CircularsNews
May 2016

Sanctions - North Korea

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

Dear Sirs,

Below please kindly find a circular by West of England P&I Club.  All Group Clubs have issued similar circular.

Also we have provided this circular in Turkish underneath this message.

The UN Security Council recently agreed to adopt enhanced measures against North Korea in light of its continuing weapons development programmes.  These measures represent a comprehensive set of sanctions which have been given effect by both the EU and the US, with the US going further by implementing what would appear to amount to a trade embargo between itself and North Korea.

Holman Fenwick Willan have produced two helpful briefing notes on these sanctions, one in April 2016 describing the broad provisions and a second in May 2016 concentrating on the scope of the EU sanctions. We are grateful to HFW for their permission to reproduce those briefings.

The relevant UN Resolution and EU and US legal instruments can be found here:

UN Security Council Resolution 2270 (2016)

EU Council Regulation 2016/682

US Executive Order 13722

Some aspects of these sanctions which might be of particular interest to the maritime community include:

  • Ban on the purchase or transportation from North Korea of gold, titanium ore, vanadium ore, rare earth minerals, coal, iron and iron ore
  • Ban on the sale and supply of aviation and rocket fuels
  • Expansion of the list of banned luxury goods which cannot be supplied to North Korea
  • Ban on all leasing and chartering of vessels and the provision of crew services
  • Ban on owning and operating of or providing classification or similar services to North Korean-flagged vessels
  • Expanded arms embargo
  • Potential for vessels proceeding to or from North Korea to be searched
  • Expansion of persons and entities on SDNs lists, including banks and shipping companies

Members considering any business involving voyages to North Korean or North Korean persons are strongly recommend to read these materials and to contact the Managers for further advice before fixing.

- See more at: http://www.westpandi.com/Publications/News/sanctions--north-korea/#sthash.cKgaFAxC.dpuf

Sayin Yetkili,

Birlesmis Milletler guvenlik konseyi Kuzey Kore’nin artan silahlanma programindan dolayi yaptirimlarin kapsamini genisletme karari vermiş ve Avrupa Birligi ile ABD’de bu dogrultuda kendi yaptirimlarini yayinlamislardir. Bu yaptirimlardan asagida ozetlenenler yasaklamara ozellikle deniz ticareti ile alakali olup sefer baglantisi yapilmadan dikkat edilmesi ve P&I klubunuze danisilmasi onemle tavsiye edilmektedir;

  • Kuzey Kore’den altin, titanium madeni, vanadium madeni, nadir bulunan madenler, komur, demir ve demir cevheri satin alinmasi ve tasinmasi yasaklanmistir.
  • Roket ve havacilik tasitlarinda kullanilan yakit temini yasaklanmistir
  • Kuzey Kore’ye yasaklanmis olunan luks mallarin listesi genisletilmistir.
  • Gemi kiralama ve murettebat servisleri hizmetlerinin alinmasi yasaklanmistir.
  • Kuzey Kore bayrakli gemilere klaslama hizmeti, operasyon hizmeti verilmesi ve sahip olunmasi yasaklanmistir
  • Mevcut silah ambargosu kapsami genisletilmistir.
  • Kuzey Kore’ye gidecek olan ve Kuzey Kore’den gelen tum gemilerin aranmasi soz konusudur.
  • SDN Listesinde yer alan yasakli kisi, isletmeler banka ve denizcilik firmalarinida kapsayacak sekilde genizletilmistir.

İlave bilgiler klubun ekteki bulteninde ve asagidaki klubun instrnet baglantisindan ulasilabilinir.

http://www.westpandi.com/Publications/News/sanctions--north-korea/#sthash.oVRA4UfA.dpuf

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