EU MRV Shipping:
The Definitive Guide
EU MRV Shipping stands for the new European Regulation on monitoring, reporting and verification of CO2 emissions and other relevant information from ships.
You have less than 3 months left until the first compliance deadline. If you have not yet started, we recommend you start now to familiarise yourself with the EU MRV Shipping system.
The Definitive Guide brings you up to speed with the new Regulation. It touches on all important aspects including the MRV process, document of compliance, publication of information and penalties.
If you know only little about EU MRV Shipping, you've come to the right place.
We explain what MRV stands for. You also learn to which voyages, vessels and companies the system applies.
What Is EU MRV Shipping?
EU MRV Shipping stands for the monitoring, reporting and verification of CO2 emissions from ships and other relevant information, such as time spent at sea, distance travelled or cargo carried.
The MRV system is the European Union's first step of integrating maritime emissions into its climate change policy. Greenhouse gas reduction targets and further measures are expected to follow in the medium to long term if the International Maritime Organization (IMO) fails to agree on an effective global system.
EU Regulation 2015/757 sets the legal framework which rules are further specified in various delegated and implementing regulations.
What Vessels Must Participate?
EU MRV Shipping regulates merchant vessels above 5,000 GT with voyages to and from ports situated in a Member State of the European Economic Area (EEA). It applies to all ships equally regardless of their flag or country of ownership.
Article 2(2) of Regulation 2015/757 exempts several ship types and operations. Amongst them are
- naval auxiliaries
- fish-catching or fish processing ships
- wooden ships of a primitive build
- ships not propelled by mechanical means
- government ships used for non-commercial purposes.
Are You Responsible For MRV Compliance?
Responsible is the ship owner, or any other person or organization, which has assumed the responsibility for the operation of the ship from the ship owner. In practise, this is the DOC company. This means, you are responsible if you are the holder of the document of compliance which demonstrates compliance with the ISM code under SOLAS.
What Voyages Are Regulated?
The EU MRV Shipping Regulation applies to all voyages starting or ending in a port of call under the jurisdiction of an EU Member State, Iceland and Norway.
What about EU outermost regions? Those are also included in the geographical scope of the Regulation. Here is the list: Azores Islands, Madeira, Canary Islands, Guadeloupe, French Guyana, Martinique, Mayotte, Saint Martin and Reunion.
And EEA Member States' Overseas Countries and Territories? No. Voyages between those territories and third-countries are outside of the geographical scope. We have listed them in the blue box.
What Is A Voyage?
Of course, we all know what a voyage is. The EU, however, is more demanding. It defines a voyage as a movement of a ship which starts at the last berth within a port of call and terminates at the first berth within the following port of call.
But that's not enough. In addition, to qualify as a voyage, the ship movement must serve the purpose of transporting passengers and cargo for commercial purposes. For that reason, ballast voyages are also subject to the Regulation.
And what about ship movements that do not serve the purpose of transporting passengers and cargo for commercial purposes? Those are exempt. You can think of:
- ice-breaking activities
- construction activities for sub-sea infrastructure
- activities to support offshore installations.
It's important to note that, per definition, a voyage always starts and ends in a port of call. So how does the EU define a port of call?
For MRV purposes, a port of call means the port where a ship stops to load or unload cargo or to embark or disembark passengers.
Ports called for any other reasons are not considered ports of call. This includes stops in ports for the sole purpose of
- obtaining supplies
- relieving the crew
- going into dry-dock
- making repairs to the ship and/or its equipment.
But the list doesn't stop here. It also includes ports called
- where the ship is in need of assistance or in distress
- for the sole purpose of taking shelter from adverse weather
- where rendered necessary by search and rescue activities.
From Hong Kong To Rotterdam
Let's imagine you load cargo in Hong Kong and in Singapore, you transit the Suez Canal, bunker in Gibraltar and unload all your cargo in Rotterdam (see the map below).
So how many ports of call, voyages and EEA related voyages do you count and which are these?
- 3 ports of call: Hong Kong, Singapore and Rotterdam
- 2 voyages: Hong Kong – Singapore and Singapore – Rotterdam
- Only 1 EEA related voyage: Singapore – Rotterdam
The 'M' in MRV stands for monitoring of CO2 emissions information and activity data.
But before you start the monitoring exercise in 2018, you will need a verified monitoring plan for each qualifying ship in your fleet.
What Is A Monitoring Plan?
The monitoring plan consists of a complete and transparent documentation of your vessel's MRV management and control system.
It must be complete, conform and correct. In other words, you must have in place a management and control system which is in conformity with the Regulation. Furthermore, the monitoring plan must accurately describe the system. And it must include all mandatory information.
You are required to create and submit a ship-specific monitoring plan to an accredited EU MRV verifier by 31 August 2017. If you operate a vessel in Europe for the first time after this date, you will need to submit your plan without undue delay and no later than 2 months after your first call in a European port.
So what information does the monitoring plan contain? Basic company and ship information, of course. A detailed description of your MRV management and control system. This includes written procedures for the monitoring of emissions and activity data, data flow and control activities, management and responsibilities, quality insurance, IT systems and data gaps.
2018 is the first reporting year. This means, starting from 1st January 2018, you will need to implement the procedures described in the plan at sea and on land.
You are also required to check regularly, and at least annually, whether the monitoring plan is still accurate and whether the monitoring methodology can be improved.
What Should You Monitor?
From 1st January 2018, you have to carry out the monitoring in accordance with your ship's satisfactorily assessed monitoring plan. Not only for any MRV relevant voyage, but also within EEA ports of call. So what information needs to be monitored?
Monitoring On A Per Voyage Basis
First and foremost, the monitoring is done on a per voyage basis. This means you must measure and record certain information for each qualifying voyage. This includes
- basic voyage information (such as port of departure and arrival or date and hour of departure and arrival)
- amount and emission factor for each type of fuel consumed in total
- CO2 emitted
- distance travelled
- time spent at sea
- cargo carried
- transport work.
Please bear in mind that fuel consumption shall include fuel consumed by main engines, auxiliary engines, gas turbines, boilers and inert gas generators.
As emission factor, you must use the default values specified in Commission Delegated Regulation 2016/2071.
Monitoring On An Annual Basis
You must aggregate the respective per voyage data to obtain annual values. This includes
- amount and emission factor for each type of fuel consumed in total
- total aggregated CO2 emitted within the scope of the Regulation
- aggregated CO2 emissions from all voyages between EEA ports
- aggregated CO2 emissions from all voyages to EEA ports
- aggregated CO2 emissions from all voyages from EEA ports
- total distance travelled
- total time spent at sea
- total transport work
- average energy efficiency.
Monitoring Within Ports
As mentioned above, the EU also requires vessels to keep track of their fuel consumption and emissions within EEA ports while at berth. It's important you don't mix up voyage and port related data as the latter must be calculated separately.
Another important point. You are exempt from the requirement to monitor fuel oil consumption within ports if you have chosen to measure all your CO2 emissions directly in exhaust gas stacks (see monitoring method D).
How Should You Monitor?
This depends primarily on data availability. The EU gives you some flexibility when it comes to choosing a monitoring method. You are free to pick any of the four approved monitoring methods. Only requirement. The method must be consistently applied once chosen. Which does not mean that you cannot use more than one method for different emission sources.
This method is based on fuel information from the Bunker Delivery Note (BDN) and on tank readings from periodic stocktakes of fuel tanks.
To calculate fuel consumed over the period (that is the time between two port calls or the time within a port), you subtract fuel in tanks at the end of the period and de-bunkered fuel from fuel in tanks at the start of the period and delivered fuel.
This method is based on fuel tank readings for all fuel tanks on-board.
To calculate fuel consumed over the period, you subtract fuel in tanks at the end of the period from fuel in tanks at the start of the period.
Method C: Flow Meters For Applicable Combustion Processes
This method is based on fuel flows as measured using flow meters that are linked to relevant CO2 emission sources. The calculation of fuel consumption is done by combining fuel flow meter information.
Method D is based on the determination of CO2 emission flows in exhaust gas stacks. This can be achieved by multiplying the CO2 concentration of the exhaust gas with the exhaust gas flow.
You calculate fuel consumption using the measured CO2 emissions and the applicable emission factor of the relevant fuels.
Monitoring Of Cargo Carried
How you express cargo depends on the type of ship you operate. The illustration below tells you which parameter(s) to use when determining cargo carried.
The 'R' in MRV stands for Reporting. It must be completed by 30 April of the year following the calendar year to which the report pertains.
Your first reporting deadline is 30 April 2019. This is the date by which you will need to submit to the European Commission a verified emissions report for the first time.
What Is An Emissions Report?
The Regulation requires you to submit an emissions report for each ship under your responsibility. So what does an emissions report contain?
The emissions report includes
- data identifying the ship and the company
- information on the verifier that assessed the emissions report
- information on the monitoring method used and the related level of uncertainty
- (most importantly) the results from the annual monitoring (LINK).
On a side note, CO2 emissions within EEA ports of call must be reported as a separate item in the emissions report.
The Regulation allows you to report certain information on a voluntary basis. For example, it's optional for chemical tankers, bulk carriers and combination carriers to report on the density of the cargoes transported.
Regarding the format, the reporting is done online using a dedicated Union information system (also called THETIS MRV database).
Before you submit your emissions report, make sure it has been verified by an accredited EU MRV verifier. More on this in chapter 4.
The 'V' in MRV stands for the verification. The MRV verification is performed by an accredited EU MRV verifier and includes the assessment of the monitoring plan and the verification of your annual emissions report.
What Is The Role Of The Verifier?
The role of the verifier consists in
- assessing your monitoring plan
- verifying your annual emissions report
- issuing the document of compliance.
EU MRV verifiers obtain their accreditation from national accreditation bodies, such as UKAS in the UK or DakkS in Germany. They must demonstrate that they are independent, impartial and competent to perform the assessment of the monitoring plans and the verification of emission reports.
Assessment Of Monitoring Plans
Essentially, your verifier will check whether your monitoring plan is complete, conform and correct.
This means it will check whether your monitoring plan contains all mandatory information. Your MRV management and control system will also undergo an examination. This is to check whether your system is in line with the Regulation and matches your monitoring plan description.
If the verification identifies any non-conformities, you must resolve them before the start of the first reporting period by the end of 2017.
Your verifier can decide to carry out a site visit if it wants to get a better picture of your MRV management and control system. This is usually done at the place where the critical mass of relevant data is stored or where data flow activities are carried out.
Your verifier has, however, the flexibility to waive a site visit if
- it has sufficient understanding of your ship's MRV management and control system
- the nature and level of complexity is such that a site visit is not required
- all required information can be obtained and assessed remotely.
Verification Of Emission Reports
The core of the verification of an emissions report is the process and data analysis.
During the process analysis, your verifier checks whether implemented procedures are in conformity with the Regulation and whether they are accurately described in the monitoring plan.
Remember. This is the second time your verifier looks for non-conformities as this has already been done when assessing your monitoring plan.
So what are non-conformities? To give you an example, a non-conformity can be a deviation from the monitoring plan, such as not implementing control activities or using another methodology for calculating fuel consumption.
And what happens if your verifier identifies non-conformities? First of all, your verifier will inform you and ask you to correct all the non-conformities in a timely manner. If you fail to resolve the non-conformities on time, the verifier will assess whether the non-conformities, individually or combined, lead to material misstatements.
A misstatement is defined as an omission, misrepresentation or error in the reported data. Misstatements are material if reported data deviates by more than 5 percent from the correct calculation.
Worst case scenario. You are indeed above 5 percent. In this case, you would receive a verification report which states that your emissions report does not comply with the Regulation.
Misstatements can also be a result of calculation, typing or transmission errors before or during the preparation of the emissions report. This is where the data analysis comes into play. Your verifier can identify those errors thanks to data testing and sampling.
Same as with non-conformities. If your verifier identifies any misstatements, it will let you know and set a reasonable deadline for you to correct them. If you fail to correct them on time, you will be asked to explain the main causes of the misstatements.
Your verifier will then assess whether the uncorrected misstatements, individually or together with other misstatements, have an impact on the total reported emissions or other relevant information and whether that impact leads to material misstatements.
At the end of the MRV verification, your verifier will issue a verification report which contains the results of the verification. If the verification was successful, it will state that the emissions report has been verified as satisfactory. By contrast, the verifier will issue a negative verification opinion if it has identified non-conformities or misstatements that have not been corrected and that lead to material misstatements.
Document of Compliance
If it was not for compliance, most shipping companies would most likely decide not to participate in EU MRV Shipping.
Unfortunately, your participation is not an option. The ultimate goal of going through the compliance process is to obtain a valid document of compliance (DOC).
What Is A Document Of Compliance?
The DOC is issued by the verifier upon successful verification of your emissions report. It confirms that your vessel has complied with the requirements of the EU MRV Shipping Regulation for a specific reporting period.
What Information Does It Contain?
The DOC contains information on the identity of the ship, ship owner and verifier, as well as the date of issue, period of validity and the reporting period to which it pertains.
By When Do You Need It?
You need to carry on board a valid DOC by 30 June 2019. Of course, this obligation is waived for ships which have not performed any EEA-related voyages during 2018.
We recommend you check at the end of each reporting year which ships of your fleet qualify for this exemption to keep your admin burden as low as possible.
You will also need to present the DOC during port state control inspections. Otherwise, you might find yourself confronted with fines, and perhaps more drastic penalties, such as detention notices or expulsion orders.
How Long Is It Valid?
The DOC is valid for 18 months after the end of the reporting period. This means the DOC operators receive for 2018 will be valid until June 2020. It must then be replaced by a new DOC – the one which demonstrates compliance with EU MRV Shipping in 2019.
Publication of Information
The publication of reported information is probably one of the most controversially discussed topics.
We reveal what information is published and explain how you can protect certain information from being disclosed.
What Information Is Published?
Article 21 of the Regulation allows the European Commission to publish CO2 emissions information and other relevant information. Information will be released by 30 June of the year following the reporting year.
The European Commission will release information on the identity and technical efficiency of the ship. And, of course, the results from the annual monitoring and reporting. Amongst them
- total CO2 emissions
- total fuel consumption
- average energy efficiency
- total time spent at sea.
In addition, the European Commission will publish an annual report. It will summarize and compare ship performance across various categories, such as size or type of ship.
How To Protect Yourself?
The very objective of the EU MRV Shipping system is to make energy efficiency related information available to the public.
This can only be prevented if you can demonstrate that the disclosure of such information would exceptionally undermine the protection of commercial interests.
You can request another level of aggregation or, if not possible, the concealment of sensitive information.
The Regulation requires EEA Member States to set up a system of penalties which is effective, proportionate and dissuasive.
We take a closer look at how the Regulation is enforced and what penalties you can expect in case of non-compliance.
How Is The Regulation Enforced?
The Regulation is enforced by participating member states. As it is the role of port state control to carry out inspections of ships within ports, the officer will also check whether the ship master is in possession of a valid document of compliance.
What Are The Penalties?
For instance, in the UK, failure to produce a document of compliance during an inspection constitutes a criminal offense subject to fines or the issuance of a detention order.
Member states can also issue an expulsion order if a certain ship fails to comply for two or more consecutive reporting periods.
It’s important to note that an expulsion order would apply to the entire EU territory and, as a consequence, any other member state would be required to refuse entry into their ports.