MRV Regulation & DANAOS

MRV Regulation has entered into force on 1st July 2015 mandating the monitoring, reporting and verifying of the CO2 emissions from ships. The first reporting period starts on 1st January 2018.

MRV background info:  “The EU’s version of SEEMP”

The EU Council has reached this decision in order to measure the CO2 emissions generated by vessels operating into, out of and between EU ports. The scope of MRV Regulation is to provide with information that are reliable and accurate (therefore “verified”), allowing for the EU to set reductions target in the future. The reduction in absolute terms of CO2 emissions is the long term target of the EU, monitoring CO2 emissions is the first step towards this goal.

While SEEMP is mandatory for the global fleet of vessels more than >400 GT, a standard procedure of implementation & reporting of SEEMP’s respective results is lacking. Simply, IMO is not “forcing” the shipping companies to disclose any data to the relevant authorities, making SEEMP a “soft” regulation.

On the contrary, EU’s MRV regulation calls for shipping companies to report emission data. In order to protect any commercial sensitive information, EU will report the collected data on an “aggregate basis”.

The rationale behind EU MRV Regulation is to measure the CO2 emissions generated by the shipping industry in order to benchmark the sector’s environmental profile, in terms of GHG emissions. It is also fairly reasonable to suggest that EU may be paving the way towards an Emission Trading Scheme (ETS), the first step being the MRV Regulation. It is also suggested that MRV is the stepping stone towards imposing taxation to the shipping industry.

The key difference of MRV Regulation and SEEMP is the requirement of reporting and verifying the CO2 emissions. It is safe to suggest that the verification process will be undertaken by the major classification societies and some smaller 3rd parties (i.e. Social Responsibility companies).

DANAOS perspective

Taking under consideration the EU Regulation for Monitoring, Reporting & Verifying the CO2 emissions generated by ocean going vessels, DANAOS has been exploring and developing the necessary tools to address this new regulatory requirement.

As far as DANAOS is concerned, MRV Regulation is creating a potentially strong business opportunity. The tools and solutions that are already available, namely the SEEMP module, has the capabilities to cover any MRV requirements.

The “monitoring plan” that the MRV Regulation mandates, is yet to be finalized, therefore future development of the MRV tool depends on the respective EU bodies.

MRV is providing with a framework for reporting CO2 emissions that allows for EU to benchmark based on accurate data. In many ways, MRV is the EU’s version of SEEMP, with the additional obligation of reporting aggregated data. Main notions of SEEMP, such as EEOI, EEDI and CO2 emissions are also common in MRV Regulation.

By restricting the reporting to annual aggregated data, EU claims that any confidentiality issues are addressed. According to EU MRV Regulation, in cases that sensitive commercial interests are not protected, a different level of data disclosure would be examined.

Challenges

 The main challenge of MRV is the implementation of the monitoring plan. While the measurement of the CO2 emissions is not a new concept, especially for companies that have established a SEEMP management plan, reporting and verifying the emission report is an area of potential controversy.

Monitoring Plan: According to MRV Regulation, by 31st August 2017, companies should have submitted a monitoring plan to accredited verifiers. The monitoring plan is a “complete and transparent” document describing the method for each and every vessel to monitor and report the CO2 emissions.

EU allows for companies to select one of the following monitoring methods, or a combination of them: use of BDN, Bunker tank monitoring on-board, use of Flow meters and direct emissions monitoring (i.e. onboard sensors system). The selected method should be clearly stated within the monitoring plan document submitted.

By liaising with market specialists, the method that until now seems to be the most cost effective and accurate is the use of BDN. This is due to the uncertainty of flow meters or bunker tank monitoring equipment measurements. Constant re-calibration of the relevant equipment is considered to be a major disadvantage of the latter methods.

Additionally, direct emissions monitoring require the installation onboard of specialized equipment, adding more costs to the shipping companies that will select this method.

The data that should be reported in the MRV report are included in the Regulation published on 19th May 2015. Indicative, these include CO2 emissions, bunker consumptions, name (IMO number) and type of the vessel.

The Monitoring Plan is yet to be finalized by the EU Council. Although, indications that the format should be very similar to IMO’s SEEMP, any attempt to predict the actual format is not solid.

Reporting: Companies are obliged to submit to EU the emission report by 30th April 2019. The data included in the MRV report are specified in the EU MRV regulation. It is clear that SEEMP and MRV are overlapping in many instances.

The emissions report is to be submitted electronically, using “automated systems” and data exchange formats, including “electronic formats”.

DanaosONE (formerly DANAOS Platform) capabilities may facilitate this information exchange in terms of reporting the emissions to the verified counter-parties.

Verification: EU specifies the role of verifiers to be that of assessing the conformity of the monitoring plan and the conformity of the emissions reports. It is our understanding that the major classifications societies (especially the EU based classification societies) will move towards obtaining the accreditation of EU MRV Verifiers.

Under the general obligations and principles for the verifiers, EU MRV Regulation states that the verifier should be independent and carry out the activities required in the Public Interest.

The Verifications procedures are covered in the MRV Regulation.

Publication of Information: EU will make publicly available the data every 30th June of each year. Special provisions in the MRV Regulation allow for non-disclosure of sensitive commercial data. This issue has to be clarified further, as it is believed that controversies may arise in the implementation of the MRV Regulation.

Opportunities

MRV poses significant challenges, at the same time numerous opportunities arise. While reporting the necessary data is an old concept, the electronic exchange of data (emissions, bunkers consumed i.e.) to a third party is fully compatible to DanaosONE functions.

Due to the nature of the data, companies will be reluctant to share sensitive data that might be commercialized by third parties (i.e. verifiers). By utilizing the benefits of DanaosONE, it is possible to create specific services that will be part of a data flow integrated system within Danaos Web Enterprise Suite.

A process of streamlining emission reports between different stakeholders will play a critical part in DanaosONE platform, in terms of managing the data exchange between different users.

Additionally, the MRV Report module has already in development. Collecting the data (i.e. via Telegrams), producing the emissions reports (i.e. during every voyage), reporting the emissions data to the accredited verifier (i.e. via DanaosONE) and according to the already established Monitoring Plan (i.e. to be part of MRV Report module) is an example of how Danaos Web Enterprise software can play the part of a complete and integrated solution. The full process of automated data exchange via electronic formats as mandated by MRV Regulation, can be realized through Danaos solutions.

Having already an established clientele within the maritime market, moving forward to integrating the MRV regulation in the existing solutions (SEEMP, Telegrams, DanaosONE), DANAOS is moving forward in new waters.

MRV

 

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