Meeting the requirements of multiple emission reduction legislations is no easy task. This is especially true in the European Union (EU), where the regional body is a global pacesetter in taking steps to meet carbon reduction targets in the shipping sector.
Yet these regulations present shipowners with unique challenges that must be addressed relatively quickly. While the EU has comprehensively outlined the pathways to each regulation, shipowners will have questions about how best to meet the challenge within their unique fleets and operations.
While the EU is a global pacesetter, the international regulatory body, IMO, has also outlined ambitious targets following MEPC80 discussions in 2023, with an agreement to reach net zero by 2050.
Spinergie’s Smart Fleet Management solution is a digital onboard reporting system that will ensure your team gathers the accurate data needed to ensure regulatory compliance and meet these reduction targets in the most user-friendly and accessible way.
Yet, the depth of the solution will uncover the route to real progress. Smart Fleet Management’s granular analysis provides the insights you need to drive the fundamental changes to your operations that will:
- Automate reporting and verification processes.
- Evolve in line with regulatory requirements and with your fleet.
- Keep your fleet on the right track to avoid penalties and issues of non-compliance.
Here, we examine the questions posed by the EU MRV and EU ETS schemes and Spinergie’s answer to meeting those compliance requirements.
Read More: Spinergie's key to FuelEU Maritime compliance? Streamlined reporting and efficient data management
The EU MRV scheme: the basis of carbon tax determination
The EU Monitoring, Reporting, and Verification (EU MRV) scheme was introduced in 2015. This scheme, which involves emissions collection and reporting, aims to assess the environmental impact of maritime transport. It is the basis for determining the carbon tax for the following regulations, including the EU Emissions Trading Scheme (EU ETS) and the FuelEU Maritime regulation.
The EU MRV currently applies to ships above 5,000 GT on EU-related (within, to, or from an EU port) voyages, irrespective of their flag. However, as of January 1, an update to the regulation will also apply to general cargo ships between 400 and 5,000 GT, and offshore vessels of 400 GT and above.
The EU MRV regulation has three primary obligations that companies must meet to comply.
Monitoring
Starting 1 January 2018, all ships must have a monitoring plan. Ship owners must monitor their ships’ CO2 emissions and fuel consumption. They must also gather data per voyage, including distance traveled, time at sea, and cargo carried. This data is then collected in an annual emissions report and sent to an accredited MRV shipping verifier.
Emissions Report
Since 2019, companies have had to submit a verified emissions report for each ship that performed maritime transport activities in the European Economic Area (EEA) during the previous calendar year/reporting period. The report is submitted to the Commission and the States where those ships are registered via the THETIS MRV system. This must be completed by 30 April each year.
Document of Compliance
Again, since 2019, and by 30 June each year, companies must ensure that all ships included in the above emissions report scope have a document of compliance issued by THETIS MRV. This requirement may be subject to inspections by individual member state authorities.
October 2024 amendment
On October 16, the European Commission amended the MRV Maritime Regulation to include the offshore industry. Specifically, ‘Port of call’ means the port where a ship stops to load or unload cargo, embark or disembark passengers, or an offshore ship stops to relieve the crew. The amendment specifies the vessel types covered by the regulation. If there are no objections to the amendment, it will be put into force by the end of 2024.
The EU ETS scheme: paying for carbon emissions
The EU carbon trading system (EU ETS) requires ship owners to pay for their emissions. Through the scheme, companies must purchase and surrender EU emission allowances (EUA) for each tonne of reported CO2 emissions in the system's scope.
The EU and its member states will use the revenue generated by the scheme to invest in green maritime technologies and incentivize improvements in energy efficiency and low-carbon solutions. The scheme is also anticipated to help the industry reduce the price difference between alternative and traditional maritime fuels.
From 2024, only cargo and passenger ships over 5,000 GT have been included in the EU ETS scope. However, offshore vessels over 5,000 GT will be included from 2027. During the review period from 2027, offshore vessels and general cargo ships between 400 and 5,000 GT will be considered for inclusion in the scheme.
Only Carbon Dioxide (CO2) is currently counted in the scheme. However, from 2024, Methane and Nitrous Oxide will be included in the EU-MRV regulation, with the EU ETS scope to follow from 2026.
The scheme's parameters are relatively straightforward. Every registered emitter surrenders a corresponding amount of allowances purchased through an auction system. Allowances are required for commercial operations within and between EU ports and internationally.
- 100% of emissions within EU ports (when ships are at berth).
- 100% of emissions between EU ports.
- 50% of emissions of voyages between EU and non-EU ports.
As with other newly reduced regulations, the EU ETS scheme is phased with companies surrendering allowances for a portion of their emissions:
- 40% in 2024
- 70% in 2025
- 100% in 2026 and beyond.
The role of Spinergie’s digital reporting in EU-MRV and EU ETS compliance
Spinergie has a suite of intuitive, user-friendly, and customizable tools to help vessel and ship owners adapt to the changing market and meet compliance requirements.
Smart Reporting
Fleet digitalization is an important first step for ship owners to ensure they have the data necessary to fulfill emissions reduction criteria.
Smart Fleet Management is a centralized solution with Smart Reporting at its core. Smart Reporting creates user-friendly, automated processes to ensure that crucial data—including emissions data—is never missing. Data accuracy comes via a customized multi-source input system, including sensor and AIS/GIS tracking to populate automatic entry fields and manual entry. Manual entry benefits from an intuitive, user-friendly interface with robust quality checks at source. This process saves up to 50% of the time crews take on reporting tasks.
Further time is saved as reported data automatically generates as many internal and external reports as needed. From these detailed reports, Spinergie’s simulations and analytics engines come into play to silo data into further dashboards that track customized key performance indicators (KPIs), voyages, or other projects.
Fully-integrated verification
In line with verification requirements, Spinergie is proud to be a DNV-integrated partner. Reports generated using Smart Fleet Management are automatically submitted and verified with DNV’s Veracity, facilitating full compliance with maritime regulations. Reports can also be automatically submitted to flag administrations or authorized organizations as required.
For EU-MRV, Smart Reporting covers the required fields of fuel consumption (port/sea), carbon emissions, transport work (actual cargo carried), distance sailed, and time at sea (excluding anchorage). Furthermore, Smart Reports can be generated for IMO-DCS compliance encompassing total fuel consumption, distance traveled, hours underway, and design deadweight used as proxy.
Enforcing mandatory fields within each report ensures that the data requested by industry regulators is stored as a matter of daily practice. The fully secure reporting environment protects this sensitive information.
Read More: Spinergie and Veracity by DNV strategic partnership enhances emissions reporting
Real-time Tracking and Consumption Analysis
Accurate and reliable reporting allows stakeholders to identify inefficiencies on a vessel or whole-fleet basis, using the analytics generated from reported data as a benchmarking tool. Fleet performance is measured during key events, which are customized to client needs. This means all data can be compared and contrasted within a single dashboard, leaving less room for error. Furthermore, Spinergie will automatically record Carbon Intensity Indicator (CII) data using the parameters outlined by the IMO.
Spinergie’s live-tracking capabilities, reinforced with sensor data and event tracking, give users a real-time account of consumption levels. This data populates user-friendly analysis dashboards that provide at-a-glance and granular details to help users understand compliance levels on a day-to-day basis.
Such in-depth data provides the root cause analysis required to identify and address the underlying issues impacting over-consumption or underperformance. This data-driven approach is the only way to ensure accurate identification of where improvements can be made.
Conclusion
The EU's stringent regulations on maritime emission reductions are setting a global precedent. While it can be challenging for companies to stay ahead of these compliance requirements, failure to do so can result in hefty fines, penalties, and damage to reputation.
However, Spinergie offers a comprehensive suite of digital solutions to help companies meet these challenges head-on and stay on the right track. Our Smart Fleet Management solution provides automated and guided manual data collection backed by robust quality checks. Furthermore, Smart Reporting offers streamlined verification processes that remove the pain of meeting the data demands of regulations like the EU MRV and EU ETS.
By embracing digitalization and partnering with Spinergie, maritime companies can navigate the complex regulatory landscape and gain a competitive edge through improved operational efficiency and reduced environmental impact.
Additional reporting by Hugo Madeline.
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