Bastille Day. EU Commission’s present to the shipping industry.

Today the EU Commission has issued a 581 page document with a proposed directive amending the 2003 ETS Directive. This is considerably less extensive that the proposed amendment to the 2015 MRV Regulation which is what the EU Parliament voted for last October.

Maritime transport will now fall within the Directive (inserted articles 3g to 3ge) which will apply in respect of: emissions from intra-EU voyages; half of the emissions from extra-EU voyages and; emissions occurring at berth in an EU port. This rows back from the Parliament’s proposed amendments to the 2015 MRV Regulation which would have included all emissions from extra-EU voyages which started from or ended within the EU. The same rules that apply to other sectors covered by the EU ETS should apply to maritime transport with regard to auctioning, the transfer, surrender and cancellation of allowances, penalties and registries (Article 16).  Shipping will enjoy phased entry into the ETS. Shipping companies shall be liable to surrender allowances according to the following schedule: (a) 20 % of verified emissions reported for 2023; (b) 45 % of verified emissions reported for 2024; (c) 70 % of verified emissions reported for 2025; (d) 100 % of verified emissions reported for 2026 and each year thereafter: somewhat different from the inclusion in the ETS as of 1.1.2022 proposed by the EU Parliament. The current MRV Regulation applies only to CO2 emissions and the Commission leaves extension to other gases to a later phase, once the monitoring approaches and emissions factors of these gases has been agreed.

The proposed amending directive includes new definitions for “shipping company” and “administering authority in respect of shipping companies” in Article 3(v) and Article 3(w) respectively.  The person or organisation responsible for the compliance with the EU ETS should be the shipping company, defined as the shipowner or any other organisation or person, such as the manager or the bareboat charterer, that has assumed the responsibility for the operation of the ship from the shipowner and that, on assuming such responsibility, has agreed to take over all the duties and responsibilities imposed by the International Management Code for the Safe Operation of Ships and for Pollution Prevention. This definition is based on the definition of ‘company’ in Article 3, point (d) of Regulation (EU) 2015/757, and in line with the global data collection system established in 2016 by the IMO. This is good news for time charterers who would have become responsible under the Parliament’s proposed amendment to the MRV Regulation.

Still, half a loaf is better than what is currently being served up by the IMO on its GHG reduction menu for international shipping.

The proposed Directive can be found here: https://ec.europa.eu/info/sites/default/files/revision-eu-ets_with-annex_en_0.pdf