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.
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.”
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
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Port & Regulatory
DNV: EU defines offshore ships for EU MRV reporting
From 1 January 2025, offshore ships above 400 GT are required to report GHG emissions data under the EU MRV regulation.
Classification society DNV, an accredited verifier for the EU MRV verification services since 2018, on Friday (8 November) issued guidance for offshore vessels under the EU MRV scheme:
Offshore ships above 400 GT are required to start reporting GHG emissions from 1 January 2025.
The adopted Delegated Regulation (to be published by the end of 2024) amends the EU MRV Regulation 2015/757 stating that the following ships designed or certified to perform service activities offshore or at offshore installations should be considered offshore ships:
Ship types
The ship’s statutory certifications or any other relevant documentation, including class notations, should be taken into consideration to determine whether the ship falls under the definition of an offshore ship or not.
DNV does not consider platforms and rigs, such as jack-ups and semi-submersible platforms, to fall under any of the ship types listed. Therefore, for such objects there is no need to prepare an MRV Monitoring Plan and start reporting. However, more guidance may be issued later specifying this list further.
Company responsible for the EU MRV Monitoring Plan
According to the MRV regulations, the registered owner is the company responsible, unless it has explicitly mandated the ISM company.
The company responsible should submit the Monitoring Plan to an accredited verifier for assessment and then to the company’s administering authority as soon as possible in time for the reporting period starting 1 January 2025.
EU ETS from 1 January 2027 (>5,000 GT)
Note that offshore ships of 5,000 GT and above will fall under the scope of the EU ETS from 1 January 2027, while ships of 400 GT and up to 5,000 GT will be reviewed by 31 December 2026 for inclusion at a later stage.
A company that is only responsible for offshore vessels (and not responsible for other ship types) does not need to open a Maritime Operator Holding Account, as the EU ETS does not apply to these ships before 2027.
Voyage-based reporting in the EU MRV
The inclusion of offshore ships in the EU MRV scheme from 2025 implies that each port of call and voyage must be monitored and reported. Reporting in regular intervals (such as every day at noon or at midnight) should be supplemented by reports documenting the start and end of a port call. In addition, emissions resulting from ship movements within a port of call should be monitored and reported. Relevant resources for reporting:
- For specific requirements related to reporting to DNV, we encourage you to visit our dedicated guidance page, see below under Resources, “Veracity’s OVD reporting resource page”.
- How to report shifting in port, see below under Resources, “How to report shifting in port for MRV”.
- How to report for offshore ships, see below under Resources: “How to report for offshore vessels”.
Port definition
The European Commission is expected to publish guidance related to stops at offshore facilities. Apart from port facilities ashore, which should naturally also be considered as a port in the context of the EU MRV Regulation, the following should be considered as a port:
- An offshore facility (such as an FPSO, FSRU) with an assigned UN/LOCODE
- An offshore facility located outside of the port but permanently connected to a port (such as loading buoys)
If an offshore ship stops at such a facility to load or unload cargo, embark or disembark passengers, or relieve crew, it will be considered a port of call under the EU MRV Regulation. Relevant resources:
- How to report port calls, see below under Resources, “How to report port calls”
Definition of “port of call”
An MRV voyage is defined as being from one port of call to another port of call, and any activities carried out in between are considered part of the voyage.
For an offshore ship, if at least one of the following conditions are met, a stop in a port is considered a port of call:
- A port where the ship stops to load or unload cargo or to embark or disembark passengers
- A port where the ship stops to relieve the crew
In addition, ship-to-ship transfer within port limits is considered a port of call in the EU MRV Regulation. In the voyage scenario below, the MRV voyage A starts when ship’s crew embarks the vessel in a member state port. The vessel proceeds to a service area (e.g. offshore installation, project site, research area) to perform service activity and later returns to a member state port to relieve the crew. The MRV voyage covers the time from departure from port, the transit to service area, the service activity and the transit back to port until arrival in port.
Reporting of cargo carried
As per the Implementing Regulation (EU) 2016/1928, for ship types not falling under any of the defined categories of the regulation, cargo carried is determined as mass of cargo on board or as deadweight carried for laden voyages and zero for ballast voyages. Offshore ships should comply with this requirement and additionally monitor the number of passengers and crew members to determine the port-of-call status. Pending further guidance from the European Commission, we recommend that all personnel on board is reported as either passengers or crew members. Relevant monitoring procedures should be reflected in the ship’s MRV Monitoring Plan.
Guidance documents
The European Commission is expected to publish guidance materials specific to the topic of offshore ships’ inclusion in MRV/ETS. Until it is in place, the guidance for shipping companies, “The EU ETS and MRV Maritime – General guidance for shipping companies (Guidance Document No. 1)” covers applicable topics. Since the document is expected to be updated in the coming months, please refer to the European Commission’s dedicated website where the most current guidance documents can be found, see below under Resources.
Recommendations
Shipping companies responsible for any ship type defined in this news should prepare an MRV Monitoring Plan and start collecting MRV data from 1 January 2025.
Companies should review their data monitoring procedures and adjust these to the MRV per-voyage reporting requirements: set up a Thetis-MRV account and request attribution to an administering authority (as per Chapter 2.4 of the Guidance Document No. 1).
Source: DNV
Photo credits: Manifold Times, DNV
Published: 13 November 2024
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