FAQs on the EU-ETS for Shipping（Edition 2.1）
[ English ]Contents
Introduction

2

Correction / Revision Record

3

Q1. What is the EU-ETS？

4

Q2. What is an overview of the EU-ETS for shipping?

5

Q2-A. What is the “Shipping Company”?

6

Q3. How can I check the GHG emissions?

7

Q4. What is the “port of call” under the EU-ETS for shipping?

10

Q5. What should I do for the EU-ETS for shipping?

11

Q6. Who will purchase allowances under the EU-ETS for shipping?

16

Q7. When, where, and how can I purchase/surrender allowances?

17

Q8. What are the penalties for non-conformities?

18

Q9. How are the revenues from the EU-ETS for shipping used?

19【Relevant Information】
What is the EU-MRV regulations?

8

Ice-class ships under the EU-ETS for shipping

10

European Green Deal

15

FuelEU Maritime Regulation

15

BIMCO’s clauses related to the EU-ETS for shipping sector

16

How is the price of allowances determined?

17

Addition of the EU-ETS functionality to ClassNK ZETA

18

EU-ETS for shipping and the IMO’s ｍarket-based measures

19

List of regulations related to EU-ETS for shipping and EU-MRV
regulations

20

Introduction
The Paris Agreement adopted in 2015 sets a common goal for the global GHG emissions
reduction, which is to keep the increase in global average temperature to at least well below
2°C above pre-industrial levels while aiming to limit it to 1.5°C.

International shipping is no exception; International Maritime Organization (IMO) revised its
GHG Strategy in July 2023 as the 2023 IMO Strategy on Reduction of GHG emissions from

Ships, which includes a target for total annual GHG emissions from international shipping to
be net zero by or around 2050.

Meanwhile, in the European Union (EU), CO2 emissions from maritime transport to and fromports in the European Economic Area (EEA) account for approximately 11% of the total CO 2
emissions from the EU transport sector and 3% to 4% of the EU's total CO 2 emissions. CO2
emissions from maritime transport are expected to increase unless further measures aretaken. The EU has therefore set a target of reducing GHG emissions by at least 55% by 2030
compared to the 1990 levels, with the aim of achieving net zero emissions by 2050. In
July 2021, a comprehensive climate policy package, “Fit for 55" was announced to achieve
the 2030 target, including proposals to extend the EU Emissions Trading System (EU-ETS) to
the shipping sector and to promote the decarbonization of fuels used on board ships(FuelEU Maritime). Subsequently, EU decided to extend the EU-ETS to the shipping sector
from 1 January 2024, and to implement the FuelEU Maritime from 1 January 2025.

In March 2023, ClassNK published the “FAQs on the EU-ETS for Shipping (1st Edition)”, which
provides an overview of the EU-ETS for the shipping sector and the necessary preparations
in a Q&A format to assist maritime stakeholders in their first efforts for the compliance with
the EU-ETS. In June 2023, the amendments to the EU-ETS Directive to bring the shipping
sector into the EU-ETS entered into force and, subsequently, supporting regulations havealso been issued.

In this “FAQs on the EU-ETS for Shipping (Edition 2.1)”, brief explanations of theaforementioned supporting regulations have been added, and the contents have been
updated based on the latest information.

We hope that this document will help all the

stakeholders in the shipping sector for their preparation for the EU-ETS.

2

Correction / Revision Record
Version

Date

SectionDetails

1.0
2.0

Mar. 2023
Jan. 2024－
Q1, Q2, Q3, Q4, Q5,
Q6, Q7, Q9
Ｑ2-A
Relevant Information

2.1

Jan. 2024

Ｑ2-A
Q5

Relevant Information(List of regulations
related to EU-ETS forshipping and EU-MRV
regulations)3－
Updated based on the latest
information.
New addition
Updated based on the latest
information.
Updated based on the latest
information.
Updated based on the latest
information.
Updated figure.
Updated based on the latest
information.

Q1. What is the EU-ETS？
The EU-ETS is the EU Emissions Trading System (ETS) introduced in 2005.

◆Participating States
The EU-ETS is currently applicable to 30 States consisting of 27 EU Member States and 3
EEA States, namely, Norway, Iceland and Lichtenstein. In this document, the descriptions
such as “EU-ETS participating States”, “EU/EEA Member States”, and “EU/EEA ports” are used.

◆Sectors in the scope of EU-ETSThe EU-ETS has been covering the energy-intensive sectors such as power generation, steel
works, cement production and oil refineries since its launch in 2005. The aviation sector wasincorporated in 2012, and its extension to the shipping sector starts from January 2024.

◆Cap-and-trade system
The EU-ETS works on the cap-and-trade system, which is to (1) allocate allowances on the
total amount of greenhouse gases (GHG) emissions that can be emitted by each operator or
installation (cap), and to (2) let them buy and sell their allowances in case of surplus orshortage (trade). Such operators who exceed their allocated allowances must purchase theallowances from the designated markets or other operators. As cap levels are set to be
gradually stringent, the efficient emissions reduction through the market principle isexpected among the participants as a whole.
Overview of the EU-ETS

4Q2. What is an overview of the EU-ETS for shipping?
◆Emission allowances
There is no free allocation for the shipping sector. Shipping companies are required topurchase allowances based on their emissions.
◆Responsibility
Shipping companies are responsible for the compliance with the EU-ETS for shipping(see Q2-A).
◆Ships in the scope
Ships of 5,000 GT and above, arriving at or departing from EU/EEA ports are in the scope of
the EU-ETS for shipping, which is the same scope as the EU-MRV regulations (see theRelevant Information on “What is the EU-MRV regulations?”).
◆Greenhous gases (GHG) in the scopeUntil 2025: Carbon dioxide (CO2) only

From 2026: Carbon dioxide (CO2) + methane (CH4) + nitrous oxide (N2O)◆Emissions in the scope
Emissions in the geographical scope of the EU-ETS for shipping are as follows:Voyages between EU/EEA and non-EU/EEA ports (Route ①):

50% of emissions

Voyages between EU/EEA ports (Route ②):

100% of emissions

Berthing in EU/EEA ports:

100% of emissions

Voyages and berthing in the scope of EU-ETS for shipping（For emissions from voyages between an EU/EEA Member State and an outermost region of the same State, and for emissionsat ports in connection with these voyages, an obligation to surrender allowances shall not arise until December 2030.）◆Phase-in approach
Emissions subject to the EU-ETS for shipping for the first two years are as follows:Emissions in 2024 (surrendered in 2025): 40% of the total emissions in the scopeEmissions in 2025 (surrendered in 2026): 70% of the total emissions in the scope5

Q2-A. What is the “Shipping Company”?
Under the EU-ETS for shipping, the shipping company is responsible for the compliance withthe regulation and is defined as follows:‘shipping company’ means the shipowner or any other organisation or person, such as the
manager or the bareboat charterer, that has assumed the responsibility for the operationof the ship from the shipowner and that, on assuming such responsibility, has agreed totake over all the duties and responsibilities imposed by the International Management Codefor the Safe Operation of Ships and for Pollution Prevention, set out in Annex I to
Regulation (EC) No 336/2006 of the European Parliament and of the Council.

In this connection, implementing regulations on the shipping company have been issued. The
overview is as follows:

The shipping company responsible for the EU-ETS can be either the registered owner orthe management company (ISM company/ISM DOC holder).
✓Registered owner means the registered owner that is identified in the Ship's
Certificate of Registry and has an IMO Unique Company and Registered Owner
Identification Number.



The registered owner can delegate the EU-ETS obligations to the management company,
i.e., ISM company. In this case, a mandate document clearly indicating that it has been
duly mandated by the shipowner to comply with the ETS obligations, signed by both theregistered owner and the ISM company, should be submitted to the Administering
Authority and the verifier of the EU-MRV. (In the absence of the document, theregistered owner has ETS obligations.)✓

A bareboat charterer can become the shipping company that has ETS obligations only
if it is an ISM company.

✓

Beneficial owner or time charterer cannot become a shipping company that has ETS
obligations.

The shipping company having ETS obligations and the company responsible for the EU-MRV
regulations should be identical. However, emissions monitoring and reporting required by the
EU-MRV regulations can be carried out by a third party designated by the shipping company.
For example, the registered owner could be the shipping company responsible for both the
EU-ETS and EU-MRV, while a management company (ISM company) carries out the emissions
monitoring and reporting required by the EU-MRV regulations. (In this case, a mandate
document between a shipping company and a third party is not required by the regulation.)6

Q3. How can I check the GHG emissions?
Emissions subject to the EU-ETS for shipping are verified in accordance with the EU-MRV
regulations. In addition to CO2, methane (CH4) and nitrous oxide (N2O) will be covered by theshipping EU-ETS from 2026 onwards. In this connection, CH4 and N2O have also been added
as GHG subject to monitoring, reporting and verification under the EU-MRV regulations from2024.
Scopes of the EU-ETS for shipping and the EU-MRVFor the CH4 and N2O emissions monitoring, except using the direct greenhouse gas emissions
measurement, as with CO2 emissions, emissions of CH4 and N2O are calculated by multiplying
aｎ emission factor of each fuel by the amount of fuel used on board. These emissions arethen converted into CO2 equivalents by multiplying the Global Warming Potential (GWP). In
the case of LNG, methane slip is also taken into account when calculating CH 4 emissions.
Different rates for the methane slip are defined depending on the combustion system of theengine. Emission factors for CO2, CH4 and N2O, methane slip as well as the GWP for CH4 andN2O for fossil fuels, ammonia (NH3) and methanol are as follows:
Type of fuelCO2 emission
factorCH4 emission
factorN2O emission
factorMethane slip

[gCO2/gFuel][gCH4/gFuel][gN2O/gFuel][% of gFuel]

GWP: 265

GWP: 28

3.114
3.151
3.206
2.750
2.750
2.750
2.750
3.03

0.00005
0.00005
0.0000500000.00005

GWP: 28

HFO
LFO
MDO/MGO
LNG: for LNG Otto (dual fuel medium speed)
LNG: for LNG Otto (dual fuel slow speed)
LNG: for LNG Diesel (dual fuel slow speed)
LNG: for Lean-Burn Spark-Ignited (LBSI)
LPG(Butane)

70.000180.000180.000180.000110.000110.000110.000110.00018------3.1
1.7
0.2
2.6
---

Type of fuelCO2 emission
factorCH4 emission
factorN2O emission
factorMethane slip

[gCO2/gFuel][gCH4/gFuel][gN2O/gFuel][% of gFuel]

GWP: 265

GWP: 28

3.00
0
1.375

0.00005
0.00005
0.00005

GWP: 28

LPG(Propane)
NH3
Methanol

0.000180.000180.00018-------For the use of biofuels, the following emission factors for CO2, CH4 and N2O, methane slip as
well as the GWP for CH4 and N2O are identified.

When calculating the emissions subject to the EU-ETS, CO2 emissions are calculated to bezero, provided that these biofuels meet the criteria set by the EU (RED II: Directive (EU)2018/2001 of the European Parliament and of the Council of 11 December 2018 on the
promotion of the use of energy from renewable sources (recast)).

Type of biofuels

CO2 emission
factorCH4 emission
factorN2O emission
factorMethane slip

[gCO2/gFuel][gCH4/gFuel][gN2O/gFuel][% of gFuel]

GWP: 265

GWP: 28

2.834
3.115
2.750

0.00005
0.0000500.000180.000180.00011

3.1

2.750

0

0.00011

1.7

2.750

0

0.00011

0.2

2.750

0

0.00011

2.6

1.375

0.00005

0.00018

GWP: 28

Bio-diesel
Hydrotreated Vegetable Oil (HVO)
Liquified Bio-methane (Bio-LNG):
for LNG Otto (dual fuel medium speed)
Liquified Bio-methane (Bio-LNG):
for LNG Otto (dual fuel slow speed)
Liquified Bio-methane (Bio-LNG):
for LNG Diesel (dual fuel slow speed)
Liquified Bio-methane (Bio-LNG):
for Lean-Burn Spark-Ignited (LBSI)
Bio-methanol

-----

---

What is the EU-MRV regulations?

EU-MRV regulations means the Regulation (EU) 2015/757 of the European Parliament andof the Council of 29 April 2015 on the monitoring, reporting and verification of carbon dioxide
emissions from maritime transport, and amending Directive 2009/16/EC requiring themonitoring, reporting and verification of fuel consumptions used onboard ships etc. during
EU-related voyages which have been implemented from 2018.

Ships of 5,000 GTs and above calling at EU ports are required to prepare a monitoring planfor their fuel consumptions and an emission report containing the records of their CO2
emissions for verification by an EU-accredited verifier.

With the introduction of the EU-ETS for shipping, EU-MRV regulations have also been

8

amended to expand the GHG subject to reporting and verification, and the types and sizesof ships covered, as follows:

Scope
GHG
Ship types
Size ofships

Until 2023
CO2 only
Commercial
ships only

From 2024
CO2＋CH4＋N2O
Commercial
ships only

5,000 GTand above

5,000 GTand above

From 2025 onwards
CO2＋CH4＋N2O
Commercial ships＋offshore ships
Commercial ships：5,000 GT and above
General cargo ships：400 GT and above
offshore ships：400 GT and above

ClassNK provides verification services as an accredited verification body under EU-MRV
regulations.
https://www.classnk.or.jp/hp/en/authentication/eumrv/

ClassNK is in the process of updating the EU-MRV verification system, ClassNK MRV Portal,
to facilitate the updating of existing EU-MRV monitoring plans for each ship and the
preparation of the aggregated emissions data for company level. From 2024, the monitoringplan is required to be submitted electronically according to the format specified on THETISMRV, instead of on paper or PDF. The MRV Portal user guide will provide information on how
to update and submit monitoring plan to THETIS-MRV in due course.

9Q4. What is the “port of call” under the EU-ETS for shipping?
Port of call under the EU-ETS for shipping is defined as follows:‘port of call’ means the port where a ship stops to load or unload cargo or to embark or
disembark passengers, or the port where an offshore ship stops to relieve the crew,
considering that stops for the sole purposes of refuelling, obtaining supplies, relieving thecrew of a ship other than an offshore ship, going into dry-dock or making repairs to the ship
and/or its equipment, stops in port because the ship is in need of assistance or in distress,
ship-to-ship transfers carried out outside ports, stops for the sole purpose of taking shelter
from adverse weather or rendered necessary by search and rescue activities, and stops ofcontainerships in a neighbouring container transhipment port listed in the implementing
act adopted pursuant to Article 3ga(2) are excluded;

Therefore, a port call for the sole purpose of refuelling, obtaining supplies, or docking in adry dock, etc. is not considered as the port of call under the EU-ETS and the voyages fromthe previous 'port of call' to the next 'port of call' are considered continuous.

“stops of containerships in a neighbouring container transhipment port” are excluded fromthe port of call under the EU-ETS for shipping, and the neighbouring container transhipment
ports are defined as the ports where the share of transhipment of containers, measured intwenty-foot equivalent unit, exceeds 65% of the total container traffic of that port during
the most recent twelve-month period for which relevant data are available located outside
the Union but less than 300 nautical miles of a port under the jurisdiction of a Member State.
It means that the voyages preceding and following such ports are considered as consecutive
voyages.

Two container transhipment ports have been designated for this provision: TANGER MED in
Morocco and EAST PORT SAID in Egypt. The container transhipment ports subject to thisprovision will be reviewed every two years.

Ice-class ships under the EU-ETS for shipping

Shipping companies may surrender 5% fewer allowances than their verified emissions taking
place until 31 December 2030 from ice class ships having the ice-class IA or IA Super or anequivalent ice class.

10Q5. What should I do for the EU-ETS for shipping?
With the introduction of the EU-ETS for shipping from January 2024, the following actions
will be required.
Timeline for the introduction of the EU-ETS for shipping◆Step 1: Confirmation of Administering Authority

Under the EU-ETS for shipping, a shipping company is registered to an Administering
Authority of an EU/EEA Member State. A shipping company will not be freely able to change
its administering authority, as the registration is based on the following manner:(1) A shipping company registered in an EU/EEA Member State:
The administering authority of the EU/EEA Member State in which the shipping company
is registered.
(2) A shipping company that is not registered in an EU/EEA Member State:
The administering authority of the EU/EEA Member State with the greatest estimatednumber of port calls from voyages performed by that shipping company in the last fourmonitoring years and falling within the scope of EU-ETS for shipping.
*A shipping company, having no such voyage in the preceding four monitoring years, isregistered to the administering authority of the EU/EEA Member State that theconcerning ship of the shipping company has arrived or started its first voyage.

11

A list of the Administering Authorities for each shipping company was published on
31 January 2024.
Commission Implementing Decision (EU) 2024/411 of 30 January 2024 on the list of shipping
companies specifying the administering authority in respect of a shipping company inaccordance with Directive 2003/87/EC of the European Parliament and of the Council

For the registered owners and management companies (ISM companies) that have ships
calling at ports in EU/EEA Member States, it is necessary to confirm which Administering
Authority of EU/EEA Member State the shipping company is registered with in the list.

The Administering Authority attributed to the shipping company can be confirmed in the EUMRV reporting platform "THETIS-MRV" operated by the European Maritime Safety Agency(EMSA), if the shipping company is a THETIS-MRV user.
◆Step 2: Opening Maritime Operator Holding Account(within 40 working days of the publication of the list of Administering Authority)

A shipping company having ETS obligations is required to surrender allowances (EUA: EU
Allowances) corresponding to the previous year's emissions by 30 September each year. In
this connection, each shipping company is required to open a registry account for
surrendering EUA, called the Maritime Operator Holding Account (MOHA). For this purpose,each shipping company is required to submit an application, together with necessary
information, to the Administering Authority for the opening of MOHA within 40 working daysof the publication of the list of the Administering Authorities.

The necessary information is identified in the following regulations. Additional information
may be required by each Administering Authority.
➢

Regulation (EU) 2019/1122 of 12 March 2019 supplementing Directive 2003/87/EC of
the European Parliament and of the Council as regards the functioning of the Union
Registry (Text with EEA relevance)Text with EEA relevance, Table III-I of Annex III; and➢Commission Delegated Regulation (EU) 2023/2904 of 25 October 2023 amending
Delegated Regulation (EU) 2019/1122 supplementing Directive 2003/87/EC of theEuropean Parliament and of the Council as regards the functioning of the Union Registry,
Table VIIa-I and VIIa-II of Annex VIIa.

In addition to the above information, the following information should also be submitted,
depending on whether the shipping company responsible for the EU-ETS is a registeredowner or an ISM company, as follows:12

①

In case where a registered owner has ETS obligations:➢

The registered owner is required to submit to its Administering Authority a list of
ships (ship name and IMO Number) that are subject to EU-ETS and EU-MRV
obligations.

➢

After submitting the necessary information, the following information should also be
submitted to the Administering Authority:✓

In case where additional ships are to be added: the ship name and IMO Numberof the additional ships.

✓

In case when transferring ETS obligations to an ISM company or deleting a
registered ship, e.g. by selling the ship: the ship name and IMO Number, as wellas the company name of the new shipping company and its IMO Unique Company
and Registered Owner Identification Number.

②

In case where an ISM company has ETS obligations:➢

The ISM company is required to submit to its Administering Authority a mandate
document stating the delegation of ETS obligations from the registered owner to the
ISM company. This document should be signed by both the registered owner and theISM company.

➢

This document should, at least, include the following information:✓

Name, IMO Unique Company and Registered Owner Identification Number,Country of registration of the ISM company✓

Name, IMO Unique Company and Registered Owner Identification Number,contact details of the registered owner✓

IMO Number of each ship that the ISM company has ETS obligations✓

The date of application of the mandate from the registered owner to the ISM
company➢

If the document is in a language other than an official language of the Member State
or English, an English translation shall be provided. If the document is a copy, thisshall be certified as a true copy by a notary public or other similar person specified
by the Administering Authority.

It is not expected that EC will provide a standardized format for the mandate document tobe signed by both the registered owner and the ISM company. ClassNK prepared a sample ofthis document which can be available from here. Please note that a format to the mandate
document may be prepared by each Administering Authority.

The method of application for opening MOHA (e.g. paper-based, system-based, etc.) varies

13from each Administering Authority. Contact details for each Administering Authority to apply
for the opening of MOHA can be found in the "contact points" section of the following URL
maintained by the European Commission.
https://climate.ec.europa.eu/eu-action/eu-emissions-trading-system-eu-ets/union-registry_en#links◆Step 3: Updating and submission of the monitoring plan (by 1 April 2024)

The company responsible for the EU-MRV regulations (the same as the shipping company
having the ETS obligations) must update the monitoring plan for each ship for the revised
EU-MRV regulations. Updated monitoring plan should be submitted, after the confirmationby the verifier, to the Administering Authority by 1 April 2024. (For more information on
monitoring methods, see Q3: “How can I check the GHG emissions?”)

In addition, if the shipping company is an ISM company, the mandate document signed byboth the registered owner and the ISM company should also be submitted to the verifier in
addition to the Administering Authorities. (The document to be submitted to the verifier can
be a copy.)

If the emissions monitoring and reporting required by the EU-MRV regulations is carried out
by a third party on behalf of the shipping company, this third party can also prepare, update,and submit the monitoring plan.

In addition, for ships which firstly apply to the EU-MRV regulations after 1 January 2024, a
new monitoring plan should be prepared. After confirmation by a verifier, it should besubmitted to the Administering Authority within three months of each ship’s first port of callin an EU/EEA Member State.
◆Step 4: Preparation and submission of emissions report of each ship and aggregatedemissions data at company level (by 31 March of each year)

The company responsible for the EU-MRV regulations (the same as the shipping company
having ETS obligations) is required to prepare the following:➢

Emissions report for the previous year for each ship; and➢Aggregated emissions data at company level.

These emissions reports and aggregated emissions data at company level should be verified
by a verifier and then submitted to the Administering Authority by 31 March each year. It
should be noted that this deadline, i.e., 31 March, may be brought forward by one month atthe discretion of each Administering Authority.

14◆Step 5: Obtaining and surrender of allowances

The shipping company having ETS obligations should obtain the allowances for the emissions
in the scope in advance and surrender allowances based on the emissions reported to the
Administering Authority as specified in Step 4 above by 30 September each year.

European Green Deal

The European Green Deal combines a comprehensive set of mutually reinforcing measuresand initiatives aimed at achieving climate neutrality in the EU by 2050, and sets out a new
growth strategy that aims to transform the Union into a fair and prosperous society, with amodern, resource-efficient and competitive economy, where economic growth is decoupledfrom resource use. The strategy includes a commitment to reduce EU’s economy-wide net
greenhouse gas emissions by at least 55% by 2030 below 1990 levels.

FuelEU Maritime Regulation

In addition to extend the EU-ETS to shipping sector, EU developed a new framework called
the FuelEU Maritime Regulation and decided to implement the regulations from January 2025.
While the EU-ETS focuses on the GHG directly emitted from ships only, the FuelEU Maritime
covers the lifecycle GHG intensity of the fuels used onboard ships, i.e. their production,transportation, storage and combustion on board.

Another regulatory component of the FuelEU Maritime Regulation is the mandatory use ofshore power when moored in EU ports (starting in 2030) for container and passenger ships.
ClassNK published “FAQs on FuelEU Maritime (1st Edition)”, which provides an overview of
the FuelEU Maritime Regulation and necessary preparations for the compliance with them ina Q&A style.

15

Q6. Who will purchase allowances under the EU-ETS forshipping?
Under the EU-ETS for shipping, while the shipping company is responsible for the compliancewith the regulation (see Q2-A), EU/EEA Member States should take the necessary measures
to ensure that when the ultimate responsibility for the purchase of the fuel and/or theoperation of the ship is assumed by a different entity than the shipping company pursuant
to a contractual arrangement, the shipping company is entitled to reimbursement from that
entity for the costs arising from the surrender of allowances.

“Operation of the ship” means determining the cargo carried and/or the route and the speedof the ship. It is to be noted that the shipping company still assumes the responsibility toensure the compliance with the EU-ETS for shipping notwithstanding their entitlement for
the reimbursement.

The arrangement of emission allowances would be agreed under a charter party. Fullconsultation between the parties concerned is recommended.

BIMCO’s clauses related to the EU-ETS for shipping sector

BIMCO (The Baltic and International Maritime Council) has issued following Emissions
Trading Scheme(ETS) clauses for charter party agreements, and ship managementagreements to clarify allocation of the costs and responsibilities for obtaining, transferring,and surrendering GHG emissions allowances for ships operating under emissions trading
schemes, such as EU-ETS.

Emission Trading Scheme Allowances Clause for Time Charter Parties 2022

Emission Scheme Freight Clause for Voyage Charter Parties 2023

Emission Scheme Surcharge Clause for Voyage Charter Parties 2023

Emission Scheme Transfer of Allowances Clause for Voyage Charter Parties 2023



SHIPMAN Emission Trading Scheme Allowances Clause 2023

16

Q7. When, where, and how can I purchase/surrender allowances?
◆How to purchase allowances
No free allocation is provided to the shipping sector. Allowances can be purchased throughthe European Energy Exchange (EEX) as the primary market. It can also be purchased throughfuture trades or bilateral trades on the secondary market. Allowances can be purchased at
any time, as long as they are secured by the due date for surrender each year.

◆How and when to surrender allowances
Allowances should be surrendered by 30 September each year in accordance with theemissions in the previous year. The surrendering is to be done by electronically transferring
EU Allowances from Maritime Operator Holding Account（MOHA） of a shipping company to its
Administering Authority. A demonstration of the surrendering can be found in the webinar
jointly organized by the European Commission and EMSA, which is available from here.

How is the price of allowances determined?

Price of allowances is determined by the supply/demand balance on the market. Necessary
and proper adjustments are made by the EU to protect the market from insider trading andmarket operations. For the purchase through European Energy Exchange (EEX), price isdetermined through an auction. For the purchase on the secondary market, the trading is
conducted between the parties concerned. Shipping companies need to understand inadvance how many allowances are required to decide when to purchase them, for there may
be a great price gap depending on the timing.
Transition of the price of allowances at the European Energy Exchange (EEX)（Based on the price of allowance issued by EEX）

ClassNK held the “ClassNK EU-ETS Seminar -Get Ready for EU Allowance in the Shipping
Sector-” in Singapore in October 2023. In this seminar, experts provided an introduction on
how to purchase EU allowances (EUA). Videos and materials of this seminar are available
from here.

17Q8. What are the penalties for non-conformities?
The EU-ETS sets the penalties to the shipping companies who are in breach of requirements
to surrender sufficient allowances. Penalties for the shipping company are as follows:

Publication of the names of shipping companies;

The excess emissions penalty shall be EUR 100 for each tonne of carbon dioxide
equivalent emitted for which the shipping company has not surrendered allowances.
Payment of the excess emissions penalty shall not release the shipping company fromthe obligation to surrender an amount of allowances equal to those excess emissions
when surrendering allowances in relation to the following calendar; andIn the case of a shipping company that has failed to comply with the surrender
requirements for two or more consecutive reporting periods and where otherenforcement measures have failed to ensure compliance, the competent authority of theMember State of the port of entry may issue an expulsion order.

Addition of the EU-ETS functionality to ClassNK ZETAClassNK released ClassNK ZETA (Zero Emission Transition
Accelerator) in 2022 to efficiently manage GHG emissions fromships.

ClassNK ZETA, linked to the ClassNK MRV Portal storing various
data provided by ships, is equipped with the functions to enable
the constant monitoring of CO2 emissions and CII ratings forindividual ships as well as for the entire fleet, and to simulate
how CO2 emissions and CII ratings are changed with slow steaming, etc. Currently, ClassNKZETA is serving more than 5,000 ships.

ClassNK ZETA has now been updated to add the functionality to manage the GHG emissions
under the EU-ETS and the surplus/shortage of allowances. Please utilize ClassNK ZETA forthe compliance with the EU-ETS for shipping.

ClassNK ZETA as a cloud service is accessible immediately with only a simple application.
Please place the application from “ClassNK ZETA application form” in the following website:
https://www.classnk.or.jp/hp/en/info_service/ghg/nk-zeta.html

18Q9. How are the revenues from the EU-ETS for shipping used?
Revenues from the EU-ETS for shipping are expected to be assigned to the Innovation Fundto support relevant projects for the penetration of fuels from renewable energy sources andlow carbon fuels and to accelerate the innovation of low- or zero carbon technologies for the
shipping sector.

The revenues will also be assigned to the Modernisation Fund to support the modernisationof energy systems and the improvement of energy efficiency in 13 lower-income EU Member
States during their transition to climate neutrality.

EU-ETS for shipping and the IMO’s market-based measures

IMO revised its GHG Strategy in July 2023 as the 2023 IMO Strategy on Reduction of GHG

emissions from Ships, which includes a target for total annual GHG emissions frominternational shipping to be net zero by or around 2050.

The revised strategy also identifies the timeline to develop mid-term measures which will
include both a technical element and an economic element, with a view to introducing thesemeasures in 2027.
When the IMO adopted the market-based measures, the European Commission will review themeasures to ensure that any significant double burden is not placed on the shipping sector.
If the IMO does not adopt a global market-based measure by 2028, further reinforcement of
GHG emissions requiring the purchase of allowances (50% of the GHG emissions from thevoyages between EU/EEA ports and non-EU/EEA ports) under the EU-ETS for shipping will beconsidered.

19

List of regulations related to EU-ETS for shipping and EU-MRV regulations◆EU-ETS relevantAmendments to the EU-ETS Directive： Directive (EU) 2023/959 of the European Parliament andof the Council of 10 May 2023 amending Directive 2003/87/EC establishing a system for greenhouse gas
emission allowance trading within the Union and Decision (EU) 2015/1814 concerning the establishment
and operation of a market stability reserve for the Union greenhouse gas emission trading system (Textwith EEA relevance)

EU-ETS Directive (consolidated text)： Consolidated text: Directive 2003/87/EC of the European
Parliament and of the Council of 13 October 2003 establishing a system for greenhouse gas emission
allowance trading within the Union and amending Council Directive 96/61/EC (Text with EEA
relevance)Text with EEA relevanceImplementing Regulation on a shipping company, etc.： Commission Implementing Regulation(EU) 2023/2599 of 22 November 2023 laying down rules for the application of Directive 2003/87/EC of
the European Parliament and of the Council as regards the administration of shipping companies byadministering authorities in respect of a shipping company

Implementing Regulation on the list of neighbouring container transhipment ports ：Commission Implementing Regulation (EU) 2023/2297 of 26 October 2023 identifying neighbouringcontainer transhipment ports pursuant to Directive 2003/87/EC of the European Parliament and of theCouncil

Amendments to the Delegated Regulation on the Union Registry： Commission DelegatedRegulation (EU) 2023/2904 of 25 October 2023 amending Delegated Regulation (EU) 2019/1122
supplementing Directive 2003/87/EC of the European Parliament and of the Council as regards thefunctioning of the Union Registry

Implementing Decision on the list of islands and ports, etc. that excluded from the scopeof EU-ETS for shipping： Commission Implementing Decision (EU) 2023/2895 of 19 December 2023
laying down the list of islands and ports referred to in Article 12(3-d) of Directive 2003/87/EC of theEuropean Parliament and of the Council and the list of transnational public service contracts ortransnational public service obligations referred to in Article 12(3-c) of that Directive◆EU-MRV relevantAmendments to the EU-MRV regulations： Regulation (EU) 2023/957 of the European Parliamentand of the Council of 10 May 2023 amending Regulation (EU) 2015/757 in order to provide for the
inclusion of maritime transport activities in the EU Emissions Trading System and for the monitoring,
reporting and verification of emissions of additional greenhouse gases and emissions from additional shiptypes (Text with EEA relevance)

EU-MRV regulations (consolidated text)： Consolidated text: Regulation (EU) 2015/757 of theEuropean Parliament and of the Council of 29 April 2015 on the monitoring, reporting and verification ofgreenhouse gas emissions from maritime transport, and amending Directive 2009/16/EC (Text with EEA
relevance)Text with EEA relevanceAmendments to the EU-MRV regulations on the monitoring of GHG emissions： Commission
Delegated Regulation (EU) 2023/2776 of 12 October 2023 amending Regulation (EU) 2015/757 of theEuropean Parliament and of the Council as regards the rules for monitoring greenhouse gas emissions andother relevant information from maritime transportDelegated Regulation on the verification activities, etc.： Commission Delegated Regulation(EU) 2023/2917 of 20 October 2023 on the verification activities, accreditation of verifiers and approvalof monitoring plans by administering authorities pursuant to Regulation (EU) 2015/757 of the European
Parliament and of the Council on the monitoring, reporting and verification of greenhouse gas emissions
from maritime transport, and repealing Commission Delegated Regulation (EU) 2016/2072

Delegated Regulation on the aggregated emissions data at company level： Commission
Delegated Regulation (EU) 2023/2849 of 12 October 2023 supplementing Regulation (EU) 2015/757 of
the European Parliament and of the Council as regards the rules for reporting and submission of theaggregated emissions data at company levelImplementing Regulation on the templates of monitoring plan, etc. ：Commission
Implementing Regulation (EU) 2023/2449 of 6 November 2023 laying down rules for the application ofRegulation (EU) 2015/757 of the European Parliament and of the Council as regards templates formonitoring plans, emissions reports, partial emissions reports, documents of compliance, and reports at
company level, and repealing Commission Implementing Regulation (EU) 2016/1927

20

FAQs on the EU-ETS for Shipping(Edition 2.1)
[ English ]For information on this publication, please contact the following:
For inquiries for the EU-ETS for shipping：
NIPPON KAIJI KYOKAI Marine GHG Certification Department
Tel: +81-3-5226-3025

E-mail: dcs@classnk.or.jp

For inquiries for the general European GHG-related regulations：
NIPPON KAIJI KYOKAI Zero-Emission Transition CenterTel: +81-3-5226-2031

E-mail: zxc@classnk.or.jp

Plan Approval and Technical Solution Division
Marine GHG Certification Department
4-7 Kioi-cho, Chiyoda-ku, Tokyo 102-8567, JAPANTel : +81-3-5226-3025
E-mail : dcs@classnk.or.jp

www.classnk.com
www.classnk.com

January 202421