DENMARK Trends and Developments Contributed by: Johannes Grove Nielsen and Camilla Søgaard Hudson, Bech-Bruun
company associated with that ship. It is the joint responsibility of the registered owner and the ISM company to determine who is to undertake obligations under the EU ETS and EU MRV regu - lations. In the absence of an explicit agreement, the registered owner will be responsible for fulfill - ing ETS and MRV obligations. EU ETS is based on Directive 2003/87/EC (ETS Directive) and the tools set out by the MRV Reg - ulation. The EU ETS in shipping encompasses 50% of emissions from journeys commencing or concluding outside the EU, and it includes all emissions during travel between two EU ports, and when ships are within EU ports. Costs for ensuring compliance Shipping companies are required to provide their administering authority with information con - cerning the ships for which they are responsible. In Denmark, the responsible authority for such is the Danish Business Authority. In Scandinavia, the responsible entity under Directive 2023/959 is referred to as the “mari - time operator”, which would either be the ship- owner or an ISM company, if the responsibility has been delegated. The maritime operator must ensure that they: • prepare a verified monitoring plan for emis - sions; • submit the verified monitoring plan to their national administrative authority for approval; and • report verified emissions from the previous year to their national administrative authority. Each year, a maritime operator must also sur - render CO₂ allowances (EU allowances; EUAs) corresponding to the verified emissions.
In practical terms, this means that it is not enough to simply purchase allowances or receive allowances from, for example, a time charterer; the allowances must be surrendered. This also means that there are several compli - ance costs to take into consideration, especially if an entity is ultimately expecting to be able to pass on such costs. In Denmark, the Danish Energy Agency and the Danish Business Authority are the national administrative authorities in respect of the EU ETS regulations. Administrative costs associ - ated with administering the EU ETS regulation will also be passed on to the responsible entity. Passing on compliance costs The EU has also recognised that emissions from a ship, and thus the carbon costs, are influenced by several factors, including the energy efficien - cy measures implemented by the ship-owner, the type of fuel used, the cargo being transport - ed and the ship’s route and speed. Of these factors, the route, the speed, the cargo transported and the fuel may be under the con - trol of an entity other than the ship-owner, but the ship-owner may not have taken this need to pass on the costs from an EU ETS perspective into account in its contracts. This is particularly the case if such contracts have been entered into prior to the entry into force of the EU ETS regulation. This may lead to the actual polluter being an entity that is not the ship-owner, and this would not be in accordance with the polluter pays principle. On this basis, the EU has included the follow - ing regulation under Article 3gc of the EU ETS regulation for shipping:
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