DENMARK Trends and Developments Contributed by: Johannes Grove Nielsen and Camilla Søgaard Hudson, Bech-Bruun
Bech-Bruun 2150 Nordhavn Copenhagen Denmark Tel: +45 25 26 33 77
Email: jgn@bechbruun.com Web: www.bechbruun.com
Enforcing the EU Emissions Trading System (ETS): The Polluter Pays, Sometimes…? The initial deadlines for reporting and surren - dering allowances under the EU ETS to national administrative authorities are approaching in 2025, and compliance measures should already be in place for ship-owners and operators with delegated compliance responsibilities. Beyond public law obligations, it is also important to consider whether an appropriate foundation has been established to pass on the associated costs. According to the “polluter pays” princi - ple, the EU ETS for shipping regulation requires member states to implement measures ensuring that the costs of surrendering allowances can be passed on to the entity responsible for purchas - ing the fuel or operating the ship. However, this may not always be the case, leaving ship-owners or International Safety Management (ISM) com - panies with delegated authority for compliance being at risk of being left with the bill. This article aims to explore whether this is consistently the case, with a focus on the EU ETS implementa - tion in Scandinavia. The European Climate Law (Regulation 2021/1119) has set a target for climate neu - trality by 2050 as well as a target for negative emissions. All economic sectors are required to contribute to emission reductions, leading to the
inclusion of maritime transport activities in the EU ETS regulation. This inclusion is outlined in Directive 2003/87/EC, as amended by Directive 2023/959. Ships covered by the EU ETS regulation include cargo and passenger ships of 5,000 gross ton - nage or more. Starting in 2027, offshore ships of 5,000 gross tonnage or more will also be included. This aligns well with the inclusion of offshore ships in the EU monitoring, reporting and verification (MRV) regulation (EU Regulation 2018/2066; the “MRV Regulation”) from 2025. Additionally, there will be considerations on whether to extend the EU ETS to offshore and cargo ships down to 400 gross tonnages. A phase-in period has also been set for the shipping industry’s inclusion in the EU ETS. In 2025, the EU ETS will apply to 40% of emis - sions reported in 2024. In 2026, it will cover 70% of emissions reported in 2025, and from 2027 onwards, ship-owners will need to surrender allowances corresponding to all verified emis - sions. Who is responsible, and what is included? The party accountable for ensuring compli - ance with emissions regulations for a specific ship may be either the ship-owner or the ISM
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