TECHNICAL AND REGULATORY NEWS No. 30/2023 – STATUTORY
CLARIFICATIONS ON THE IMO DCS/CII
AND EU MRV/ETS, USE OF BIOFUEL
Relevant for ship owners and managers, yards and flag states, but also suppliers and
design offices could benefit from this.
December 2023
The 2023 EU MRV and IMO DCS reporting period will soon come to an end, whilst the EU ETS
regulations are coming into effect from the start of the new year. As we approach year-end,
this news summarizes some important clarifications on the EU MRV, IMO DCS and EU ETS.
Below is a summary of updates and clarifications on:
• IMO DCS/CII
• EU MRV:
• ISM company mandate for ETS
• Partial emissions report
• Cargo and bunker sampling
• Leisure stops (relevant for cruise ships only)
• Dry-docking and emissions
• Biofuels
Required and attained CII calculation after change
of DWT/GT during 2023
IMO DCS/CII
a. For changes listed in the SEEMP Part III or the CAP:
The required CII is calculated based on the original
DWT/GT*. For the year of the conversion, the attained
CII is calculated and verified based on the average DWT
or GT value weighted on distance travelled before and
after conversion. For subsequent years, the attained CII
is based on the new DWT/GT.
The Carbon Intensity Indicator (CII) is a measure of how
efficiently a ship can transport goods or passengers and is
given in grams of CO2 emitted per cargo-carrying capacity
and nautical mile, based on reported IMO DCS data. The ship
is then given an annual rating ranging from A to E, where the
rating thresholds will become increasingly stringent towards
2030. For ships that achieve a D rating for three consecutive
years or an E rating in a single year, a Corrective Action Plan
(CAP) needs to be developed (and approved) as part of the
Ship Energy Efficiency Management Plan (SEEMP) Part III,
before the DCS Statement of Compliance can be issued. This
functionality will be available in DNV’s SEEMP Part III tool
from 1 January 2024:
Upon receiving the uploaded DCS data in early 2024, DNV
will inform its customers via email for ships having a CII E
rating (where urgent action is needed). Furthermore, our
customers will receive a notification of the ship rating during
the submission process.
As outlined in MEPC.348(78), permanent alterations to a
vessel’s deadweight (DWT) and/or gross tonnage (GT) can be
implemented as a measure within SEEMP Part III or as a CAP
to enhance the ship’s operational carbon intensity performance. For vessels that underwent changes in DWT and/or
GT after 1 January 2023, a new methodology for calculating
attained and required CII will apply:
b. For changes not listed in the SEEMP Part III or the CAP:
For the year of the conversion, the required CII and attained
CII are calculated and verified based on the average DWT
or GT value weighted on distance travelled before and after
conversion. For subsequent years, the required CII and
attained CII are based on the new DWT/GT.
*Original DWT/GT refers to the DWT and/or GRT on 1 January 2023, for existing vessels, or on
the delivery date for new builds.
DNV AS, Veritasveien 1, 1363 Høvik, Norway, Phone: +47 67 57 99 00, www.dnv.com/maritime
DNV Disclaimer of Liability
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EU MRV/ETS
Firstly, a brief recap of the revised EU MRV regulations:
Existing EU MRV
Revised EU MRV
Regulation (EU) 2015/757
Regulation (EU) 2023/957 and secondary legislation
EU MRV Plan
Extended EU MRV Plan
Emissions of CO2
Emissions of CO2, N2O and CH4
Yearly reporting only
From first MRV leg to end of last MRV leg starting in a year
Partial MRV report + yearly report
From 1st Jan to 31st Dec each year
Ship’s emissions report
Ship’s and company’s emissions report
Verified report submitted to the EC by end of April
Verified company report submitted to Administering
Authority and the EC by end of March
ISM company mandate for ETS
Partial emissions report
As announced in our news from 17 November (see references),
the EC has adopted an implementing regulation detailing
which company is responsible for monitoring and reporting
GHG emissions and surrendering emission allowances. The
default responsible entity is the registered owner. The responsibility can be shifted to the ship manager – i.e. the ISM company – only if an agreement between the registered owner and
the ISM company explicitly states this shift in responsibility.
The issuance of the partial emissions report was also mentioned on our news from 17 November, but a few clarifications need to be added: from 5 June 2023, the revised MRV
regulation requires that upon change of company, a partial
MRV emissions report (ER) is to be submitted for verification. The verified partial MRV ER should be submitted to the
administering authority, flag state authorities of the Member
State, the European Commission and to the new company as
close as practical to the day of change of company and no
later than three months thereafter. The verified data covering
the previous company’s responsibility period should form
a part of the MRV ER that will be submitted by the company
responsible at the end of the reporting year.
In the event that the shipowner delegates the EU ETS obligation to a shipping company, the shipping company shall
provide its administering authority with a document clearly
indicating that it has been duly mandated by the shipowner
to comply with the ETS obligations. DNV has prepared a template for such an agreement, available free of charge for our
customers in Fleet Status on Veracity:
In addition to the above, in the updated MRV MP online form
our customers will find the same document template and can
populate it with relevant data. The functionality is available
under the “Important information for ISM companies” button
found on the “Administrative data” tab.
The mandate document shall be duly filled out and signed
by both the shipowner and the shipping company. It should
be provided upon MRV MP submission in THETIS MRV portal to your MRV verifier and made available to the administering authority.
However, the previous company’s emissions for a vessel
which has been taken over by a company will not be a part of
the aggregated emissions data at the company level for the
new company. Therefore, the company taking over the ship
will not be liable to surrender allowances for the period when
the vessel was under the previous management or ownership. Nevertheless, the current owner/manager still needs to
request the verified aggregated MRV data for the previous
company’s period to fulfil MRV obligations at the end of the
year. This data, combined with the log abstract data, will form
a full-year MRV ER.
Taking into consideration that changes have only been
recently implemented in THETIS-MRV and an administering
authority must be first assigned to the companies to fulfil
the obligations of the MRV Regulation Article 11.2, DNV will
support verification of partial MRV ER from January 2024.
Submission and verification of 2023 partial MRV ERs will also
be enabled.
DNV AS, Veritasveien 1, 1363 Høvik, Norway, Phone: +47 67 57 99 00, www.dnv.com/maritime
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Cargo and bunker sampling
For some time, with the public attention on verified emissions
data rising and the EU ETS soon effective, regulators and
accreditation bodies have been increasing the stringency of
formal verification requirements. This means that DNV is now
required to review documents on reported bunkering and
cargo data, including evidence for reported bunkering and
reported MRV-relevant cargo figures per emissions report.
This ensures the MRV ERs will have the required quality considering the increasing relevance of verified emissions data.
Additional information is available in Fleet Status on Veracity:
Leisure stops (applies to cruise ships only)
In the context of the MRV/ETS, see Appendix for clarification
on leisure stops for cruise ships.
Dry-docking and emissions
The European Commission informed at an MRV/ETS implementation event held on 14 November that emissions
released during dry-dock are included in the MRV and ETS
assessment. The new approach does not affect the MRV
reporting requirements. The following example illustrates
this point:
DNV AS, Veritasveien 1, 1363 Høvik, Norway, Phone: +47 67 57 99 00, www.dnv.com/maritime
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Biofuels
The different regulations have different approaches on how
to deal with biofuels, summarized in the following:
Existing EU MRV
EU ETS
IMO DCS / CII
Any biofuels
Biofuels fulfilling GHG saving / sustainability criteria
EU RED II (Renewable Energy Directive)
Sustainable biofuels fulfilling GHG saving /
sustainability criteria certified by an international certification
scheme (E.g. ISCC/RSB)
• Actual emission from
combustion biofuels.
• CO2 emissions of biofuel fraction of
fuel blens taken as zero.
• CO2, N2O and CH4 emission
considered
• N2O and CH4 emissions not considered
until 2026.
• CO2 emission defined based on WtW (wellto-wake) GHG intensity and Lower Calorific
Value.
When aggregated and put side-by-side, total carbon emission from the use of biofuel will vary substantially between
the three schemes. EU MRV emissions data is the basis for
determination of total emission of GHG to be reported under
the EU ETS Directive. However, by applying a CO2 factor
of zero for biofuel fraction of fuel used, the ETS-relevant
emission is reduced. For CII, a completely different set of
rules is applied, focusing on the life cycle’s emissions of fuel.
Different criteria for the application of the methodology as
described above should be noted and consulted with the
fuel supplier before the fuel purchase, with the aim to claim
benefits from the use of biofuel in GHG reporting.
Further information on how to report the use of biofuels is
available on the OVD resources page. If guidance is needed
on how to update the SEEMP Part II and the MRV Monitoring
Plan in relation to the use of biofuel, we invite you to contact
our DATE experts.
Ordering of MRV and DCS with the same
verifier
DNV already advised in the early days of the MRV and
DCS to submit the MRV ER and DCS / fuel oil consumption report (FOCR) and to order the verification from
the same verifier – now, with the EU ETS, this still makes
practical sense. Combined submission (MRV and DCS)
is also financially beneficial.
• Energy weighted average for fuel blends.
Recommendations
DNV encourages its MRV/DCS/ETS customers to immediately upload any emissions data to check the data quality.
By using DNV’s quality check (pre-verification checks), any
incorrections in reported data can easily be identified. By
reviewing the data quality now, before submission, the time
spent on corrections is reduced, leading to early submission
and approval of the emissions report and fuel oil consumption report.
DNV also recommends that customers visit our Emissions
Insights in My Fleet on Veracity, which is a dashboard
designed for monitoring the carbon emissions of your fleet.
It focuses on compliance monitoring, allowing users to track
parameters related to CII and ensure vessel compliance. The
most recent update includes the EU ETS.
References
• MRV – The Monitoring, Reporting and Verification (MRV)
system for the EU and UK - DNV
• IMO DCS (dnv.com)
• EU ETS – Emissions Trading System - DNV
• Technical & Regulatory News, 17 Nov 2023: Preparing for
the EU ETS - next steps (dnv.com)
• OVD Resources page
Contact
CONTACT
For customers:
DATE – Direct Access to Technical Experts via My Services on Veracity.
Otherwise:
Use our office locator to find the nearest office.
DNV AS, Veritasveien 1, 1363 Høvik, Norway, Phone: +47 67 57 99 00, www.dnv.com/maritime
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APPENDIX
Appendix: Leisure stops (applies to cruise ships only)
Depending on the classification of leisure stops on cruise
ships within the context of the MRV, specifically whether they
are regarded as ports of call or not, certain operators may
incur increased or decreased allowances for emissions under
the EU ETS.
This variance arises because ports of call mark the commencement and conclusion of MRV voyages, potentially altering the duration or significance of MRV-related voyages.
In recent past, DNV granted operators the authority to determine the treatment of leisure stops. However, this approach
will not be supported with the growing commercial significance of the EU ETS. To ensure a consistent application for all
relevant operators, a standardized approach for addressing
leisure stops is imperative.
We have received communication from the European Commission indicating that, in their view, leisure stops of cruise
ships should be classified and treated in the same manner as
ports of call. Examples:
• A cruise ship on a trip from Miami to Europe is stopping
in the Caribbean for leisure and then continuing the trip
to Europe. Considering the leisure stops in the Caribbean
as ports of call will result in a shorter voyage into EU, thus
reducing the MRV-relevant emissions.
• A cruise ship starts a round trip in the Aegean Sea in Turkey
(not EU) and visits ports in Greece (EU) and then returns to
Turkey. Considering the leisure stops in Greece as ports of
call will make the whole round trip subject to MRV/ETS. Otherwise, this whole round trip would not be MRV-relevant.
DNV AS, Veritasveien 1, 1363 Høvik, Norway, Phone: +47 67 57 99 00, www.dnv.com/maritime
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