EU ETS

DNV explains how its Emissions Connect can help in navigating new EU ETS landscape

DNV released a report on its Emissions Connect service and how the shipping industry could benefit from it in view of the expansion of EU ETS into shipping in January this year.

Published

7 months ago

June 21, 2024

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Classification society DNV on Thursday (16 November) released a Maritime Impact report on its Emissions Connect and how the shipping industry could benefit from it in view of the expansion of EU ETS into shipping in January this year:

The introduction of the EU’s Emissions Trading System (ETS) into shipping has brought significant changes, deeply impacting financial operations, day-to-day management and commercial transactions. Frontline, a global leader in tankers, explains how DNV’s Emissions Connect is helping them to navigate this complex environment.

Growing moves to decarbonize the maritime industry are being accompanied and advanced by its rapid digitalization. Following the expansion of the EU ETS into shipping in January 2024, the importance of accurate, reliable data has never been higher. DNV’s Emissions Connect offers a comprehensive solution that ensures accuracy and dependability in emissions verification, helping stakeholders manage costs effectively under the new regulatory framework.

The role of data in a changing maritime environment

“We’re in a whole new dimension now,” says Pål Lande, Digital Business Development Director at DNV. “A lot of work has been done in recent years, and new regulations have emerged, gradually raising the importance of emissions data. This started with the EU’s Monitoring, Reporting and Verification (MRV) regulation, which mandates emissions reporting on an annual basis.

“While MRV reporting will continue to be a requirement in itself, since January 2024 companies also have to manage the costs of carbon credits through the expansion of the EU’s Emissions Trading Scheme into shipping.”

Frontline’s digital journey

Although the implication of the EU ETS has changed the dynamics of emissions reporting, this has been on the horizon for some time. For some companies, this has been just another stage on their digitalization journey.

“We decided to embark on a journey about four years ago, together with DNV, to handle our digital transformation,” says Lars Pedersen, CTO at Frontline. “This started with data collection for ESG reporting and has since evolved into reporting for the EU’s MRV regulation and IMO’s Data Collection System.

“These were frontrunners to the EU ETS reporting and enabled a very smooth transition when this came into force in January 2024. This also means that we are well prepared for further regulations down the line, such as FuelEU Maritime.”

From annual to daily reporting

The implementation of the EU ETS in 2024 means that many shipowners now also need to report emissions data, and have it verified, as part of their day-to-day operations.

“Traditionally, decision-making in shipping has been informed by annual aggregated data, where deadlines were not urgent and the impacts from incorrectly inputted data were limited,” says Lande. “However, the introduction of the EU ETS has created a paradigm shift. While the ETS itself does not mandate daily reporting, the financial implications of emissions costs necessitate daily management of emissions data.

“Effective management of this data is now crucial, influencing everything from compliance and certification to financial accounting. It also profoundly affects how shipping companies interact with their commercial partners.”

Impact of EU ETS on commercial transactions

Under the EU ETS scheme, the shipowner is responsible for the reporting of data and the purchasing and surrendering of carbon credits, a change from previous regulations where the ship manager was responsible. Nonetheless, the complexity of commercial relationships means that clarity over emissions – and who will pay for them – is now a fundamental part of many transactions.

“Carbon costs and other liabilities need to be handled throughout the value chain. How this is done will depend on a range of factors, such as segment, geography and agreements between key stakeholders like owners, managers and charterers,” says Lande.

“For all of this to function correctly, it is vital that there is a high degree of trust in data related to emissions, and other things like ship performance. Failure to do this correctly could lead to a lot of disputes.”

The value of verification

Frontline operates one of the largest tanker fleets in the industry, dealing with commercial transactions across the value chain on a daily basis.

“Every voyage involves a commercial settlement between owners and charterers,” says Pedersen. “Before, this was limited to the hiring of the vessel, but now it also includes the settlement of emissions.”

For this to function correctly, it is crucial that the data is both accurate and reinforced by a stamp of approval from a trusted third party.

“Having accurate, trusted data, delivered in a timely and cost-efficient way, and verified by a recognized classification society like DNV, provides it with a level of trust and security. This generates confidence throughout our own operations and helps a lot in commercial settlements.”

Note: The full Maritime Impact by DNV can be found here.

Photo credit: Frontline Management
Published: 21 June, 2024

Events

OceanScore to launch combined EU ETS and FuelEU solution in Singapore

Albrecht Grell, Managing Director, and Leo Grayson, Head of Commercial, APAC, will explain how the Compliance Manager can help businesses thrive under the latest regulations.

Published

2 weeks ago

January 8, 2025

Admin

OceanScore Managing Director Albrecht Grell

Hamburg-based technology platform OceanScore will introduce the Compliance Manager, its new solution that will help effectively manage FuelEU Maritime Regulation and EU Emissions Trading System (EU ETS) on one platform, in Singapore.

Albrecht Grell, Managing Director, and Leo Grayson, Head of Commercial, APAC, will discuss the FuelEU regulation in depth, what it means for Asian players, and best practices and strategies for efficient compliance.

The event will be held from 3 to 5pm (Singapore time) on 23 January. The venue of the event will be at OceanScore Singapore, c/o Blue Net Chartering Asia Pte. Ltd., 20 Cecil Street, PLUS, #24-02.

Note: Registration for the event can be completed here.

Photo credit: OceanScore
Published: 8 January, 2025

Port & Regulatory

Danish Shipping: FuelEU Maritime Comes into Force on 1 January

Currently, the lack of green fuels at competitive prices is the biggest challenge for the green transition of shipping.

Published

4 weeks ago

December 30, 2024

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Danish Shipping, a trade and employers' organisation for Denmark's shipping industry, on Thursday (26 December) issued a statement welcoming FuelEU which aims to promote the use of green and low-emission fuels within EU shipping but highlights the need for global climate regulation of the shipping industry:

FuelEU Maritime is part of the EU’s climate legislation package, “Fit for 55.” The new rules aim to significantly reduce CO2 emissions from shipping. The regulation not only seeks to lower the sector's carbon footprint but also to create incentives for the development and use of alternative fuels that support a more environmentally friendly transition for the entire maritime industry.

"The EU has ambitious climate goals, which we at Danish Shipping fully support. I am confident that Danish shipping companies are well-prepared for the new EU requirements. Danish shipping companies are already investing heavily in green ships, fuels, and technologies that can reduce fuel consumption and improve energy efficiency," said Nina Porst, Director of Climate, Environment, and Safety at Danish Shipping.

FuelEU Maritime is the latest addition to the EU's regulation of the shipping industry. On 1 January 2024, shipping was included in the EU Emissions Trading System (ETS). Allowances for permitted emissions will be gradually reduced, making it increasingly expensive for companies to emit greenhouse gases.

"I hope FuelEU Maritime can help drive both the demand for and production of green fuels for shipping. Currently, the lack of green fuels at competitive prices is the biggest challenge for the green transition of shipping. Additionally, it is important to emphasise that while the EU’s regulation of shipping emissions is undoubtedly a step in the right direction towards climate neutrality, it is crucial that EU countries also push for international rules within the IMO, applicable regardless of where ships operate," said Nina Porst.

Photo credit: Chris Pagan on Unsplash
Published: 30 December 2024

Emissions reporting

DNV simplifies reporting compliance for Asian shipowners with Emissions Connect

DNV shares how its online tool can help Asian shipowners and operators such as Singapore-based UMMS overcome challenges in emissions reporting to comply with global regulatory frameworks such as EU ETS and FuelEU.

Published

2 months ago

November 22, 2024

Admin

DNV simplifies reporting compliance for Asian shipowners with Emissions Connect

The global regulatory framework aiming to decarbonize the shipping industry has reached a considerable level of complexity, confronting Asian shipowners and operators with the challenging task of collecting, managing, verifying and reporting emission data on a regular basis. DNV has developed a comprehensive online emission data validation and management tool that helps the industry share trustworthy data:

New rules require a new approach

The IMO’s Carbon Intensity Indicator (CII), the management of EU allowances (EUAs) within the EU Emissions Trading System (ETS), and the forthcoming FuelEU Maritime Regulation come with challenges for the maritime industry. There are still wide-spread misconceptions about the EU ETS scheme, and many registered owners have not realized that it is their responsibility to report emissions and purchase EUAs for their vessels operating in European waters.

“Purchasing and surrendering emission allowances under the EU ETS can be costly for shipping companies,” explains Dominic Ng, Head of APAC Veracity at DNV in Singapore. “This has consequences for contractual agreements between parties across the value chain.”

For shipowners, ship operators and managers, charterers and cargo owners, it is crucial to collaborate closely to ensure compliance and avoid the risks of defaulting on emission reporting duties, incurring unnecessary costs, and experiencing data handling errors. For example, to compute ETS exposure and file the consolidated end-of-voyage emission reports, charterers need daily emission data feeds from their ships.

A digital tool establishing a single source of truth

Of critical concern is the accuracy and reliability of the reported emission data because it influences the number of EU allowances that must be purchased. The data collected on board should therefore be verified and receive a “stamp of approval” from a trusted third party.

Recognizing these needs, DNV developed its online tool Emissions Connect, available on the Veracity platform. “Emissions Connect combines three key functionalities the shipping industry needs to comply with decarbonization regulations: consistent management of emissions data, easy integration of business partners, and quick generation of the mandatory statements,” Ng points out. “It provides the trusted single source of truth everyone needs for efficient emission reporting.”

DNV simplifies reporting compliance for Asian shipowners with Emissions Connect

Union Marine believes in being proactive

Many shipowners in Asia erroneously believe that EU ETS compliance is exclusively the charterer’s responsibility, says Vinay Gupta, Founder and Managing Director of Singapore-based Union Marine Management Services Pte. Ltd. (UMMS). “We started our EU ETS compliance programme in August of 2023. I personally held a two-hour session with each of our 18 clients operating ships in EU waters, explaining to them what EU ETS stands for and how it will affect them, how they can manage it, and how they can mitigate any inherent risk.”

UMMS had been using DNV’s Veracity data platform for IMO DCS and EU MRV verification since 2019. When Emissions Connect was added, DNV helped UMMS integrate the solution with their ERP system through an application program interface (API). Today UMMS uses Emissions Connect for all vessels going on EU voyages, or roughly 25 per cent of their managed fleet.

Convenience, transparency and data security

“Emissions Connect has added value by streamlining the way our data is arranged,” Gupta continues. “Following integration of Emissions Connect, we were able to identify the gaps in our reporting system and now the data undergoes many more levels of checks and sanitation before it is synchronised with the Emissions Connect portal for verification.”

“Verified EU ETS statements can be generated quickly and submitted to the owner or charterer within seven days of voyage completion”, Gupta adds. “Emissions Connect has a user-friendly interface, and its voyage simulation feature assists in planning future CII ratings for an intended voyage, helping managers proactively maintain vessel emission levels. All this brings added value to our clients.”

When a German bank offered its emission allowance trading services to UMMS, Gupta opened a certificate trading account as the final element in a seamless EU ETS value chain: Fuel consumption data captured on board and transmitted to shore in the noon report is subsequently routed through the API to DNV’s Veracity and Emissions Connect, where it is quality assured and verified. From here the trusted data is seamlessly transmitted to the trading account. “This end-to-end process is so convenient we are now offering it as a service to many clients, including some whose ships are not even under our management,” says Gupta.

“With the DNV Emissions Connect, we can have transparency and effective monitoring of the data being submitted and verified,” explains Gupta. “All the calculations on Emissions Connect are in line with the latest requirements and are accepted industry-wide.” Thanks to its EU ETS know-how, UMMS can now be of help to companies struggling to understand the regulation. “Many owners still don’t know what it is they need to know to carry on with their business,” Gupta points out.

Getting ready for FuelEU Maritime

“DNV are very mature in their understanding of the regulations and how they have to be implemented,” summarizes Gupta. “They are a good partner to have in the current situation – a very collaborative, proactive, forward-thinking organization.”

As both companies’ experiences with the EU ETS introduction have shown, this proactive mindset is enormously helpful in coping with regulatory challenges. Both organizations strongly believe in helping shipowners understand that increasing the efficiency of their vessels can improve CII ratings, lower EU ETS costs incurred and enhance the competitiveness of their vessels.

The next major challenge, FuelEU Maritime, will add further complexity to emissions reporting: Reconciling regulatory deadlines and commercial obligations will require even closer alignment and synchronization between the stakeholders. However, with a unified, common data architecture and a centralized “single source of truth” available for secure data sharing, and with a smooth emission reporting process in place, that next step should quickly lose its scare.

Photo credit: DNV, UMMS
Published: 22 November, 2024