EU ETS impact on EU MRV reporting

Ships of 5,000 gross tonnage and above, carrying out voyages to and/or from ports in the European Economic Area, must submit a revised and verified monitoring plan for carbon dioxide (CO2), methane (CH4) and nitrous oxide (N2O) emissions to the administering authority by 1 April 2024.

Since 1 January 2018, large ships of 5,000 gross tonnage (GT) and above loading or unloading cargo or passengers at ports in the European Economic Area (EEA) have been required to monitor and report related CO2 emissions and other relevant information to the European Commission (EC) under its Monitoring, Reporting and Verification of Maritime Transport (MRV) Regulation (2015/757).

In order to ensure the effective functioning of the EU Emission Trading System (ETS) at an administrative level, the scope of the EU MRV Regulation has been amended and now includes requirements for additional greenhouse gases and emissions from additional ship types.

A consolidated version of the amended EU MRV Regulation is available on the EC website. A “questions and answers page” further guides shipping companies in understanding the application of the regulation.

Recommendations

Preparation is key for companies to comply with the amended EU MRV Regulation. As most major classification societies are acting as accredited bodies for EU MRV verification, we recommend consulting the vessel’s classification society for assistance. They will be able to work with you to assess monitoring plans to ensure they comply, as well as verify annual emission data. However, the following key dates and requirements should be noted:

Application

• From 1 January 2024, ships of 5,000 GT and above transporting cargo or passengers for commercial purposes.
• From 1 January 2025, general cargo and offshore ships of 400 GT and above will also be eligible.

Scope of emissions

• From 1 January 2024, companies must, for each eligible ship under their responsibility, monitor and report methane (CH4) and nitrous oxide (N2O) emissions, in addition to carbon dioxide (CO2) emissions.

Monitoring plan

• No later than 1 April 2024, companies shall, for each eligible ship under their responsibility, submit a revised and verified monitoring plan to the responsible Administering Authority.
• For ships falling for the first time under the EU MRV Regulation, a monitoring plan shall be submitted no later than three months after each ship’s first call in an EEA port.

Reporting

• From 2025, by 31 March of each year, companies shall, for each eligible ship under their responsibility, submit an emissions report for the entire reporting period of the previous year, which has been verified as satisfactory by an accredited verifier, to the relevant Administering Authority as well as to the flag State and the EC.
• From 2025, by 31 March of each year, for ships falling within the scope of the EU ETS Directive, aggregated emissions data at company level must also be submitted.

Risks of non-compliance

• In case of a ship that has failed to comply with the monitoring and reporting obligations for two or more consecutive reporting periods, and where other enforcement measures have failed to ensure compliance, the competent authority of an EEA port of entry may, after giving the opportunity to the company concerned to submit its observations, issue an expulsion order, which will be notified to the EC, the European Maritime Safety Agency (EMSA), the other EEA countries and the flag State concerned.
• Where such a ship flies the flag of an EEA country and enters or is found in one of its ports, the country concerned will, after giving the opportunity to the company concerned to submit its observations, detain the ship until the company fulfils its monitoring and reporting obligations.

If you would like to know more about the implications of including maritime emissions in the EU ETS from 2024, our insights EU ETS: important compliance clarifications of 4 January 2024 and The EU Emission Trading System – are you ready? of 7 December 2022 provide the details.
Source: Gard, https://www.gard.no/web/articles?documentId=36544785