Navigating Maritime Emissions Regulations: Updates and Insights on EU MRV, IMO DCS, and EU ETS
The reporting period for the 2023 EU MRV and IMO DCS is nearing its conclusion, while the EU ETS regulations will come into force at the beginning of the new year. This update synthesizes crucial clarifications on the EU MRV, IMO DCS, and EU ETS as we near the end of the year.
Below, you’ll find a condensed version of the latest updates and clarifications on:
IMO DCS/CII
EU MRV:
Mandate for ETS by ISM companies
Partial emissions reporting
Sampling of cargo and bunkers
Leisure stops (relevant for cruise ships exclusively)
Dry-docking and emissions
Biofuels
IMO DCS/CII
The Carbon Intensity Indicator (CII) gauges a ship’s efficiency in transporting goods or passengers, represented in grams of CO2 emitted per cargo-carrying capacity and nautical mile, based on reported IMO DCS data. Subsequently, the ship receives an annual rating from A to E, with rating thresholds becoming progressively stringent towards 2030. Ships that maintain a D rating for three consecutive years or an E rating in a single year must develop (and have approved) a Corrective Action Plan (CAP) as part of the Ship Energy Efficiency Management Plan (SEEMP) Part III before receiving the DCS Statement of Compliance. This feature will be accessible in DNV’s SEEMP Part III tool from January 1, 2024:
Upon receipt of the uploaded DCS data in early 2024, DNV will promptly notify its customers via email if their ships have an E rating (indicating urgent action is required). Furthermore, customers will be informed of the ship’s rating during the submission process.
Calculation of required and attained CII after alterations to DWT/GT in 2023
As outlined in MEPC.348(78), permanent modifications to a vessel’s deadweight (DWT) and/or gross tonnage (GT) can be implemented as a measure within SEEMP Part III or as a CAP to improve the ship’s operational carbon intensity performance. For vessels that underwent changes in DWT and/or GT after January 1, 2023, a new methodology for calculating attained and required CII will be applied:
a. For alterations listed in the SEEMP Part III or the CAP:
The required CII is computed based on the original DWT/GT*. For the year of the conversion, the attained CII is calculated and verified based on the average DWT or GT value weighted by distance traveled before and after the conversion. Subsequently, the attained CII is based on the new DWT/GT.
b. For alterations not listed in the SEEMP Part III or the CAP:
For the year of the conversion, both the required and attained CII are calculated and verified based on the average DWT or GT value weighted by distance traveled before and after the conversion. Subsequently, both the required and attained CII are based on the new DWT/GT.
EU MRV/ETS
Firstly, a concise overview of the revised EU MRV regulations:
Mandate for ETS by ISM companies
As previously announced on November 17 (refer to “References” below), the EC has adopted an implementing regulation specifying which company is responsible for monitoring and reporting GHG emissions and surrendering emission allowances. By default, the registered owner bears this responsibility. However, the responsibility can be transferred to the ship manager (i.e., the ISM company) only if an agreement between the registered owner and the ISM company explicitly states this transfer of responsibility.
In instances where the shipowner delegates EU ETS obligations to a shipping company, the shipping company must furnish its administering authority with a document clearly indicating that it has been duly authorized by the shipowner to fulfill the ETS obligations. DNV has prepared a template for such an agreement, available free of charge for our customers in Fleet Status on Veracity:
Leisure stops (pertaining exclusively to cruise ships)
In the context of MRV/ETS, please refer to the Appendix for elucidation on leisure stops for cruise ships.
Dry-docking and emissions
The European Commission revealed at an MRV/ETS implementation event held on November 14 that emissions released during dry-dock are incorporated into the MRV and ETS assessment. This revised approach does not alter the MRV reporting requirements. The following example illustrates this point:
Biofuels
The various regulations employ distinct approaches to handling biofuels, summarized as follows:
When compared side by side, the total carbon emissions from biofuel usage exhibit substantial variation across the three schemes. EU MRV emissions data serves as the basis for determining the total emission of GHG to be reported under the EU ETS Directive. However, applying a CO2 factor of zero for the biofuel fraction of the fuel used reduces the ETS-relevant emissions. For CII, an entirely different set of rules is applied, focusing on the life cycle emissions of fuel. Different criteria for the application of the methodology, as described above, should be noted and discussed with the fuel supplier before fuel purchase to leverage the benefits of using biofuel in GHG reporting.
Further guidance on reporting biofuel usage is available on the OVD resources page. Should assistance be required in updating SEEMP Part II and the MRV Monitoring Plan regarding biofuel usage, we encourage you to reach out to our DATE experts.
DNV urges its MRV/DCS/ETS customers to promptly upload any emissions data to ensure data quality. By utilizing DNV’s quality check (pre-verification checks), any inaccuracies in reported data can be easily identified. By reviewing data quality before submission, the time spent on corrections is minimized, leading to early submission and approval of the emissions report and fuel oil consumption report.
DNV also advises customers to explore Emissions Insights in My Fleet on Veracity, a dashboard designed for monitoring the carbon emissions of their fleet. It focuses on compliance monitoring, enabling users to track parameters related to CII and ensure vessel compliance. The latest update includes the EU ETS.