To add to its suite of ETS clauses, on 8 December 2023 BIMCO released the ETS – SHIPMAN Emission Trading Scheme Allowances Clause 2023.
The clause deals with two situations.
First, the default position under the EU ETS, whereby owners are the responsible entity for surrendering emissions allowances. The owners are to comply with, or procure compliance with, surrender of emissions allowances under any relevant scheme, and the ship manager are to provide Owners with emissions data in a timely fashion to enable Owners to comply with their emissions allowance obligations.
Second, where the party responsible for emissions allowances is the ship manager (with the ETS that will be the case where there has been an appropriate written delegation in accordance with the Implementing Regulation of November 2023).
The clause provides for the Ship Managers to surrender the allowances in accordance with the provisions of the relevant emissions scheme and provides a framework for Owners to pay the Ship Managers in respect of those emissions allowances.
The Ship Manager is to be responsible for:
-providing the Owners with Emission Data together with the calculation of the Emission Allowances required;
-monitoring and reporting Emission Data to the administering authority in accordance with the Emission Scheme(s) applicable to the Vessel, and;
-each month preparing and presenting to the Owners, in writing, their estimates of the Emission Allowances for the Vessel for the ensuing month, including the reconciliation of the Vessel’s actual emissions under each Emission Scheme applicable to the Vessel for the previous months and adjustment for any previous shortfall or excess.
Owners who have made the necessary delegation to the ship manager to act as the shipping company under the ETS, needs to be aware of the provisions of Article 16(11a) of the revised ETS Directive.
“In the case of a shipping company that has failed to comply with the surrender obligations for two or
more consecutive reporting periods, and where other enforcement measures have failed to ensure compliance, the competent authority of the Member State of the port of entry may, after giving the opportunity to the shipping company concerned to submit its observations, issue an expulsion order, which shall be notified to the Commission, the European Maritime Safety Agency (EMSA), the other Member States and the flag State concerned. As a result of the issuing of such an expulsion order, every Member State, with the exception of the Member State whose flag the ship is flying, shall refuse entry of the ships under the responsibility of the shipping company concerned into any of its ports until the shipping company fulfils its surrender obligations in accordance with Article 12. Where the ship flies the flag of a Member State and enters or is found in one of its ports, the Member State concerned shall, after giving the opportunity to the shipping company concerned to submit its observations, detain the ship until the shipping company fulfils its surrender obligations.
Where a ship of a shipping company as referred to in the first subparagraph is found in one of the ports of the Member State whose flag the ship is flying, the Member State concerned may, after giving the opportunity to the shipping company concerned to submit its observations, issue a flag State detention order until the shipping company fulfils its surrender obligations. It shall inform the Commission, EMSA and the other Member States thereof. As a result of the issuing of such a flag State detention order, every Member State shall take the same measures as are required to be taken following the issuing of an expulsion order in accordance with the first subparagraph, second sentence.
This paragraph shall be without prejudice to international maritime rules applicable in the case of ships in distress.”
Accordingly, an owner could find themselves adversely affected by a default by their ship manager in regard to emissions from other vessels whose owners have made a delegation to them to constitute them as their shipping company. Some provision for this should be made in owner’s ship management contract, such as a provision that the managers warrant that they will make timely and full surrender of allowances accrued in respect of other vessels for whom they have been constituted as the ‘shipping company’ under the revised ETS Directive 2023/959
