Maritime decarbonisation: five questions for 2025
Owners and charterers - question one
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 in navigating these changing times, by focusing on the practical issues likely to impact your business directly, the team is opening 2025 by illuminating one key maritime decarbonisation question each week for the next five week.
We start this week looking at the EU Emissions Trading Scheme (EU ETS) and asking: your vessel left the EEA before 1 January 2024 but was still performing its departure voyage on 1 January 2024, are its departure voyage emissions within the EU ETS?
Legal context
The EU ETS imposes an obligation on "shipping companies" to surrender EU allowances in connection with the greenhouse gas emissions of vessels on voyages to, from and within the EEA. Now that the 2024 reporting year has concluded, parties are preparing to report their 2024 emissions (in time for compliance with the 31 March 2025 deadline) and acquire EU allowances to cover those emissions (in time for compliance with the 30 September 2025 deadline).
2024 is the first year the EU ETS has applied to emissions from vessels and there are at least two schools of thought as to how emissions from vessels which left the EEA before 1 January 2024, but were still performing their departure voyage on 1 January 2024, should be counted.
Why does it matter
If a portion of the departure voyage emissions fall within the EU ETS an obligation to surrender allowances in connection with those emissions arises. Whilst charterparties are likely to make provision for EU allowances to be collected and provided along the chain, disputes may arise where the EU ETS regime is interpreted differently by different parties. This could leave the "shipping company" short of EU allowances, if those are not transferred along the chain in good time to meet the surrender deadline, and facing increased costs where EU allowances need to be acquired at short notice and/or at the "shipping company's" own cost to avoid non-compliance.
What should you do
If you are the "shipping company" in connection with a vessel which was still performing a departure voyage on 1 January 2024, or a party in the charterparty chain of such a vessel:
- check whether allowances in connection with that voyage have been collected/transferred along the chain;
- address calculation issues and regulatory and contractual interpretation issues with counterparties as soon as possible; and
- if you have any queries or concerns, consult Stephenson Harwood's 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.
