What is the Monitoring, Reporting and Verification (MRV regulation)?
New rules affecting shipping often come into effect at the turn of the year and from 1 January 2018 the major change for ships above 5,000gt will be the requirement to comply with the EU’s Monitoring, Reporting and Verification (MRV regulation).
The MRV regulation is the regulator’s response to the accusation that shipping is not doing enough to reduce its CO2 emissions. Quite clearly putting a lower limit of 5,000gt on the regulation will exclude huge numbers of ships, but those that are covered are considered to be responsible for around 90% of CO2 emissions from ships.
Under MRV regulation rules, ships will be required to monitor the CO2 emissions from ships, make an annual report of those emissions to an approved third party verifier and for the verified reports to be submitted to appropriate authorities where they will be aggregated. The information gathered will then be used to determine future efficiency regulation and also very likely to be used as grounds for including shipping into some market-based measure that will raise money to supposedly offset the effect of those emissions.
There are two MRV regulation regimes that will be operating. The first of these to come into effect is an EU regime with the IMO’s own similar but not identical regulation coming into effect later in 2018. The EU regime applies only to ships planning to make calls to ports in the EEA – effectively any EU member state plus Iceland and Norway. The governing rules are laid out in Regulation (EU) 2015/757 which is supplemented by Regulation (EU) 2016/2072 (accreditation and appointment of verifiers) and Regulation (EU) 2016/1927 (requirement for monitoring plans).
It is important to read all of the regulations together because shipowners need to follow designated pathways to making reports and must have a documented plan in place that will need to be followed. The January 2018 date is in fact the second of two deadlines in the EU regulation as the requirement for an approved plan for the company to be in place was back in August 2017.
EU and EEA shipowners will have been made aware of the requirements by flag states but for ships registered in other countries the owners may have been unaware of the exact requirements especially the fact that the verifier must have been approved by one of the member states of the EEA. The fact that one of the deadlines has already passed is not a huge obstacle as under Article 6.2 of the EU rules, the owner will have two months from the date of any affected ships first port call to put all requirements in place. For any owner still lagging in implementing the requirements, the 2016/1927 Regulations which can be downloaded from a number of sources includes a very useful plan template.
MRV regulation - Gathering facts
Although there may be some grace period for ships which do not yet have a reporting plan in place, it will be important that they at least understand the requirements so that appropriate records and documentation can be kept. For each ship this will include fuel consumption and other parameters, such as distance, time at sea and quantity of cargo carried. The quantity of cargo carried is included because the EU ETS (Emission Trading System) that the owners may have to participate in is about the amount of work done by cargo and distance which is in contrast to the IMO’s simpler variant which just records distance.
The monitoring plan is required to describe the vessel and its installed combustion machinery, and provide information in a complete and transparent manner. What kind of fuel will be used and which of the provided methods for the determination of fuel oil consumption for monitoring and reporting CO2 emissions or other relevant information is chosen.
There are four available methods for determining consumption; Bunker fuel delivery note (BDN) and periodic stocktakes of fuel tanks, Bunker fuel tank monitoring on board, Flow meters for applicable combustion processes and finally Direct CO2 emission measurements using calibrated equipment. It is permissible to use a combination to improve accuracy. Shipowners need to consider how to measure emissions which may involve purchasing and installing emission monitoring systems some of which can simultaneously measure and record other exhaust emissions such as NOx and SOx.
MRV regulation - Getting help
It will be some relief to shipowners to know that assisting them in complying with the EU rules has been prioritised by several organisations especially classification societies, software and hardware producers and more beside. Almost without exception, the class societies that are part of IACS have been approved as verifiers and many of these have also developed their own plan templates that owners can use to build their own specific plans. Software that records voyage data can be useful as can the products offered by engine management and control systems manufacturers.
IMO rules differ
Unlike the EU, which has made no secret of the fact that the collection of data is intended to bring shipping into an ETS, the IMO’s rules to gather information on CO2 emissions are at present merely an attempt to quantify exact figures. What may evolve thereafter will eb a matter for national delegations to the IMO to decide and that looks to eb a very contentious debate.
The rules governing IMO data also cover only ships above 5,000gt and they are to be found in chapter 4 of MARPOL Annex VI under Regulation 22A. In addition, new appendices have been developed outlining ‘Information to be submitted to the IMO, including ‘Ship Fuel oil Consumption Database’ (Appendix IX), and ‘Form of Statement of Compliance – Fuel Oil Consumption Reporting’ (Appendix X). These rules come into effect from March 2018 and the first reporting period will be for the full year 2019.
The data that is collected under the IMO regime is reported to flag states which will aggregate it and submit the data for the f lag to the IMO for inclusion into an IMO database. The data to be submitted includes the fuel consumption data (by fuel type and in metric tonnes), as well as distance travelled and time at sea, from berth to berth.
There are other consequences of the IMO rules that will affect all shipowners including those subject to the EU regulations. All shipowners will have to ensure that by 31 December 2018, the Ship Energy Efficiency Management Plan (SEEMP) onboard each of their vessels has been amended to include the methodologies that will be used for collecting the required data and reporting that data to the flag state.
The table below sets out the core components of the two systems alongside each other for ease of comparison.
The EU intends to use the data gathered as a basis for including shipping in its ETS from 2023/24 if by 2023 the IMO has not established a means for immediate reduction in CO2 emissions from the industry.
At MEPC 72 in April 2018, the issue will be high on the agenda but while there is an acceptance of the need for shipping to become more efficient the method of doing this remains the subject of fierce debate.
The IMO has included the issue as one of its strategic developments adopted at the IMO Assembly in December 2017 and Shipping industry bodies have also submitted proposals. The IMO is planning the adoption of a revised strategy in 2023 to include short-, mid-, and long-term further measures, as required, including implementation schedules. However, there is no evident consensus on the ways to proceed as things stand.