THE EU's Emissions Trading System is fraught with ambiguities and contractual risks for shipowners, operators, and charterers, says a study commissioned by the Royal Belgian Shipowners' Association.
Published in the European Transport Law Review, the study says 'our analysis finds that there are significant complexities in the definition of the responsible entity.
'One example is the stipulation that the responsible entity must be the same for EU MRV (Monitoring, Reporting, and Verification) and EU ETS (Emissions Trading System) where this is not always the case.
'Another is the challenges of applying the 'polluter pays' principle across EU member states where each has its unique legal framework,' said co-authors Elle De Soomer, head of the shipowners' association's legal affairs, and Celine Audenaerdt, head of the group's environmental affairs.
'It is vital that the shipping industry first understands the principles of the EU ETS so that they can better interpret which party should bear the compliance burden,' said Mr De Soomer.
'Our analysis finds that there are significant complexities in the definition of the responsible entity,' he said.
'One example is the stipulation that the responsible entity must be the same for EU MRV (Monitoring, Reporting, and Verification) and EU ETS (Emissions Trading System) where this is not always the case,' he said.
By examining standard contractual clauses aimed at mitigating these challenges, the paper also provides strategies for navigating the regulatory environment and offers recommendations to achieve compliance, their paper said.
As for FuelEU Maritime, companies are currently hesitant to prepare for it due to the absence of definitive legislative texts and unclear regulatory intentions, the study said.
Said Ms Audenaerdt: 'There have been efforts to anticipate changes by integrating broad clauses into customer contracts, yet substantial education and discussions are needed. All of which depend on the final legislation.
'Additionally, a specific BIMCO clause is not yet available, and fuel certification rules, especially for fuels produced outside the EU, remain undefined,' she said.
'This uncertainty complicates industry readiness for the 2025 FuelEU implementation, challenging the notion that the industry can adapt in time without clear regulations and certification processes. The industry's ability to make billions in investments hinges on having these elements in place,' said Ms Audenaerdt.
The path to greener maritime practices not only depends on regulatory adjustments but also on clarifying enforcement mechanisms, particularly in relation to the 'polluter pays' principle, said the paper.
'Addressing these challenges requires a concerted effort by Member States to ensure that the transition to environmentally sustainable shipping practices does not unduly burden those committed to leading the change,' the paper said.
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Published in the European Transport Law Review, the study says 'our analysis finds that there are significant complexities in the definition of the responsible entity.
'One example is the stipulation that the responsible entity must be the same for EU MRV (Monitoring, Reporting, and Verification) and EU ETS (Emissions Trading System) where this is not always the case.
'Another is the challenges of applying the 'polluter pays' principle across EU member states where each has its unique legal framework,' said co-authors Elle De Soomer, head of the shipowners' association's legal affairs, and Celine Audenaerdt, head of the group's environmental affairs.
'It is vital that the shipping industry first understands the principles of the EU ETS so that they can better interpret which party should bear the compliance burden,' said Mr De Soomer.
'Our analysis finds that there are significant complexities in the definition of the responsible entity,' he said.
'One example is the stipulation that the responsible entity must be the same for EU MRV (Monitoring, Reporting, and Verification) and EU ETS (Emissions Trading System) where this is not always the case,' he said.
By examining standard contractual clauses aimed at mitigating these challenges, the paper also provides strategies for navigating the regulatory environment and offers recommendations to achieve compliance, their paper said.
As for FuelEU Maritime, companies are currently hesitant to prepare for it due to the absence of definitive legislative texts and unclear regulatory intentions, the study said.
Said Ms Audenaerdt: 'There have been efforts to anticipate changes by integrating broad clauses into customer contracts, yet substantial education and discussions are needed. All of which depend on the final legislation.
'Additionally, a specific BIMCO clause is not yet available, and fuel certification rules, especially for fuels produced outside the EU, remain undefined,' she said.
'This uncertainty complicates industry readiness for the 2025 FuelEU implementation, challenging the notion that the industry can adapt in time without clear regulations and certification processes. The industry's ability to make billions in investments hinges on having these elements in place,' said Ms Audenaerdt.
The path to greener maritime practices not only depends on regulatory adjustments but also on clarifying enforcement mechanisms, particularly in relation to the 'polluter pays' principle, said the paper.
'Addressing these challenges requires a concerted effort by Member States to ensure that the transition to environmentally sustainable shipping practices does not unduly burden those committed to leading the change,' the paper said.
SeaNews Turkey