Maritime decarbonisation: five questions for 2025
Banks and financiers - question two
As we step into 2025 fast-paced regulatory, technological and contractual change continues to drive maritime decarbonisation, with numerous fresh challenges emerging day-to-day.
To assist you in navigating these changing times, by focusing on the practical issues likely to impact your business directly, we are opening 2025 by illuminating five key maritime decarbonisation question.
This week we ask: when financing the purchase of a vessel that has been trading to Europe, does historical EU MRV and EU ETS compliance matter?
Legal context
Subject to specific exemptions, vessels of and over 5,000GT carrying cargo and passengers for commercial purposes have been within the EU MRV regime since 1 January 2018 and within the EU ETS regime since 1 January 2024. Offshore vessels and commercial cargo vessels of and over 400 GT joined the EU MRV on 1 January 2025.
If vessels within the EU MRV have traded to Europe obligations concerning the monitoring, reporting and verification of the vessel's greenhouse gas emissions will have arisen. If vessels within the EU ETS have traded to Europe obligations concerning the surrender of emission allowances will also have arisen.
Penalties for non-compliance with the EU MRV and EU ETS include the publication of names, financial penalties and, following two years consecutive non-compliance, expulsion of vessels from, or detention in, Member States.
Why does is matter
Whilst the EU ETS penalty regime provides that historical non-compliance penalties would be levied on the ships of the non-compliant shipping company (i.e. the Sellers or previous owners or managers), the EU MRV penalty regime provides that historical non-compliance penalties would be levied on the non-compliant vessel.
Historical compliance is therefore of interest as vessels with a history of non-compliance could be exposed to expulsion or detention risks which, if realised, could impact the commercial viability of the vessel and repayment capacity of borrowers.
What should you do
1 – check whether any transactions concern vessels which fall within the scope of the EU MRV or EU ETS;
2 – undertake due diligence in respect of historical compliance to further appraise the risk; and
3 – if you have any queries or concerns, consult our maritime decarbonisation experts who can advise and assist you further.
We look forward to supporting you with any queries, providing insight and offering guidance though this time of transition.
