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What is the EU ETS and how is it changing?

The EU Emissions Trading Scheme (“EU ETS”) is a legislative scheme by which the EU caps emissions of greenhouse gases from certain industries by requiring emitters to surrender emission allowances to offset the gases they emit. A limited number of emitters are granted some free emission allowances, but most allowances must be purchased in auctions arranged by the European Energy Exchange (the “EEX”), which allowances may then be traded, before being surrendered to a competent authority by the emitters. Hence, the EU ETS is a “cap and trade” emissions scheme.

Change is underway to include certain emissions from shipping within the EU ETS, by phasing in requirements to report emissions and to purchase and surrender allowances for increasing proportions of carbon dioxide (CO2), nitrous oxides (N2O) and methane (CH4) emissions from shipping activity within the EU, between now and 2026.Continue Reading EU formalises its plans for the expansion of the EU ETS into shipping in 2024

Just as there is no easy route to decarbonisation, there is no straightforward way of balancing a shipowner’s obligation to comply with the MARPOL Carbon Intensity Indicator (“CII”) Regulations with a time charterer’s right to direct the employment of a vessel.

That much is clear from the long-awaited BIMCO CII Operations Clause for Time Charters 2022 and, more tellingly, from the industry reaction.

Now that the dust is settling: what does the clause actually say? What are the key sticking points? And how are owners and charterers positioning themselves before the CII Regulations come into force on 1 January 2023? In this briefing, we take a closer look at some of the emerging themes.Continue Reading BIMCO CII Clause for Time Charters – The dust begins to settle

Introduction

There cannot be many people left in the shipping sector unaware that the International Maritime Organisation (IMO) has set a target of reducing annual greenhouse gas emissions in shipping by at least 40% by 2030 and pursuing a 70% reduction by 2050.

As a key means of achieving this, the IMO, through the Marine Environment Protection Committee (MEPC) has adopted amendments to the International Convention for the Prevention of Pollution from Ships (MARPOL) Annex VI. These changes will implement major new technical rules called the Energy Efficiency Existing Ship Index (EEXI) and the Carbon Intensity Indicator (CII). The regulations are due to come into force on 1 January 2023, just over a year from now.

Put simply, EEXI is a framework for determining the efficiency of the design of in-service vessels over 400 GT falling under MARPOL Annex VI. The CII is an operational measure of how efficiently a ship transports goods or passengers measured, in essence, in grams of CO2 emitted by cargo-carrying capacity and nautical mile.

Both EEXI and CII are complex and evolving, with much of the detail still unclear. However, they need to be carefully considered and understood now so that those affected can start planning for January 2023.

In this article, we set out in an easy-to-use table the main points, and explain some of the key issues owners and charterers need to consider.
Continue Reading EEXI and CII – shipping’s next environmental challenge

The California Air Resources Board (CARB) will conduct a public Board hearing later this month as it continues its efforts to expand the state’s existing Ocean-Going Vessels At-Berth Regulation to further reduce air emissions from ships docked in California. As earlier reported, CARB recently released further modifications to the at-berth rulemaking documents (15-day change).…

On 1 January 2020 amendments to the International Maritime Organization’s (IMO’s) International Convention for the Prevention of Pollution from Ships (MARPOL) enters into force.

Read our Shipping Group’s latest whitepaper, by Ron Clark, on the 2020 Global Sulphur Cap at reedsmith.com.

Including topics covering:

  • 2020 SOx issues
  • An introduction to marine fuels
  • Abatement technology
  • Scrubbers

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As a first step towards reducing the marine transport industry’s greenhouse gas emissions, on 28 June 2013 the European Commission (the “Commission”) tabled a draft Regulation to introduce a system of monitoring and publication of individual vessels’ annual CO2 emissions. This alert explains why the Commission has taken this step, exactly what it is proposing,…