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EU ETS – Emissions Trading System

Frequently asked questions about the EU ETS

Curious about how the EU ETS affects your shipping operations? Our comprehensive FAQs address these queries and many more. Do you have a specific question that isn't covered in our FAQ? Feel free to reach out to our expert team via our contact form at the bottom of this page.

Our FAQ tables below cover:

Additionally, you can find FAQs about the Role of data on the separate tab.

Commercial – Administering Authorities

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Administering authority is the authority in an EU/EEA member state, to which is the company obliged to surrender the allowances corresponding to the emissions reported in the preceding calendar year.

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For companies registered in the EEA – it is a member state where it is registered​. For companies outside the EEA – it is a member state with the largest number of port calls over last 4 years​. Vessel not trading in the EEA in the last 4 years – it is a member state of the first port call in the EEA.

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It will be the responsibility of the company managing the vessel, to submit the assessed Monitoring Plan to the Administering Authority. Verified Monitoring Plan has to be submitted to Administering Authority until the 1st of April 2024.

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Commercial – EUA handling

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  1. Auctions - EUAs can be purchased at a fixed price at auctions arranged several times a year by the European Energy Exchange (EEX) on behalf of the EU. Companies need to register with the European Commission to participate in these auctions.
  2. Trading - EUAs can be bought and sold on the secondary market through brokers or online trading platforms. These can be traded on various exchanges and over-the-counter (OTC) markets, and the price fluctuates according to supply and demand.
  3. Futures - It is possible to bank EUAs for use in future years. This can be useful if you expect to have higher emissions in the future and want to ensure you have sufficient allowances to offset those emissions. EUAs dated 1 January 2013 or later remain valid for meeting future surrender obligations, and EUAs issued on or after this date do not expire until they are surrendered.

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DNV assumes that all of these allowances will be certified on purchase and there will be no additional requirements on allowances certification. Later, these allowances will have to be submitted to the Administering Authorities which will verify the quantity of EUAs (EU Allowances) and compare it to aggregated emissions.

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No, number of allowances that have to be submitted to the Administering Authority will depend on the quantity of greenhouse gases emissions verified in the Company Emission Report after all the vessels' MRV Emission Reports have been verified after MRV reporting year. However, number of allowances can be monitored using new DNV service: Emissions Connect.

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EU Allowances dated 1 January 2013 or later remain valid for meeting future surrender obligations, and EUAs issued on or after this date do not expire until they are surrendered.

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There is no free allocation of the EUAs in shipping sector. Instead, the phase-in percentage in 2024 and 2025 reduces the amount of allowances to be surrendered respectively to 40% and 70% of verified emissions in scope of EU ETS.

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Under EU ETS, company is liable only for emissions which occurred during the time of its responsibility for the vessel. In the MRV scheme however, the company responsible for vessel at the end of calendar year should submit the annual report consisting of its own data and verified data covering previous company's responsibility period.

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Commercial – EU ETS responsibility

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The EC has adopted an implementing regulation detailing which company is responsible for monitoring and reporting of GHG emissions and surrendering of emission allowances. The default responsible entity is the registered owner, including if the ship is on a bareboat charter. The responsibility can be shifted to the technical manager – i.e. the ISM company – only by an agreement between the registered owner and the ISM company, explicitly stating the delegation.

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For companies registered in the EEA – it is a member state where it is registered​. For companies outside the EEA – it is a member state with the largest number of port calls over the last 4 years​. Vessel not trading in the EEA in the last 2 years – it is a member state of the first port call in the EEA.

  1. The registered owner takes on the responsibility for compliance with ETS and MRV and establishes its own monitoring system

    The owner company should provide its Administering Authority (AA – see below) with a list of ships for which it assumes responsibility with the MRV and ETS obligations. The registered owner must establish its own monitoring system, develop a monitoring plan, having it assessed by a verifier, and submit it to the AA by 1 April 2024.

  2. The registered owner takes on the responsibility for compliance with ETS and MRV but delegates the practical monitoring to the ISM company

    The owner company should provide its administering authority (AA) with a list of ships for which it assumes responsibility with the MRV and ETS obligations. The ISM company can continue with the monitoring and reporting as today, but the monitoring plan must be updated referring to the owner as the responsible entity. The ISM company will implement the monitoring plan and provide the emissions reports for the registered owner. It is not yet clear if it will be possible to the ISM company to submit the plans and reports in Thetis MRV on the owner’s behalf.

  3. The registered owner delegates the responsibility for compliance with ETS and MRV to the ISM manager.

    The owner company and ISM company must sign a document clearly indicating that the ISM company has been mandated by the shipowner to comply with the MRV and ETS obligations. Under this option, the existing monitoring plan can be continued, provided it is extended with the required additional elements.
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Compliance timing – Deadlines

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From 2025, the deadline for a verified EU MRV Emission Report submission to European Commission will be 31.03, instead of 30.04. After sucessful verification of the whole fleet MRV reports, Company Emission Verification Report containing all the fleet's EU ETS scope emissions must be submitted to the Administering Authority until 31.03 each year. However, DNV recommends to submit all the MRV Emission Reports for verification at least a month before the deadline in order to fulfill all the requirements in the due time.

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Compliance timing – Penalties

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Companies that fail to surrender allowances are liable to an excess emissions penalty of €100/tonne CO2 and are still liable for the surrendering of the required allowances. Companies that fail to comply for two or more consecutive periods may be denied entry to the EEA/EU for all ships under its responsibility.​

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EUAs monitoring – Emissions Monitoring

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In our Emissions Insights tool, it will be possible to monitor emissions in EU ETS scope and estimated EU Allowances cost. Please keep in mind that this information will be based on submitted MRV data and will not be verified.
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Exceptions – Alternative fuels

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Biofuels and biofuel blends should be recorded in the fuel type table using default names 'Bio-diesel' for FAME biofuel, 'HVO' for Hydrotreated Vegetable Oil and 'Other biofuel' for fuels not falling under the two specific categories. Companies are asked to specify the biofuel component - fuel blends should not be specified separately each time a new blend percentage is to be used. In addition to the fuel types table, company should specify which emission sources will potentially used the biofuel as well as declare the method to determiny density of fuel.​

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Exceptions – Derogations

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Transshipment ports are ports outside the EU/EEA, but less than 300 nm from an EU/EEA port. The European Commission will provide a list of transshipment ports by the 31 December 2023​.​

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  • IA, IA super or equivalent ice-classed vessels (see next questions) – 5% fewer allowances to be submitted​.
  • Voyages between small islands of a Member State below 200,000 inhabitans with no road link and a port of the same member state and related port activities – applies only to passenger ships / ro-pax​.
  • Voyages in framework of transnational public service obligation and related port stays – applies only to passenger ships / ro-pax​.
  • Voyages between Outermost Region port of a Member State and other port of the same Member State and related port stays​.
  • Renewable fuels – for biofuel complying with the sustainability criteria and greenhouse gas emission saving criteria for the use of biomass established by EU RED II, the CO2 emission factor of the biomass fraction of the fuel shall be zero

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The European Union (EU) counts nine outermost regions, which are geographically very distant from the European continent. These are French Guiana, Guadeloupe, Martinique, Mayotte, Reunion Island and Saint-Martin (France), Azores and Madeira (Portugal), and the Canary Islands (Spain).​

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EU Member States can request that transnational public service contract or a transnational public service obligation between two Member States should be temporarily exempted from certain obligations under ETS Directive. The possibility should be limited to connections between a Member State without a landborder with another Member State and the geographically closest Member State, such as the maritime connection between Cyprus and Greece.​

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Vessels with assigned polar classes PC1-PC5 have no direct equivalents in the Finish-Swedish ice class rules, however since they fulfill the requirements of IA Super ice class, these vessels can benefit from the derogation to surrender 5% fewer allowances than their the verified emissions in EU ETS scope. Polar classes PC6 and PC7 have their direct equivalents and are applicable to the ice class derogation.

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Regulation – Greenhouse Gases

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For fuels other than LNG, CH4 and N2O emission is calculated in similar manner to CO2. Annex I to MRV regulation is extended to provide a table with emission factors for CH4 and N2O, which are multiplied by amount of fuel consumed to get individual greenhouse gas emissions.​

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In addition to above, for LNG fuels (Fossil LNG, Bio-LNG, e-LNG) methane slip is considered using slippage coefficient values defined in Annex I for different emission source classes. The percentage value, multiplied by mass of LNG fuel consumed, provides data on CH4 emissions. Since slipped methane is not combusted, mass of fuel is reduced by mass of slipped methane to determine CO2 and N2O emissions resulting from combustion.

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For the purpose of calculating greenhouse gas emissions as CO2 equivalent, Global Warming Potential (GWP) values are used to relate individual greenhouse gas emissions to CO2. These vales are as referred to in in the Annex to Commission Delegated Regulation (EU) 2020/1044 and are equal to 28 for methane (CH4) and 265 for Nitrous oxide (N2O).

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Where the methane slip at 50% load differs from default values assumed for given source class of emission source due to applied technologies, company should declare a custom slippage coefficient value for the emission source and provide suitable evidence.

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The slippage coefficient values for methane assumed by European Commission have been determined for 50% of rated power of the emission source.

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Methane and nitrous oxide emissions from maritime transport activities will be in scope of EU ETS from 1st January 2026. Other questions in this section describe how these emissions are to be determined.

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Regulation – Reporting Period

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Regular EU ETS reporting period is a calendar year - from the 1st of January until the 31st of December. Company report can be a sum of individual vessels' data for calendar year, but also partial year periods for vessels gone out of management or taken into management. Number of allowances to be surrender needs to correspond only to emissions that occurred during the time of responsibility of particular company for the vessels.

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In such scenario, voyage will be cut at the end of the year and for voyages starting and ending in two different years, respective data is accounted to the year when emission occurred. However, the vessel shall still report until next cargo change, so the scope of such a voyage can be determined.

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Previous company's periodical emissions for a vessel will be a part of their aggregated emissions data on company level next year. Therefore your company will not be liable to surrender allowances for the period when the vessel was not under your management.

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EU ETS reporting is a calendar year - from the 1st of January until the 31st of December. Voyages with a departure in one year (X) and arrival in the next year (X+1) will have to be split into two events at least - one at the end of year X and another one at the start of year X+1. Consumed fuel ROBs must be reported in both events.

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Regulation – Scope of ETS

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Methane and nitrous oxide emissions from maritime transport activities will be in scope of EU ETS from 1st January 2026. Other questions in this section describe how these emissions are to be determined.

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To avoid evasive behaviour, container ships stopping in the transshipment ports announced by European Commission, need to include 50% of the emissions for the voyage to that port as well, rather than only the short leg from the transshipment port.

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EU ETS applies only to the vessels calling EU/EEA ports for commercial reasons in the preceding reporting year. Only the ships with emissions on voyages into/within/out of EEA countries shall be included in the Company Emission Verification Report. It should also be noted that there are special derogations applicable in specific cases. These are described in the answer to the next question.

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Transshipment ports are ports outside the EU/EEA, but less than 300 nm from an EU/EEA port. The European Commission will provide a list of transshipment ports by the 31 December 2023​.

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Requirements – Company Report

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The company report should be submitted separately for verification to DNV. The company report should be the sum of verified ship emissions from all ships under the responsibility of a shipping company in given year (including partial MRV reports for vessels which are no longer compan. Where company uses multiple verifiers accross the fleet, the company report should also include data verified by other verifiers.

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Regulation – Monitoring Plan

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Biofuels and biofuel blends should be recorded in the fuel type table using default names 'Bio-diesel' for FAME biofuel, 'HVO' for Hydrotreated Vegetable Oil and 'Other biofuel' for fuels not falling under the two specific categories. Companies are asked to specify the biofuel component - fuel blends should not be specified separately each time a new blend percentage is to be used. In addition to the fuel types table, company should specify which emission sources will potentially used the biofuel as well as declare the method to determiny density of fuel.​

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The slippage coefficient values for methane assumed by European Commission have been determined for 50% of rated power of the emission source.

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The new Monitoring Plan will be a revision of existing MP covering additional information on new GHG and data aggregation. It shall be prepared between the 1st of October and the end of December 2023. Vessels shall start reporting accordingly starting from the 1st of January 2024. submitted for assessment to an Accredited Verified. Assessed Monitoring Plan has to be submitted to Administering Authority until the 1st of April 2024.

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Yes, DNV revised the online form available in Fleet Status portal to cover the requirements of new plan template. The new form will be made available shortly after plan template is formally adopted by European Commission.

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Yes, from 2024 the MRV Monitoring Plan needs to be uploaded to Thetis-MRV portal. Companies using DNV's online form to create the new MRV Monitoring Plan will be invited to download an XML file representing plan content and upload it to Thetis-MRV portal, similar to the Emission Report XML. Bulk upload functionality is announced for Thetis, which will lower the burden for shipping companies.

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Incinerator should be listed in the emission sources list of the MRV Monitoring Plan - companies are invited to add this emission source when updating their plans using the new revised MRV Monitoring Plan online form. Consequently incinerator fuel consumption should be reported to DNV following the OVD interface requirements. Incinerator consumption does not need to be reported as separate item, but can be part of total fuel consumption reported today.

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Specific Fuel Oil Consumption (SFOC) for emission sources such as boilers or inert gas generators should be the maximum hourly fuel consumption, expressed in kg/h.

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Smaller tonnage general cargo ships (400-5000GT) and offshore ships will be in scope of MRV regulation from 2025. Good practice suggests that Monitoring Plans for these vessels are prepared in second half of 2024, in preparation for the first reporting period.

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The revised MRV Monitoring Plan should be submitted using DNV's online form. Comments are handled in Fleet Status portal as per the usual process. Following successful verification, companies are requested to upload XML files representing the verified Monitoring Plan to Thetis-MRV portal. Plans are formally assessed by DNV in this portal.

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Until legal text of the implementing act is updated, standard EN 16258:2012 should be applied for the dermination of the consumption split between cargo and passengers on a Ro-Pax vessel.

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It will be the responsibility of the company managing the vessel, to submit the assessed Monitoring Plan to the Administering Authority. Verified Monitoring Plan has to be submitted to Administering Authority until the 1st of April 2024.

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Regulation – Partial MRV report

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The verified partial MRV report should be submitted to Administering Authority, Flag State authorities of Member State, the European Commission and to the new company as close as practical to the day of change of company and no later than three months thereafter. The verified data covering previous company's responsibility period should form a part of the MRV Emission Report that will be submitted by the company responsible at the end of the reporting year. However, previous company's emissions for a taken-over vessel will not be a part of your aggregated emissions data on company level - your company will not be liable to surrender allowances for the period when the vessel was not under your management. Nevertheless, you still need to request the verified aggregated MRV data for previous company's period to fulfill MRV obligations at the end of the year. This data combined with your own log abstract data will form a full-year MRV Emission Report.

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The requirement to submit an partial MRV emission report applies from 5th June 2023. Taking into consideration that changes firstly need to be implemented in Thetis-MRV and Administering Authority have to be assigned to the companies, DNV will support verification of partial MRV emission reports from January 2024. Submission and verification of 2023 partial MRV reports will also be enabled.

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The verified partial MRV report should be submitted to Administering Authority, flag State authorities of Member State, the European Commission and to the new company as close as practical to the day of change of company and no later than three months thereafter. Good practice suggests that the partial MRV report is submitted for verification to DNV within a month after change of company to provide sufficient time for handling of comments and clarifications.

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Regulation – Reporting Requirements

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For most cases, additional greenhouse gas emissions will be calculated based on already reported total consumption per fuel type and default emission factors for CH4 and N2O (together with already existing CO2 emission factor) will be applied to reported consumption in MRV scope, resulting in automatic calculation of all three greenhouse gases' emissions calculation in DNV's database. However, LNG vessels will be required to report consumption per emission source to apply correct methane slippage corresponding to the applicable emission source class.

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Revision to MRV regulation requires that upon change of company, Partial MRV Emission Report is submitted for verification. In addition, the reporting period is by default fixed to calendar year, meaning that ongoing voyages and port stays are split between two years. This implies that end of reporting period (year end or day of ship's handover to other company ) is marked with an event, such as noon event, where data including fuel ROB is given.

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With updates to the MRV regulation, the reporting period will be strictly a calendar year. This implies that a split between each calendar year is introduced by reporting an event (such as noon event) on 31st December each year. All parameters mandatory for a noon event should be reported on this event - distance, fuel consumption, time, ROB etc.

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Reporting of port codes plays a crucial role in determination of the geographical scope of a voyage. To eliminate risk of potential errors, companies are requested to specify a 5-letter code of port of arrival /port of departure on applicable events. Where a full code is not assigned to port in question, companies may use the 2-letter country code and specify vessel position on arrival and departure events

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Considering the need to determine slipped methane emission resulting from use of LNG as fuel, it is mandatory to report LNG consumption per each fuel consumer group having the same slippage coefficient values. Should there be a need for reporting explicitly per each engine (and not a group of emission sources such as ME, AE), companies are requested to contact DATE@dnv.com with a request to set up vessel data related to engine-specific reporting.

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