In a nutshell: The question of whether the shipowner or the manager will be responsible for the submission of emission certificates has now been definitively answered.

The Implementing Regulation was adopted on 22 November 2023 with some additions and confirmed that the shipowner is responsible for submitting the certificates, unless otherwise agreed. In addition, it has been clarified that the person or organisation that has assumed responsibility as a “shipping company” for compliance with the relevant obligations under Directive 2003/87/EC (as last amended, the “ETS Directive”) must be the same person or organisation responsible for monitoring and reporting greenhouse gas emissions from the relevant ships under Regulation (EU) 2015/757 (as last amended, the “MRV Regulation”). In this newsletter, we provide an overview of what this means in practice.

INTRODUCTION

The extension of the European Union Emissions Trading System (EU ETS) to greenhouse gas emissions from the shipping industry from 1 January 2024 is not far off. For a few weeks now, more and more clarifications and information have been published on outstanding issues relating to the EU ETS in the shipping industry. The question of who will be responsible for submitting emission allowances to the competent administrative authorities in the Member States of the European Union (EU) – the shipowner or the manager – had already been clarified by a draft implementing regulation published by the European Commission on 1 September 2023. According to this draft, it should be the shipowner, unless there are other arrangements within the meaning of the Implementing Regulation.

EFFECTS OF THE IMPLEMENTING REGULATION

The “Commission Implementing Regulation (EU) laying down rules for the application of Directive 2003/87/EC of the European Parliament and of the Council as regards the administration of shipping companies by the administering authorities in respect of a shipping company” (the “Implementing Regulation”) was adopted by the European Commission on 22 November 2023.

As already mentioned in the draft implementing regulation, the Implementing Regulation stipulates that the registered shipowner is generally responsible for compliance with national measures to implement the ETS Directive, including the submission of the required emission allowances to the competent administrative authority in the respective Member State. This applies unless another contractual agreement has been concluded which fulfils the requirements set out in the Implementing Regulation (including the provision of certain data and information). The Implementing Regulation has now clarified that one and the same person or organisation must be responsible both for compliance with the MRV Regulation (i.e. for monitoring, verifying and reporting the greenhouse gas emissions of the relevant ships) and for the obligations arising from the ETS Directive towards the EU and the competent administrative authority.

This leads to three basic options between which the shipowner can choose by means of a suitable contractual arrangement:

(1) The shipowner is the responsible person both for the fulfilment of the EU ETS obligations (i.e. for compliance with the national measures implementing the ETS Directive 2003/87/EC, including the surrender of emission allowances to the responsible administrative authority) as well as for the obligations arising from the MRV Regulation.

(2) The shipowner remains the responsible person both for the fulfilment of the EU ETS obligations as well as for compliance with the obligations under the MRV Regulation, but appoints one or more service providers to support him in fulfilling all requirements associated with the EU ETS or the MRV Regulation( e.g. in collecting the necessary data).

(3) The shipowner transfers responsibility not only for compliance with the obligations under the MRV Regulation, but also for compliance with the EU ETS obligations to another person or organisation, such as the manager or bareboat charterer. This transfer must comply with the formal requirements set out in the Implementing Regulation. If it does not, the shipowner remains the responsible person.

This means that not only the obligations under the ETS Directive, but also those under the MRV Regulation must be fulfilled by the person or organisation responsible according to these three options in order to meet all the requirements that the extension of the EU ETS to the shipping industry entails. This clarification should be included in the negotiation of the respective clauses.

A further addition to the Implementing Regulation, which was dealt with differently in the draft implementing regulation, states that the country of registration of a shipping company that is recorded in “Thetis MRV” – the EU’s special information system to support the implementation of the MRV Regulation – should be decisive for the purposes of assigning a shipping company to the respective competent national administrative authority. Conversely, the draft implementing regulation envisaged the “International Maritime Organization Unique Company And Registered Owner Identification Number Scheme” for this purpose.

In the coming weeks, the Baltic and International Maritime Council (BIMCO) is also expected to publish an EU ETS clause for the SHIPMAN ship management contract. We will be happy to assist you in weighing up your options and drafting the appropriate clauses for your contracts.

Please get in touch with your contact person at EHLERMANN RINDFLEISCH GADOW or with Dr. Julia Glocke or Hendrik Brauns.

For further information on this topic, we would also like to refer you to our newsletters of 27 January 2023 and 11 October 2023.