Implementation Timeline for Offshore Ships

Regulation (EU) 2023/957 was published in the Official Journal of the European Union (EU) on 16 May 2023 and entered into force on 5 June 2023. It amended Regulation (EU) 2015/757 on the monitoring, reporting and verification (MRV) of greenhouse gas emissions (GHG) from maritime transport. As of 1 January 2025, the amended Regulation 2015/757 also applies to offshore ships of 400 gross tonnage (gt) and above, covering GHG emissions released during their voyages from their last port of call to a port of call under the jurisdiction of a member State and from a port of call under the jurisdiction of a member State to their next port of call, as well as within ports of call under the jurisdiction of a member State.

Beginning on 1 January 2027, the EU ETS Directive will expand to cover offshore ships exceeding 5,000 gt, which will be required to surrender allowances at the company level by 30 September 2028. No later than 31 December 2026, the European Commission (EC) will present a report to the European Parliament and the Council, evaluating the feasibility, as well as the economic, environmental and social impacts, of including emissions from offshore ships, between 400 and 5,000 gt in the EU ETS Directive.

Applicable Offshore Ships

Directive (EU) 2023/959 amends Directive 2003/87/EC, which provides that, regarding offshore ships, a “port of call” includes the port where the boat stops to relieve the crew.  

Delegated Regulation (EU) 2024/3214 has amended Annex I to Regulation (EU) 2015/757 to clarify the term “offshore ships,” ensuring a uniform application concerning the determination of the GHG emissions covered by the Regulation beyond those already covered when related to a ships’ movements and activities serving the purpose of transporting cargo or passengers for commercial purposes. According to this amendment, GHG emissions from offshore ships shall cover GHG emissions released during voyages from the last port of call to a port of call under the jurisdiction of a member State and from a port of call under the jurisdiction of a member State to the next port of call, as well as within ports of call under the jurisdiction of a member State by the ships listed below, other than icebreakers, designed or certified to perform service activities offshore or at offshore installations:

This list is non-exhaustive. The ship’s statutory certifications or any other relevant documentation, including class notations, should be considered to determine whether the ship is designed or certified to perform service activities offshore or at offshore installations.

Ships Operated in Stationary Mode

Ships operated in stationary mode still fall within the scope of EU ETS but for stationary installations. As per the EC’s guidance document:

“Where liquefied natural gas (LNG) terminals or other offshore installations such as oil rigs are installed on a ship, the emissions from the ship’s engine would be covered by the EU ETS for maritime transport while it is mobile. However, if the ship’s engine is used during stationary mode (e.g., for the production of electricity or heating), its emissions are to be included in the GHG permit which it requires for being stationary.”

Therefore, operators of such ships should contact the jurisdiction's competent authority where the ship is operated in stationary mode to obtain a GHG emissions permit per Article 4 of the EU ETS Directive and submit a monitoring plan for approval accordingly. Note that such monitoring plans are not included in THETIS-MRV and that such ships will not be subject to other obligations set in the MRV Maritime Regulation, such as reporting emissions within the port of call, as long as they remain stationary. For more information, see the EC's website for guidance on stationary installations.

Stops at Offshore Facilities

Any offshore facility having an assigned United Nations Code for Trade and Transport Locations (UN/LOCODE) and any offshore facility located outside port areas but permanently connected to a port are considered ports within the MRV Maritime system.

• Offshore facilities having an assigned UN/LOCODE may include, but are not limited to, FPSO units, Floating storage and regasification units (FSRU), and single points of mooring (SPMs).
• The permanent connection of an offshore facility located outside port areas to a port can be established by different means if it serves the purpose of transferring cargo or passengers from the ship to the connected port (or conversely) in a permanent manner (e.g., including via, but not limited to, pipelines). Where such an offshore facility does not have any assigned UN/LOCODE, the shipping company should report the UN/LOCODE of the port to which the facility is connected.

Stops at offshore facilities that have an assigned UN/LOCODE and/or are permanently connected to a port will, therefore, determine a port of call within the MRV Maritime Regulation, provided that the loading/unloading of cargo or passengers or release of the crew take place there.

Actions for Compliance

1. 1.    From 1 January 2025, the shipping company must submit the monitoring plan of the offshore ship to its administering authority within three months after the ship’s first port of call in a port under the jurisdiction of a member State.
   1. The monitoring plan submitted to the administering authority must already have been assessed by an accredited verifier as conforming to the MRV Maritime Regulation.
   2. As offshore ships do not currently fall within the EU ETS scope, the administering authority is not required to approve them (only submit them).
2. From 1 January 2025, start monitoring carbon dioxide, methane and nitrous oxide emissions and activity data according to the verified EU MRV monitoring plan for the offshore ships with a port of call in a port under the jurisdiction of a member State.
3. By 31 March 2026 and each year, submit to the responsible administering authority to the ship’s flag State (for ships flying the flag of a member State) and to the EU Commission a verified emissions report for the entire reporting period of the previous year.
   1. As EU ETS does not cover offshore ships for the time being, they are not concerned by the obligation to submit aggregated emissions data at the company level (the so-called ‘CER')
4. By 30 June 2026 and each year, carry a valid Document of Compliance (DoC) on board.
5. By 31 March 2028 and each year, companies shall submit to the administering authority for offshore ships of 5,000 gt and above an aggregated report at the company level for the emissions of the previous calendar year.

References

What emissions will be covered under EU ETS?

The necessary allowances will be based on the reported emissions under EU MRV. However, shipping companies will not have to surrender allowances for the total CO₂ emissions reported for the previous calendar year, but for:

• 100% of the emissions from ships performing voyages between EU ports
• 50% of the emissions from ships performing voyages departing from an EU port to a non-EU port
• 50% of the emissions from ships performing voyages departing from a non-EU port to an EU port
• 100% of the emissions from ships at berth in an EU port

Initially only CO₂ emissions will be covered. However, starting in 2024, CH₄ and N₂O will be included in the EU MRV and from 2026 in the EU ETS. As mentioned above by 1 April 2024, shipping companies shall submit to the responsible administering authority, a verified monitoring plan that reflects the inclusion of CH₄ and N₂O emissions.

What vessels will be covered?

Initially, EU ETS will cover CO₂ emissions generated from ships of 5,000 gross tonnes (GT) and above that call at EU ports. From January 2027, EU ETS will be extended to offshore vessels over 5,000 GT, which will be already included in the EU MRV from 2025 along with general cargo ships of 400 GT and above. For the latter, their inclusion in EU ETS will be reviewed no later than 2027.

Will EU ETS be applied to vessels that call on EU ports only?

The EU recognizes that due to the absence of a global market-based-measure (MBM) on shipping generated GHG emissions, the probability of EU port evasion is increased. In that order certain stops of containerships at non-EU container transhipment ports will be included in EU ETS which are in a vicinity of less than 300 nautical miles from the Union’s territory. By 31 December 2023, the Commission shall establish a list of container transhipment ports and update it by 31 December every two years thereafter.

Are shipping companies eligible for any exclusions from EU ETS?

Yes, under EU ETS shipping companies are eligible for surrendering fewer or no EUAs at all under the following four scenarios:

• Ice class ships

o   Current design of ice class ships enabling them to sail in ice conditions that lead to an increased fuel consumption. Therefore, shipping companies may surrender 5% fewer EUAs than their verified emissions until 31 December 2030 from ice class ships, provided that these ships have ice class IA or IA Super or an equivalent ice class.

• Small islands

o   Until 31 December 2030, member States may request from the Commission the exclusion of shipping companies from the obligation to surrender emissions from voyages performed by passenger ships, other than cruise passenger ships and by ro/pax ships, between the port of an island under the jurisdiction of the requesting member State and a port under the jurisdiction of that member State, provided that the island has a permanent population of less than 200,000 residents.

• Transnational public service connection between member States

o   Until 31 December 2030, shipping companies may be excluded from the obligation to surrender allowances for the emissions arising from voyages by passenger or ro/pax ships performed in the framework of a transnational public service between a member State that has no land border with another member State and the other member State that is at the closest proximity to the first, at the joint request of these two member States.

• Outermost regions

o   Until 31 December 2030, an obligation to surrender allowances shall not arise for the emissions generated during voyages between a port located in an outermost region of a member State and a port located in the same member State.

What are the obligations of shipping companies, verifiers and administering authorities?

• Shipping companies:

From 1 January 2024, they shall start monitoring based on their monitoring plan and by 31 March 2025 and onwards to report aggregated monitoring data at company level. By 1 April 2024 they shall submit to their administering authority a revised monitoring plan that has been assessed as being in conformity with the revised EU MRV Regulation by the verifier to reflect the inclusion of CH₄ and N₂O. By 30 September 2025 and onwards they shall surrender adequate allowances based on their reported aggregated emissions. For ships that fall under EU ETS for the first time after 1 January 2024, shipping companies shall submit a monitoring plan no later than three months after each ship’s first port of call in a MS.

• Verifiers:

The verifiers shall check whether or not the submitted monitoring plan is in compliance. Furthermore, by 31 March 2025 and onwards they shall assess the shipping company’s submitted data and issue a verification report.

• Administering authorities:

Administering authorities shall by 31 March 2025 and onwards, ensure that each shipping company’s submitted data is properly verified and by 30 September 2025 and onwards confirm that the shipping company has surrendered adequate allowances.

How will the revenues from EU ETS be used?

The revenues arising from EU ETS will fund investments such as:

• R&D and demonstration projects that aim to reduce GHG emissions;
• Development of renewable energies and other technologies that contribute to the transition to a safe and sustainable low-carbon economy;
• Environmentally safe carbon capture and storage;
• Measures intended to improve energy efficiency and clean technologies in the sectors covered by EU ETS.

Furthermore, each year until 2030 the revenue from the auction of 20 million allowances will be included in the Innovation Fund to support investments for the decarbonization of maritime sector and especially:

• Improvement of energy efficiency of ships, ports and short-sea shipping;
• Electrification of maritime sector;
• Investments in sustainable alternative fuels such as hydrogen and ammonia;
• Investments in zero-emission propulsion technologies e.g., wind propulsion
• Innovations to ice class ships. 

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