irrespective of flag) in relation to their carbon dioxide emissions released and other relevant information during their voyages from, to and between ports under the jurisdiction of a member state.

There are limited exclusions for some categories including warships, naval auxiliaries, and fish-catching or fish-processing ships.

What?

The Regulation applies to commercial voyages, including ballast ones. A voyage is defined as any movement of a ship that originates or terminates in a port of call and that serves the purpose of transporting passengers or cargo for commercial purposes.

Activities such as dredging, ice-breaking, pipe laying or offshore installation are not included.

Stops in ports where the vessel does not transport passengers or cargo are not considered as ports of call. Examples include stops for the sole purpose of refuelling, getting supplies, going into dry-dock or when a vessel stops at a port in need of assistance.

Where?

For the Regulation to be applicable, the voyage must be from, between or to a port located within the EU territory, including Norway and Iceland. There are some European Economic Area member states’ overseas countries and territories which do not qualify as ports of call within the territory.

Who?

MRV obligations are to be fulfilled on a ‘per ship’ basis. The obligation falls upon the ship owner or any other entity who has taken the responsibility of operating the vessel, such as managers or bareboat charterers (referred to as ‘company’ in the Regulation).

Key dates

The key compliance dates for MRV companies are summarised as follows:

• By 31 August 2017, MRV companies shall have submitted for approval to an accredited verifier a monitoring plan on a ‘per ship’ basis indicating the chosen method for monitoring and reporting emissions and other relevant information. It consists of transparent and complete documentation of the monitoring method and procedures to be applied to each of their ships. The fact that this deadline has passed is not necessarily an issue, as the Regulation makes provision that for vessels falling under the scope of the Regulation after that date, the relevant MRV company is to submit a monitoring plan to a verifier at the latest within two months after the vessel’s relevant call in a port
• From 1 January 2018 MRV companies (on the basis of the ship’s satisfactorily assessed monitoring plan) are to commence the monitoring of the carbon dioxide emissions and other relevant information for each ship on a per-voyage and annual basis
• From 2019 onwards and by 30 April of each year, MRV companies are to submit to the European Commission and the flag state authorities, an emissions report verified independently for each ship under their responsibility
• From 30 June 2019 onwards, ships having carried out activities falling under the Regulation during the previous calendar year and visiting ports within the EU territory shall have on board a valid document of compliance relating to the relevant reporting period
• By 30 June each year, the European Commission shall make publicly available the information on carbon dioxide emissions and further information prescribed under the Regulation

Read part two: New monitoring and reporting obligations for emissions – are you EU MRV ready?