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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:
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
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CIRCULAR: INTERNATIONAL GROUP CIRCULAR - REGULATIONS OF THE PEOPLE'S REPUBLIC OF CHINA ON THE PREVENTION AND CONTROL OF MARINE POLLUTION FROM SHIPS 2010
Circular issued by International Group clubs
Published 04.11.2009
Background
This Circular issued by the International Group deals with the same subject matter as the Skuld Legal News item published on 10 October 2009. (or see below which has this circular as well.)
On 1 March 2010, the Regulations of the People's Republic of China (PRC) on the Prevention and Control of Marine Pollution from Ships ("the Regulations") (promulgated by the PRC State Council on 9 September) will take effect. The aim of the Regulations is to establish comprehensive rules governing oil pollution prevention, response and clean up within PRC waters.
The intention of this circular is to summarise the key provisions of the Regulations. The International Group (IG) understands that the PRC's Maritime Safety Agency (MSA) is drafting further implementing legislation to give effect to a number of the provisions contained in the Regulations; which includes the requirement to contract with approved pollution response companies and the requirement to maintain insurance or other financial security to cover liabilities arising from oil pollution damage. The IG will continue to engage with the MSA in this regard and, as appropriate, will issue further circulars.
Overview
The Regulations cover a wide range of issues, such as the discharge and reception of oil pollutants; dumping of waste and permissions for dumping; oil pollution response planning; oil spill clean-up arrangements; reporting and emergency handling of pollution incidents; investigation and compensation of pollution incidents; supervision of the loading, lightening and discharging of the polluting hazardous cargoes; and penalties for contravening any of the Regulations' requirements.
The Regulations also introduce into PRC law a compulsory insurance regime for all ships (except those that are less than 1,000 gt and not carrying oil cargoes) to cover claims arising from oil pollution damage. This would also seem to provide the necessary implementing legislation to give effect to the insurance provisions of the 2001 Bunkers Convention (which the PRC ratified at the end of 2008) and the 1992 CLC (International Convention on Civil Liability for Oil Pollution Damage 1992) which the PRC ratified some years ago. The Regulations also make provision for the establishment of a domestic Ship Oil Pollution Compensation Fund, to be funded by contributions from receivers of persistent oil cargoes (or their agents) which have been transported by sea to a Chinese port. Note: the PRC is not a State party to the 1992 Fund Convention (International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage 1992)
The MSA will be the designated authority for enforcing the Regulations and is therefore the responsible agency for the specific supervision and administration of prevention and control of marine pollution by ships and relevant ship operation activities. Overall responsibility will rest with the Beijing MSA, with regional MSAs having local authority (as required).
Scope
The Regulations cover any ship sourced pollution and any ship-related operation that causes or may cause pollution damage in the internal waters, territorial waters and the contiguous zones, exclusive economic zone and continental shelf of the PRC and all other sea areas under the jurisdiction of the PRC (wherever the pollution occurs).
Requirement to contract with an approved local clean up contractor
The Regulations require the operators of any ship carrying polluting and hazardous cargoes in bulk or of any other vessel above 10,000 gt to conclude a pollution clean up contract with an MSA approved pollution response company before entering a PRC port. "Operators" is not defined in the Regulation but the Group will seek clarification and advice from the MSA in this respect.
It is the International Group’s understanding that these clean up contractors will bear responsibility for conducting clean up operations in the event of an incident, under the MSA's supervision, and with the intervention of the MSA if the capabilities of the contractor are exceeded. It is understood that there will be more than one contractor in each of the Chinese ports.
The MSA is currently approving contractors in the various Chinese ports and further legislation will be issued in the near future. That legislation will cover both the response contracts that will need to be concluded by operators and the contractors that have been approved by the MSA. The IG is engaged with the MSA in this regard and will provide a further update to members pending any further clarification that is obtained.
The IG understands that four levels of contractors that will be designated who will have the capability to respond to a spill depending on the size and extent of the spill itself. The additional implementing legislation will clarify which contractors, in terms of levels, operators will need to contract with depending on their type of trade and size of vessel.
Although the MSA has undertaken to complete the inspection process of responders within 30 working days from the date of receiving their application for approval, this is likely to result in a very short time period within which operators can conclude such contracts prior to 1 March 2010. The Group understands that an extension may be given to the entry into force date of the provisions in the Regulations on concluding response contracts but, in the event that such an extension is not forthcoming, every effort will be made to ensure that members are in compliance by 1 March 2010.
Generally, breach of the Regulations carries a series of possible fines, ranging from RMB 10,000 to RMB 300,000 depending on the facts and, logically, per breach.
Clean up costs
In respect of compensation for costs incurred in the event of an incident, the Regulations seem to provide that priority shall be given to the costs of response organised by the Government. Before commencing her next voyage, any vessel involved in an incident where response action has been taken by the MSA is required to pay the MSA's costs or provide a relevant financial guarantee. The form of the guarantee to be provided (e.g. IG Club letter or local PRC insurer/PRC bank guarantee) is still to be clarified. The Regulations also provide that the MSA may detain the vessel while investigating any such incident.
On board emergency response plans
The Regulations require shipowners, operators or managers to maintain emergency response plans for the prevention and control of marine pollution. It is understood that a MARPOL Shipboard Oil Pollution Emergency Plan (SOPEP) will be sufficient to meet this requirement.
Insurance and Liability Issues
The PRC is a State party to the 1992 CLC and the 2001 Bunkers Convention. The liability provisions in the Regulation largely mirror those contained in these Conventions, which provide for strict liability of the owner for pollution damage arising from the carriage of persistent oil by sea (1992 CLC) and strict liability of the shipowner[1] for pollution damage caused by spills of bunker oil (2001 Bunkers Convention).
All vessels trading within PRC territorial waters, with the exception of those below 1,000 gt that are carrying non-oil cargoes, will be required to maintain insurance or other financial security cover to satisfy the requirements of the Chinese Maritime Code or the 1992 CLC and Bunkers Convention where applicable.
The MSA will determine and publish a list of competent insurance providers that will be qualified to provide the necessary insurance cover, in much the same manner as has been the case since 2007.
Reporting
Any pollution arising from an incident, or likely to arise, within the territorial waters of the PRC or beyond the territorial waters of the PRC under the PRC's jurisdiction must be reported to the local MSA. The accident report must contain the following information:
1. The ship’s name, nationality, call sign or number;
2. The name and address of the owners, operators or managers of the ship;
3. The time, place, weather and sea condition of the accident;
4. Preliminary determination of the cause of the accident;
5. The type, quantity, stowage, location of the pollutant substance of the ship;
6. The degree of the pollution;
7. The pollution control and disposal measures adopted and to be adopted and the situation of the control of the pollution and the salvage requirements;
8. Any other required information.
The International Group will continue to monitor both the implementation of the Regulations and the development of further legislation designed to give effect to a number of the Regulation provisions, and will continue to engage with the PRC MSA in this regard. A further update to members will be provided in due course.
All Clubs in the International Group of P&I Clubs have issued similar circulars.
___________________________
[1] Defined as including the registered owners, bareboat charterers, managers and operators.
LEGAL: THE REGULATION OF THE PEOPLE’S REPUBLIC OF CHINA ON THE PREVENTION AND CONTROL OF MARINE POLLUTION FROM SHIPS 2010
Legal news - Chinese law update
Published 16.10.2009
By Wei Fan, Skuld (Far East) Ltd
Note: This subject is also dealt with in an
International Group Circular issued on 4 November 2009.
Background
China has recently promulgated the Regulation of the People’s Republic of China on the Prevention and Control of Marine Pollution from Ships (hereinafter the Regulation), which repeals the old one (1983 Regulation of the People’s Republic of China on the Prevention and Control of Marine Pollution from Ships). The new Regulation will take effect on March 1, 2010.
Intention of the Regulation
It intends to build up a systematic structure for ship-induced pollution response in China in order to control and prevent marine pollution from ships. It is an administrative regulation in essence, which regulates a wide range of issues including oil pollution response planning, oil spill clean-up arrangements, supervision of the loading, lightening and discharging of the polluting and hazardous cargos, investigation and compensation of pollution incidents, establishment of domestic compensation Fund and punishment for contravening any of the requirements of the Regulation etc.
Significant developments with the Regulation
The most significant development in this Regulation is that according to the Article 33, the operators of the ships carrying polluting and hazardous liquid in bulk, and other ships of above 10,000 GT, must conclude a pollution cleanup operation contract with approved pollution cleanup companies before entry of the port in order to specify the rights and responsibilities of all concerned parties in case of a pollution accident. The cleanup companies can then conduct cleanup operations immediately after such accident. This resembles the OPA 1990. Each port will have one or more pollution response companies and they must be approved by the China MSA.
Dealing with clean up costs
With regard to dealing with clean up costs one of the most significant developments is probably the provisions on the claim for clean-up costs, that is, the cleanup costs of emergency response action will be compensated in priority from the oil pollution compensation. Article 55 reads "After the pollution accident, the necessary expenses spent in the emergency response and cleanup operation by those units as organized by the government shall be compensated in priority from oil pollution compensation."
It is not yet clear from the Regulation itself whether the MSA will take such action with its own resources (i.e. to mobilise its own cleanup equipment and personnel) or whether it will use owners' pre-contracted response team instead. Nevertheless, this Article is controversial in terms of the priority as it seems to contradict with article 22 of the Chinese Maritime Code. Article 22 provides for the priority of certain maritime claims but cleanup costs are not one of them. In theory the effect of the law should supersede the regulation if in contradiction in China. However it can be argued that instead of being in contradiction with the Article 22 of the Chinese Maritime Code, the Article 55 of Regulation only functions as an addendum and is therefore valid. Nevertheless, before Chinese maritime courts render their interpretation, the question of priority will remain vague and may lead to disputes.
Compulsory Insurance
It is worth noting that the Regulations require all ships (with exception of ships below 1000GT carrying non-oil cargo) trading within China territorial waters to have compulsory insurance or financial security satisfying the requirements of the Chinese Maritime Code or the applicable liability Conventions, as so-called blue card for P&I clubs. So far so good. However, we understand that the Ministry of Transport is currently drafting another regulation (Draft Regulation of the People's Republic of China on the Implementation of the Civil Liability Insurance for Ship Oil Pollution), which provides for the qualification of the oil pollution liability provider. Article 8 of the draft Regulation provides that "The insurers that undertake the oil pollution civil liability insurance of the ships of Chinese nationality shall conform to the following requirements:…4. have good service reputation and no record of bad behavior in the compensation…"
The phrase "good service reputation and no record of bad behavior..." is vague enough to cause concern. There are concerns that Article 8 might be misused and could lead to difficulties with interpretation where Clubs have legitimate concerns over the amount of rates being charged for clean up costs. Could this type of dispute be deemed “bad behavior..." such that the P&I Club would not be deemed a sufficient provider within the scope of Article 8.
Lastly, China has not acceded to the Fund Convention, and the Chinese government we understand is likely to set up its own domestic fund. In the first draft the Regulation (Article 56) provides that the cargo owner or his agent who receive the persistent oil shall contribute to the Ship Oil Compensation Fund.The collection and management of the Ship Oil Compensation Fund will be developed by the State transport and finance authorities. An Administration Commission, established by the State, and comprising relevant government officials and representatives of the main cargo owning contributors, will be responsible for the administration of the Fund.
Anyone who is interested in reading the English version of the whole Regulation please feel free to contact Wei Fan fan.wei@skuld.com
