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EU ETS: Preliminary agreement to include shipping in the EU’s Emission Trading System from 2024

From 2024 the EU ETS will include ships above 5000 GT transporting cargo or passengers for commercial purposes; offshore ships will be included from 2027, according DNV.

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Classification society DNV on Tuesday (24 January) released a statutory news article regarding EU’s legislative bodies reaching an agreement on including shipping in its Emission Trading System (EU ETS). The following is an excerpt of the article:

Subject to final adoption, ships above 5000 GT transporting cargo or passengers for commercial purposes in the EU will be required to acquire and surrender emission allowances for their CO2 emissions from 2024. Offshore ships will be included from 2027. This statutory news summarizes the current information on EU ETS.

Relevant for ship owners, managers and charterers.

The European Parliament (EP), Council of the European Union, and the European Commission have reached an agreement on including shipping in the EU’s Emission Trading System (EU ETS) from 2024. There is no consolidated text available yet and this newsletter is based on the available information about the agreement and otherwise the Commission proposal from 14 July 2021. The EP and Council are expected to formally adopt the revised directive later. Further details on the requirements and processes can be expected as the final text is adopted, and the European Commission adopts related implementing and delegated acts.

The EU ETS is an emission cap-and-trade system where a limited amount of emission allowances – the cap – is put on the market and can be traded. The cap is reduced each year, ensuring that the EU’s emission target by 2030 of 55% reduction, relative to 1990, can be met while becoming climate-neutral by 2050.

The EU ETS and EU MRV requirements

Under the EU ETS each company with ships trading in the EU/EEA is required to surrender emission allowances corresponding to a certain amount of its GHG emissions emitted over a calendar year starting with 2024. The requirements apply to the shipping company which is the shipowner or any other organization or person, such as the manager or the bareboat charterer, who has assumed the responsibility for the operation of the ship including duties and responsibilities imposed by the ISM Code. The emissions will be reported and verified through the existing EU MRV (Monitoring, Reporting and Verification) system, which will be revised and extended to cover necessary GHG emissions, ship types and sizes.

Emission scope

Ship types and sizes

From 2024 the EU ETS will include ships above 5000 GT transporting cargo or passengers for commercial purposes. The EU MRV system will be extended from 2025 to apply to offshore ships above 400 GT and general cargo ships between 400 and 5000 GT transporting cargo for commercial purposes. Offshore ships above 5000 GT will from 2027 be included in the ETS. By 2026 the European Commission will review whether general cargo and offshore ships between 400 and 5000 GT will also be included in the ETS.

Screenshot 2023 01 31 at 12.58.29 PM

Greenhouse gases (GHGs)

From 2024 the EU ETS will include CO2 emissions only, while the EU MRV will be extended the same year to include reporting of methane (CH4) and nitrous oxide (N2O) which are two other greenhouse gases (GHG) emitted by ships. From 2026 the EU ETS will also include these two GHGs.

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Voyages

All 100% of emissions on voyages and port calls within the EU/EEA, and 50% of emissions on voyages into or out of the EU/EEA are subject to the EU ETS. To avoid evasive behaviour, container ships stopping in transhipment ports outside the EU/EEA but less than 300 nm from an EU/EEA port, need to include 50% of the emissions for the voyage to that port as well, rather than only the short leg from the transhipment port. The EU will provide a list of transhipment ports.

Screenshot 2023 01 31 at 12.58.48 PM

Note: The full DNV statutory news article can be read here

 

Photo credit: william william on Unsplash
Published: 31 January, 2023

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Biofuel

China Shipping & Sinopec Suppliers completes first biofuel bunkering op of passenger ship in Dalian

Firm successfully refuelled passenger ship “Chang Shan Dao” owned by Cosco Shipping Ferry with B24 bio bunker fuel on 29 November at Dalian Cruise Port.

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China Shipping & Sinopec Suppliers completes first biofuel bunkering op of passenger ship in Dalian

China Shipping & Sinopec Suppliers Co., Ltd. on Wednesday (29 November) successfully refuelled passenger ship "Chang Shan Dao" owned by Cosco Shipping Ferry Co., Ltd. with B24 bio bunker fuel at the Dalian Cruise Port. 

The occasion marked the first biofuel bunkering operation for passenger ships in China. 

The B24 biofuel oil used was blended with 24% biofuel and 76% conventional low-sulphur fuel oil.

Sinopec China Shipping Fuel Supply, which is responsible for the bunkering operation, is a bunker supply firm jointly established by Sinopec Group and COSCO Shipping Group.

According to Li Zhi, Deputy Party Secretary and Deputy General Manager of China Shipping & Sinopec Suppliers Co., Ltd., the biofuel bunkering business is another step in the company's active business of the group's development strategy. 

The bunkering operation after the firm completed the first bonded biofuel bunkering operation of a domestic ship on 7 September. 

Disclaimer: The above article published by Manifold Times was sourced from China’s domestic market through a local correspondent. While considerable efforts have been taken to verify its accuracy through a professional translator and processed from sources believed to be reliable, no warranty is made regarding the accuracy, completeness and reliability of any information.

Photo credit: China Shipping & Sinopec Suppliers
Published: 8 December, 2023

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Alternative Fuels

Singapore, Tianjin to pilot and trial alternative bunker fuels following shipping corridor MoU

Singapore – Tianjin Green and Digital Shipping Corridor will serve as a valuable testbed for both countries to pilot and trial digital solutions, alternative fuels and technologies, amongst others.

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Singapore, Tianjin to pilot and trial alternative bunker fuels following shipping corridor MoU

The Maritime and Port Authority of Singapore (MPA) and the People’s Republic of China’s Tianjin Municipal Transportation Commission on Wednesday (6 December) signed a memorandum of understanding (MoU) to establish the Singapore – Tianjin Green and Digital Shipping Corridor.

Mr Teo Eng Dih, Chief Executive, MPA, and Mr Wang Zhinan, Director General, Tianjin Municipal Transportation Commission, signed this MoU.

The MoU marked the first Green and Digital Shipping Corridor established between Singapore and China to support the decarbonisation, digitalisation and growth of the maritime industry between Singapore and the Bohai Region. 

The Singapore – Tianjin Green and Digital Shipping Corridor will serve as a valuable testbed for both countries to pilot and trial digital solutions, alternative bunker fuels and technologies, and facilitate talent development to support the decarbonisation and digitalisation of shipping. 

Singapore and Tianjin will work with the research community, the  institutes of higher learning, and industry stakeholders such as shipping lines, port operators, shipbuilders, classification societies, and bunker suppliers to enable more efficient port clearance through digital exchanges, encourage the offtake of zero or near-zero greenhouse gas emission fuels and adoption of new fuel technologies, spur innovation and support the growth of the maritime startups community, and facilitate manpower training and professional development.

The establishment of the Singapore – Tianjin Green and Digital Shipping Corridor reaffirms the strong commitment by Singapore and Tianjin to accelerate maritime decarbonisation and digitalisation. Singapore will also be exploring the establishment of similar collaboration with other maritime and port ecosystems within China.

Photo credit: Maritime and Port Authority of Singapore
Published: 8 December, 2023

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Decarbonisation

Report highlights routes-based action plan methodology to accelerate uptake of clean bunker fuels

NextGEN Connect-GreenVoyage2050 collaboration, which includes Singapore, emphasises the important role of regional energy hubs in enabling the inclusive adoption of clean marine fuels.

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Report highlights routes-based action plan methodology to accelerate uptake of clean bunker fuels

The Maritime and Port Authority of Singapore (MPA) on Thursday (7 December) said the NextGEN Connect-Green Voyage2050 Project identified a key role for regional hubs to help connect large demand clusters and remote locations, with regional fuel supply sources, in order to enable a more inclusive and effective transition to a low-carbon maritime future. 

The project is a collaboration between Singapore, Norway and the International Maritime Organization (IMO). 

These findings were unveiled in the Lloyd’s Register Maritime Decarbonisation Hub (LR MDH) report titled Routes-based Action Plans: A Toolkit launched at the Voyage to Net-Zero Forum, which was organised by MPA, at the 28th United Nations Climate Change Conference (COP28/CMP8/CMA5) yesterday.  

The report was developed following a workshop discussion that was held from 5 to 6 October 2023 in Singapore, with the participation of 40 stakeholders representing ports and National Administrations across Asia, based on the concept of the LR MDH’s First Movers Framework for green corridors. The workshop simulated the process steps of the routes-based action plan methodology, addressing the limitations in its application in the wider Asian context. Additional engagements with stakeholders from the Pacific are envisaged to further refine the methodology. 

“One of the key findings in our report highlighted the varying pace of decarbonisation efforts across the Asian region and the need for regional coordination among governments to establish energy clusters that will serve both as demand centres and energy producing hubs” said Charles Haskell, Director at LR MDH. 

The creation of energy producing hubs includes defining a strategy that brings together demand from different countries at different developmental stages across the region to build up investment cases for implementing energy infrastructure at scale, all the while taking into consideration the economic and social benefits for local communities. 

The report also emphasised that routes-based action plans should be steered by national governments to give confidence to the industry’s infrastructure investment decisions, with development banks and regional funds needing to play a part to help tailor financing solutions to support infrastructure development. 

“If we truly want to achieve a net-zero future where no one is left behind, we cannot focus only on existing first mover initiatives. We must also study locations where the energy infrastructure is still in its infancy”, added Charles Haskell. 

Essential to driving the implementation of routes-based action plans, as highlighted in the report, is the pooling of resources and capacity building to develop the business case for building the necessary infrastructure for regional hubs that include Least Developed Countries (LDCs) and Small Island Developing States (SIDS). This will require regional coordination and collaboration involving governments and all stakeholders across the maritime supply chain.

Mr. Teo Eng Dih, Chief Executive of MPA, said: “As we steer toward a sustainable maritime future, fostering a collective and inclusive approach is imperative in the development of green corridors and the energy transition to decarbonise international shipping.”

“The NextGEN Connect-GreenVoyage2050 collaboration emphasises the important role of regional energy hubs in enabling the inclusive adoption of clean marine fuels, particularly for LDCs and SIDSs. MPA looks forward to continuing its collaboration with IMO, Ministry of Climate and Environment of Norway and LR MDH to pilot solutions to reduce GHG emissions from ships and drive innovative transformations in the maritime industry.”

Sveinung Oftedal, Chief Negotiator of the Norwegian Ministry of Climate and Environment, said: “Separate routes for emission-free ferries and ships can play an essential role in stimulating early action to adopt zero or near-zero emission technologies and fuels, and hence are an important step towards decarbonising shipping. There is currently a significant volume of maritime traffic between Asian countries, and our workshop was a great forum to discuss opportunities the decarbonisation of maritime shipping can bring and how efforts can be linked to countries’ wider energy transition.”

Jose Matheickal, IMO Director of Partnerships and Projects, said: “Supporting developing countries, including SIDS and LDCs, in their efforts to implement the 2023 IMO Strategy on the Reduction of GHG Emissions from Ships is imperative to the decarbonisation of the maritime sector. IMO is pleased to provide, through this collaboration, practical support around the development and subsequent implementation of National Action Plans and route-based actions in line with IMO’s MEPC RESOLUTION.366(79) that encourages Member States to undertake these voluntary actions to facilitate the achievement of greener shipping and reduced emissions.” 

Note: ‘Routes-based action Plans: a toolkit’ can be found here

Photo credit: Maritime and Port Authority of Singapore
Published: 8 December, 2023

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