CircularsNews
January 2014

Marpol/Solas Update: Prohibition on blending of bulk liquid cargoes

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,

Asagida Uluslararasi Grup Kulüplerinden biri olan Skuld’dan alinan sirküler yer almaktadir. Sirküler içerisinde göreceginiz üzere, sefer sirasinda gemi tanklarinda yapilan blending/commingling SOLAS yeni regülasyonlari geregi yasaklanmistir. Bu nedenle sefer sirasinda gemi üzerinde commingling/blending yapilmasi durumunda ,sirküler içerisinde belirtilen özel durumlar haricinde, konuyla ilgili kuvartürünüze halel gelecegini hatirlatmak isteriz.

Her ne kadar simdilik sadece Skuld’dan konuyla ilgili sirküler almis olsak da, MARPOL/SOLAS gibi Ulusal/ Uluslarasi Kurallara uyma zorunlulugu tüm sigorta sirketlerinin poliçe sarti oldugundan, konuyla ilgili  grup kulüplerinin/fix prim kuluplerin ayni yaklasimi gösterecegi kanaatindeyiz.

MARPOL / SOLAS update: Prohibition on blending of bulk liquid cargoes

Published 06 January 2014

Advisory to Members

Members are advised that as of 1 January 2014, the further SOLAS regulations VI/5-2 will have come into force. It can be found under Chapter VI "Carriage of Cargoes", Part A General Provisions, and is added after the previous regulation 5-1.

This new regulatory provision provides that:

1.    "The physical blending of bulk liquid cargoes during a sea voyage is prohibited"

This is further defined as the "process whereby the ship's cargo pumps and pipelines are used to internally circulate two or more different cargoes with the intent to achieve a new product designation".
The exception is that a Master will not be prohibited from making cargo transfers where either the safety of the vessel or the marine environment are concerned.
The prohibition does not apply to blending of products used in the search and exploration of seabed mineral resources on board such specialist vessels.

2.    "Any production process on board a ship during a sea voyage is prohibited"

This is defined as "any deliberate operation whereby a chemical reaction between a ship's cargo and any other substance or cargo takes place".
This prohibition does not apply to the production processes of cargoes used in the search and exploration of seabed mineral resources on board such specialist vessels.

Members active in the bulk liquid cargo trade should take due note, in particular where the trade may involve requests from Charterers / Shippers other cargo interests for the blending of cargoes on board vessels.

It would be prudent to review any existing charter arrangements and terms which may make express reference to such operations and to ensure future fixture terms are suitably amended to take account of these new SOLAS regulations.

If Members are uncertain as to whether a proposed activity falls within the scope of these regulations they should contact their Class and Flag for appropriate guidance.

In case of further query, Members are asked to contact the Association:

lossprevention@skuld.com

Christian Ott
Vice President Head of Claims, Skuld Singapore Branch
Loss Prevention and Recurring Claims Team Leader

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