Padmesh Prabhune

Class NK, a ship classification society dedicated to safer and cleaner seas had organized a Technical Seminar on Friday, 01st December in Navi Mumbai, to discuss various happenings at IMO (MPEC 80).

Mr M Matsunaga, Corporate Officer from ClassNK Tokyo was the Chief Guest for the technical seminar.

Mr. Sumithran Sampath, General Manager ClassNK Mumbai, welcomed everyone at the venue, introducing Mr. M Matsunaga who set the stage by informing audiences about the recent happenings at IMO. The MEPC 80 session adopted the 2023 IMO Strategy on Reduction of GHG Emissions from Ships, with enhanced targets to tackle harmful emissions.

The seminar consisted of discussions equally divided into four sessions starting with ‘Mr. Vishal Chowdhary Ship Surveyor ClassNK Vishakaptnam, who briefed the audience upon the concept of Environment protection and Maritime safety referring to various regulations like Ballast Water Management, e-log books, compulsory ventilations in boats and alike. This was followed by Mr. Amar Kumar Ship Surveyor ClassNK Mumbai, presenting the outline of the Ship Recycling Convention (Hongkong Convention) that takes effect starting year 2025.

While Mr. Enomoto, Staff, Business Department ClassNK Tokyo, made a presentation on Pathway to Zero-Emission in International Shipping, Mr. Ashish Matta Manager Principal Surveyor ClassNK Mumbai, discussed the overview of EU-ETS & Fuel EU Maritime.

While the revised IMO GHG Strategy includes an enhanced common ambition to reach net-zero GHG emissions from international shipping close to 2050, a commitment to ensure an uptake of alternative zero and near-zero GHG fuels by 2030, as well as indicative check-points for 2030 and 2040, the Fuel EU Maritime Regulation is a complementary regulation to the EU ETS, ensuring that the greenhouse gas intensity of fuels used by the shipping sector will gradually decrease over time.

It contributes to the EU-wide target of reducing net emissions by at least 55% by 2030, and to achieving climate neutrality in 2050.

The EU ETS will apply to ships calling at EU ports, regardless of the flag they fly, or where the owner of that ship is incorporated. Member States will be responsible for administering the scheme for shipping companies incorporated in that jurisdiction.

The yearly EU ETS cycle begins with an individual ship’s MRV Emissions Report being submitted to a verifier, who then issues verification of the report. The individual ship data or fleet data are also sent to the verifier, who subsequently issues a Company Emissions Report.

Initially, only vessels over 5,000 GT which call at EU ports will be subject to the EU ETS. From January 2025, vessels between 400 GT and 5,000 GT and offshore ships over 5,000 GT which call at EU ports will become subject to the scheme.

The industry will become incrementally subject to the EU ETS, with shipping companies being required to surrender allowances equivalent to the following amounts:
40% of verified emissions reported for 2024;
70% of verified emissions reported for 2025;
100% of verified emissions reported for 2026 and each year thereafter.

For non compliance with ETS each outstanding unit will incur a penalty of 3 x the price of carbon on the due date. The person is also required to surrender or repay the units in addition to paying the penalty.

The seminar helped the audience understand the significance along with the challenges that are likely to arise from regulations. It also discussed various related issues like the probabilities of EU allowance trading and the cost escalations arising of the directives.

Vessel emissions will be having increasing significance in chartering arrangements, both from an operational and commercial perspective as a result of the extension of the EU ETS.

The collection and exchange of data between shipowners and charterers to enable the compliance with the obligations imposed by the EU ETS will need to be addressed in chartering arrangements.

There will also need to be an allocation of responsibility for bearing the costs of compliance with the EU ETS, particularly in relation to the purchase of allowances under the scheme.

The seminar was quite informative and concluded with Vote of Thanks from Mr. Sumithran Sampath.
Marex Media