CircularsNews
August 2014

August 2014 / Situation in Ukraine Update

The European Union’s Emissions Trading System (EU ETS) was extended to cover emissions from shipping as of 1st January 2024.

The EU ETS is limited by a 'cap' on the number of emission allowances. Within the cap, companies receive or buy emission allowances, which they can trade as needed. The cap decreases every year, ensuring that total emissions fall.

Each allowance gives the holder the right to emit:

  • One tonne of carbon dioxide (CO2), or;
  • The equivalent amount of other powerful greenhouse gases, nitrous oxide (N2O) and perfluorocarbons (PFCs).
  • The price of one ton of CO2 allowance under the EU ETS has fluctuated between EUR 60 and almost EUR 100 in the past two years. The total cost of emissions will vary based on the cost of the allowance at the time of purchase, the vessel’s emissions profile and the total volume of voyages performed within the EU ETS area. The below is for illustration purposes:
  • ~A 30.000 GT passenger ship has total emissions of 20.000 tonnes in a reporting year, of which 9.000 are within the EU, 7.000 at berth within the EU and 4.000 are between the EU and an outside port. The average price of the allowance is EUR 75 per tonne. The total cost would be as follows:
  • ~~9.000 * EUR 75 = EUR 675.000
  • ~~7.000 * EUR 75 = EUR 525.000
  • ~~4.000 * EUR 75 * 50% = EUR 150.000
  • ~~Total = EUR 1.350.000 (of which 40% is payable in 2024)
  • For 2024, a 60% rebate is admitted to the vessels involved. However, this is reduced to 30% in 2025, before payment is due for 100% with effect from 2026.
  • Emissions reporting is done for each individual ship, where the ship submits their data to a verifier (such as a class society) which in turns allows the shipowner to issue a verified company emissions report. This report is then submitted to the administering authority, and it is this data that informs what emission allowances need to be surrendered to the authority.
  • The sanctions for non- compliance are severe, and in the case of a ship that has failed to comply with the monitoring and reporting obligations for two or more consecutive reporting periods, and where other enforcement measures have failed to ensure compliance, the competent authority of an EEA port of entry may issue an expulsion order. Where such a ship flies the flag of an EEA country and enters or is found in one of its ports, the country concerned will, after giving the opportunity to the company concerned to submit its observations, detain the ship until the company fulfils its monitoring and reporting obligations.
  • Per the EU’s Implementing Regulation, it is the Shipowner who remains ultimately responsible for complying with the EU ETS system.

There are a number of great resources on the regulatory and practical aspects of the system – none better than the EU’s own:

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02003L0087-20230605

https://climate.ec.europa.eu/eu-action/transport/reducing-emissions-shipping-sector_en

https://climate.ec.europa.eu/eu-action/eu-emissions-trading-system-eu-ets/what-eu-ets_en

Sayin Ilgili,

West of England Klup muhabirinden alinan ve Ukraynaki deniz ticaretinin kontrolüne iliskin sirküler bilgilerinize sunulur. Sirkülerde Kirim limanlarina giren gemileri kontrol eden bir sistem gelistirildigi ve 2 Türk gemisinin de bu radara yakalandigi haberi yer almaktadir.

Qte

Following our Notification dd. 07.08.2014 we would like to inform you that presently in Ukraine we have very active  social organization named ‘Maidan Of Foreign Affairs’ (MFI) which try to detect the vessels-violators, which are trading to Crimean ports. MFA together with associated Internet Media Issue ‘Black Sea News’ detect vessels-violators and report about their findings on the web page of ‘Black Sea News’.

Recently they presented the pictures of 2 Turkish bulk carriers which loaded the grain cargo at the ‘Avlita’ terminal of Sevastopol port. They have put on their web-page many pictures of different stages of both vessels cargo operations, showing by that presentation their knowledge of the situation in the area in general, and in Sevastopol port in particular.

In their issue dd. 08.08.2014 they have mentioned as well, that it was detected by their organization  ‘that some vessels which are trading to Crimean ports try to hide their maneuvers as well as a route of the passage by switching off their Automatic Identification System (AIS)’. They put the names of such vessels on their web-page as well.

Taking into consideration the above said we kindly ask the Shipowners to be very careful while choosing their trading routes in the Black Sea and Azov Sea areas. If their vessels have ‘history of Crimean ports calls’ they should never send them for loading/discharging/bunkering to Ukrainian ports.

Update from Andrey Yanitskiy – partner of ‘Yanitskiy and Partners Law Office’

At the same time it is unknown as of now if ships’ calls at the Crimean ports are being officially monitored by the Ukrainian authorities. No special service has been introduced for that purpose. There have been no further changes to the Ukrainian legislation on the temporarily occupied territories since the adoption of the Law of Ukraine No.1207-VII “On Assurance of Rights and Freedom of Citizens and Legal Regime on Temporarily Occupied Territory of Ukraine” and the Directive ? 255 “On Closure of Sea Ports” earlier this year (for more details – please see our previous notifications on that subject). In this respect what is most likely is that any action against the vessels which visited the ports in Crimea in breach of the above legislation will be taken on an occasional basis as a result of formal application from the social agencies or organizations to the law-enforcement authorities of Ukraine.

The last but not least. As you may be aware, by Council Implementing Regulation (EU) No 810/2014 of 25 July the Kerch Commercial Sea Port and the Sevastopol Commercial Sea Port have been put on the EU Sanctions List. This means that no funds or economic resources may be made available, directly or indirectly, to or for the benefit of the above ports. Thus, the payment of port dues, and any other fees and charges incurred as a result of loading or discharging cargo at these ports would amount to a breach of sanctions. Although this was not apparently the intention of the sanctions, as a potential negative consequence this may also affect vessels trading into the Ukrainian ports Mariupol and Berdyansk and Russian ports  Rostov-upon-Don, Azov and Eisk located on the Sea of Azov. All the vessels which are passing the Strait of Kerch (and in particular, Kerch-Yenikal fairway - the only one channel suitable for the passage of a cargo ship) pay a Canal Fee to the Kerch Commercial Sea Port. The above Fee, even if it is paid via the ship agents would appear to be a breach of the EU sanctions.

As far as the legal position is not crystal clear this issue may be the subject of special discussion with the EU Commission.

Uqte

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