Summary of developments in EU and the EU Fit for 55 policy package – 2023

Summary of developments in EU and the EU Fit for 55 policy package- September/October 2023

EU ETS

The revised EU ETS and EU MRV legislation will apply from 1st January 2024.

• The Commission has decided to allow the parties to agree contractually among them on the identity of the entity that is entrusted with the obligations following from the EU ETS.
• The shipowner can contractually mandate the ISM company to assume responsibility for the EU ETS obligations and to surrender the EU ETS allowances. In this case, the ISM company should provide its administering authority with information on ships under its responsibility.
• The organisation or person shall provide its administering authority in respect of a shipping company with a document signed by both the shipowner and that organisation or person clearly  indicating that it has been duly mandated by the shipowner to comply with the ETS  obligations

• The Commission has adopted several delegated acts  including the delegated act on the functioning of the Union Registry on 25 October.
• The Commission is currently finalising   implementing acts including the rules for the administration of shipping companies by administering authorities and templates for monitoring plans, reports & other documents for shipping emissions.
• An updated FAQ is expected.

FUEL EU MARITIME

The new rules will apply from 1 January 2025

• The Commission is preparing the related implementing and delegated acts.
• Commission intention is to align FUEL EU monitoring and reporting with EU ETS and MRV avoiding any duplication.

ALTERNATIVE FUELS INFRASTRUCTURE REGULATION (AFIR)

The Alternative Fuels Infrastructure Regulation (AFIR)has been formally adopted and published 22 September 2023, in the official journal of the European Union.

The text can be found here

RENEWABLE ENERGY DIRECTIVE (RED III)

The Renewable Energy Directive (RED III) was adopted by the EU Council on October 9, 2023, and raised the share of renewable energy in the EU’s overall energy consumption at least 42.5% by 2030.

The text is available here

• The directive is introducing a combined energy-based target for advanced biofuels and biogas and renewable fuels of non-biological origin, including a minimum share for renewable fuels of non-biological origin.

NET-ZERO INDUSTRY ACT

The Net Zero Industry Act is currently progressing through the legislative process.

EU TAXONOMY

It is expected that the delegated acts will be published in the Official Journal and enter into force by the end of 2023.

CORPORATE SUSTAINABILITY DUE DILIGENCE DIRECTIVE

The European Commission, the Parliament and the Council have started the final talks to turn the proposal into law.

MARITIME SAFETY PACKAGE

The Commission has proposed to add environmental parameters which will be taken into account to establish the ship risk profile used to target ships for inspection.

• More particularly the proposed environmental parameters also include the Carbon Intensity Indicator (CII): ships which are category D-E shall be considered as posing a higher risk.
• Despite that Member states do not support the inclusion of the CII in the environmental parameters to be considered negotiations with the Parliament will follow.

BASEL III RULES

The new law will have to be formally approved by the Plenary of the European Parliament and the Council.

EU AGREEMENT ON BANNING GREENWASHING CLAIMS AND BASED ON OFFSETTING SCHEMES

The European Parliament and the Council reached a provisional agreement on the Commission’s proposal providing protection against unfair practices and aims to ban, among others, Generic environmental claims without proof of recognised environmental performances related to the claims.

Summary of developments in EU and the EU Fit for 55 policy package- June/July 2023

MARITIME SAFETY PACKAGE

On 1^st June, the Commission published the Maritime Safety Package, including the updated EMSA mandate that seeks to align the Agency’s activities for a sustainable and smart mobility strategy adopted in December 2020 and with the “Fit for 55” package, among other objectives , and which proposes the revision among other Directives related to :

• port State control

(i.e: to extend the scope of the directive and include BWM Convention , add environmental parameters which will be taken into account to establish the ship risk profile, ships which are category D-E shall be considered as posing a higher risk, encourage to use electronic certificates)

• compliance with flag State requirements

(i.e: bring it in line with IMO instruments, Integrate the provisions of the IMO Instruments Implementation Code (III Code), Introduce safety and pollution prevention requirements)

• ship-source pollution and on the introduction of penalties, including criminal penalties, for pollution offences

(i.e: Include, discharges of harmful substances, sewage (MARPOL Annex IV), garbage (MARPOL Annex V), as well as discharge waters and residues from Exhaust Gas Cleaning Systems (wet scrubbers) (MARPOL Annex VI))

More details can be found in the enclosed document along with the texts and a preliminary analysis on the above

EU ETS

A consolidated version of the EU ETS Directive was released.

• The text can be found in all EU languages at the following link: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02003L0087-20230605.

Please note that this text is meant purely as a documentation tool and has no legal effect.

FUEL EU MARITIME

On 11 July, the Plenary of the European Parliament adopted the FuelEU maritime regulation.

• The text can be found in the following link : https://data.consilium.europa.eu/doc/document/PE-26-2023-INIT/en/pdf
• The Commission has already started to work on the delegated and implementing acts with DG MOVE and DG CLIMA having opposing views on how low-GHG fuels used in international voyages should be counted towards the yearly average GHG intensity of the energy used on-board under FuelEU maritime.  More details enclosed.
• The new rules will apply from 1 January 2025

BASEL III RULES

An agreement on the Basel III rules was reached between the European Parliament and the Council end of June that gives explicit recognition to ship finance.

• The new rules will allow banks to apply preferential treatment to shipping portfolios on specialized lending when calculating risk weights and ultimately their capital requirements.
• As a result, the new law will enable banks to finance at a competitive price.
• More details can be found in the following link: https://www.consilium.europa.eu/en/press/press-releases/2022/11/08/banking-sector-council-agrees-its-position-on-the-implementation-of-basel-iii-reforms/
• The new law will have to be formally approved by the Plenary of the European Parliament and the Council in the following months.

ALTERNATIVE FUELS INFRASTRUCTURE REGULATION (AFIR)

The EU Council adopted the new regulation.

• The text can be found in the following link: https://data.consilium.europa.eu/doc/document/PE-25-2023-INIT/en/pdf

• The new regulation will be published in the EU’s official journal after the summer and will enter into force the twentieth day after this publication. The new rules will apply from six months after the date of entry into force of the regulation.

EU TAXONOMY

On 13 June 2023, the European Commission approved in principle the amendments to Taxonomy Delegated Acts  and among others the first Taxonomy Environmental Delegated Act (TDA1),

• The amendments to TDA1 provides additional technical screening criteria for maritime transport for after 2025 including criteria based on the life-cycle approach.
• Compared to the draft TDA1 that was also consulted on in April 2023, an additional criterion was added to address methane slip.
• More details and the texts may be found in the following link: https://finance.ec.europa.eu/publications/sustainable-finance-package-2023_en
• It is expected that the delegated acts will be published in the Official Journal and enter into force by the end of 2023.

CORPORATE SUSTAINABILITY DUE DILIGENCE DIRECTIVE

On 1^st June the European Parliament formally adopted in plenary the Corporate Sustainability Due Diligence Directive (366 votes in favor, 225 votes against and 38 abstentions).

• The final text is be available in English on the Parliament’s website via the following link: https://www.europarl.europa.eu/doceo/document/TA-9-2023-0209_EN.html
• The scope of the Directive covers companies with more than 250 employees and a turnover of at least €40 million.
• The European Commission, the Parliament and the Council have started the final talks to turn the proposal into law.

Summary of developments in EU and the EU Fit for 55 policy package-

May 2023

EU ETS

Summary of Developments

On 16 May EU ETS and EU MRV amendments along with  additional pieces of the Fit For 55 Package were published in the Official Journal of the EU  and can be found attached or in the EU website here: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=OJ:L:2023:130:TOC,

Next steps:

Delegated and implementing acts expected by October 2023

Alternative Fuels Infrastructure Directive (AFIR)

Background

The 2014 Alternative Fuels Infrastructure Directive required EU countries to develop national policy frameworks (NPFs) for developing publicly available refueling and recharging points for alternative fuel vehicles and vessels.

Summary of Developments

The Parliament’s TRAN Committee approved the draft provisional agreement, including:

• The provisions regarding Onshore Power Supply (OPS) in maritime ports are now fully consistent with the FuelEU Maritime proposal.
• A core network of LNG, liquefied biogas or synthetic liquefied methane, including blends of those fuels should be made available by 2025.
• Hydrogen and Ammonia could not be finalised during the trilogues and was therefore pushed-back but future reviews of the Regulation might integrate those fuels in the main text.

Next steps

The text will now go to Plenary for final approval.

Corporate Sustainability Due Diligence Directive

Background

On 23 February 2022, the Commission adopted a proposal for a Directive on corporate sustainability due diligence. The Corporate Sustainability Due Diligence Directive does not refer explicitly to shipping companies, but it has provisions for all the business sectors. Big shipping companies are expected to be impacted by the directive.

Summary of Developments

On 01 June the European Parliament formally adopted in plenary the Corporate Sustainability Due Diligence Directive. The final text is available in English on the Parliament’s website via this link.

• The reliable entities shall be the Directors of the companies (Article 25)
• The scope of the Directive covers companies with more than 250 employees and a turnover of at least €40 million.
• Obligations for the companies and their directors  can be found in the EU website : https://commission.europa.eu/business-economy-euro/doing-business-eu/corporate-sustainability-due-diligence_en#what-are-the-obligations-for-companies-and-their-directors
• Activities that companies should perform in order to comply with the Directive are indicated in Article 4, and the main ones are companies to integrate due diligence into their policies, to identify and prevent actual or potential adverse impacts and to share information.

Next steps:

The first Trilogue is expected to take place on 08 June, where the European Commission, the Parliament and the Council will start the final talks to turn the proposal into law.

Summary of developments in EU and the EU Fit for 55 policy package-

March 2023

EU ETS

The texts of the EU ETS and the EU MRV were adopted on the 9th of February by the Environment Committee of the Parliament. More information can be found in our website here.

FUEL EU MARITIME

Background

FuelEU Maritime is the EU’s strategy to phase out fossil fuels from shipping and boost the uptake of alternative fuels in the sector. The proposed regulation introduces increasingly stringent limits on carbon intensity of the energy used by vessels from 2025, which should oblige them to use alternative fuels.

Summary of Developments

The EU Parliament and the Council reached a provisional agreement on FuelEU Maritime. It applies to commercial vessels of 5 000 gross tonnes and above, regardless of their flag and introduces greenhouse gas intensity limits of energy used on-board by a ship of 2% from 1 January 2025 and 6% from 1 January 2030. It is also noted that fuel suppliers are included in the article on the penalties. The Revenues generated from the penalties under the FuelEU regulation will be allocated to projects to support decarbonisation of the maritime sector.

Next steps:

The agreement will need to be approved first by the Council Committee of Permanent Representatives and the Parliament’s Transport and Tourism Committee, and then by the Parliament’s plenary and the Council.

RENEWABLE ENERGY DIRECTIVE(RED III)

Background

The EU renewable energy directive (RED) was adopted in 2009 to deliver a minimum 20 % share of renewable energy sources (RES) in EU final energy consumption by 2020, and the ‘fit for 55’ package adopted by the European Commission on 14 July 2021 included a significant revision of the RED.

Summary of Developments

The Council and the Parliament reached a provisional political agreement on the Renewable Energy Directive (RED III). Members may note that the outcome of the provisional agreement on RED III shows that the EU is putting the emphasis on RFNBOs, including a binding combined sub-target of 5.5% for advanced biofuels (generally derived from non-food-based feedstocks) and renewable fuels of non-biological origin (RFNBOs – mostly renewable hydrogen and hydrogen-based synthetic fuels) in the share of renewable energies supplied to the transport sector and a minimum requirement of 1% of RFNBOs in the share of renewable energies supplied to the transport sector in 2030.

Next steps

The proposal will eventually move to the European Parliament and the Council for discussion.

ALTERNATIVE FUELS INFRASTRUCTURE REGULATION (AFIR)

Background

The 2014 Alternative Fuels Infrastructure Directive required EU countries to develop national policy frameworks (NPFs) for developing publicly available refueling and recharging points for alternative fuel vehicles and vessels. The Fit for 55 package included the proposal to revise the 2014 Directive on alternative fuels infrastructure. The initial text includes provisions for Member States to ensure installation of a minimum shore-side electricity supply for certain seagoing ships(seagoing container and passenger ships) in maritime ports and for inland waterway vessels and to ensure an appropriate number of LNG refuelling points in maritime TEN-T ports and to identify relevant ports through their national policy frameworks.

Summary of Developments

The Parliament and the Council reached a provisional agreement on the Alternative Fuels Infrastructure Regulation (AFIR) and provisions regarding on-shore power supply in maritime ports are now fully consistent with the FuelEU Maritime proposal.

Next steps:

The proposal will eventually move to the European Parliament and the Council for discussion.

NET-ZERO INDUSTRY ACT

Background

The ‘Green Deal industrial plan for the net-zero age’ sets out a European approach to boost the EU’s net-zero industry.

Summary of Developments

On 16 March, the Commission published its proposal for a Net-Zero Industry Act, the first legislative proposal implementing the Green Deal Industrial Plan published in February.

The Act identifies a number of “strategic net-zero technologies” for which, by 2030, manufacturing capacity need to approach or reach “a benchmark of at least 40% of the Union’s annual deployment needs for the corresponding technologies necessary to achieve the Union’s 2030 climate and energy targets”. The below technologies are identified:

• offshore renewables, batteries, sustainable biogas/biomethane
• Carbon Capture and Storage.
• renewable fuels of non-biological origin technologies
• sustainable alternative fuels technologies

Next Steps

The proposal will now move to the European Parliament and the Council for discussion. This Regulation shall be binding in its entirety and directly applicable in all Member States.

ENVIRONMENTAL CRIME DIRECTIVE

Background

The Directive aims to crack down on environmental crime, fulfilling a key commitment of the European Green Deal.

The EU Council, general approach was adopted on 9 December and maintains the Commission proposal regarding the shipping sector interest and ship recycling continues to be considered a criminal offense when the activity is completed in a yard not included in the EU list.

Summary of Developments

European Parliament’s Legal Affairs Committee adopted its position on the update of EU rules on environmental crimes. The updated list of environmental crimes punishable at EU level would now include in the scope of the Directive offenses deriving from ship source pollution, ship recycling and shipment of waste.

Next Steps

The report following a vote will become Parliament’s position for the negotiations with the Council.

EU TAXONOMY

Background

The proposal sets out uniform criteria for determining whether an economic activity is environmentally sustainable and sets out a process involving a multi-stakeholder platform to establish a unified EU classification system (EU taxonomy) based on a set of specific criteria, in order to determine which economic activities are considered sustainable.

Summary of Developments

The European Commission is in the process of finalizing the draft proposal of their second environmental delegated act related to the EU Taxonomy Regulation.

• This second environmental delegated act adds transitional criteria for maritime shipping for after 2025.
• The second delegated act is not covering pollution prevention for the maritime industry.

• Vessels dedicated to the transport of fossil fuels are still excluded.
• With regards to the technical screening criteria in order that vessels are considered suitable as per the “manufacture, repair, maintenance retrofitting, repurposing and upgrade” of vessels and activities the draft text includes additional criteria

Next Steps

Currently, the Commission is discussing the draft proposal with EU Member States.

Summary of developments in EU and the EU Fit for 55 policy package-

February 2023

EU ETS

Background

The European Commission trilogue negotiations have concluded and an agreement on the revision of the EU ETS directive is reached.

Summary of Developments

The texts following the provisional agreement resulting from the interinstitutional negotiations of the EU ETS and the EU MRV, were adopted on the 9th of February by the Environment Committee of the Parliament.

Next Steps

The vote in plenary is scheduled in April. The text will then be published in the Official Journal and enter into force 20 days afterwards.

By end of October 2023, the Commission will have to prepare the delegated and implementing acts related to the inclusion of shipping in the EU ETS.

The list of delegated and implementing acts that the Commission will have to prepare in view of the inclusion of shipping in the EU ETS are enclosed including the Delegated acts under the EU MRV.

FUEL EU Maritime

Background

FuelEU Maritime is the EU’s strategy to phase out fossil fuels from shipping and boost the uptake of alternative fuels in the sector.

Summary of Developments

Main outstanding issue in the Trilogue negotiations between the Council and the Parliament are inclusion of fuel suppliers under the scope of the regulation, to ensure that shipowners are not unduly penalised if the sustainable fuels necessary for compliance are not delivered. Conditional to the mandatory inclusion of fuel suppliers and the availability of fuels, is also the introduction of a sub quota on RFNBOs, as proposed by the Parliament.

Next Steps

Trilogue negotiations are heading to a close.

REPowerEU

Background

REPowerEU, the EU’s proposal seeking to reduce energy consumption and diversify the Union’s energy supply as a result of the war in Ukraine.

The regulation also aims increasing production and uptake of sustainable biomethane, and renewable or fossil-free hydrogen, increasing the share and accelerating the deployment of renewable energy and supporting zero emission transport and its infrastructure.

Summary of Developments

The REPowerEU regulation has been published in the Official Journal and entered into force at the beginning of March.

10th Package Of Sanctions Against Russia

On Saturday 25 February, the 10^th package of sanctions against Russia was published in the Official Journal of the EU.

Environmental Crime Directive

Background

The Directive aims to crack down on environmental crime, fulfilling a key commitment of the European Green Deal.

Summary of Developments

The EU Council, general approach was adopted on 9 December and maintains the Commission proposal regarding the shipping sector interest and ship recycling continues to be considered a criminal offense when the activity is completed in a yard not included in the EU list.

Members may find more details in our circular ref: 0220-F-23015 – Future EU legislation on ship recycling.

Next Steps

The plenary vote is currently scheduled on the 17 April. The trilogue negotiations will start shortly afterwards.

Flag State Directive Revision

Background

European Commission, in its 2021 work programme announced on 19 October 2020, intends to review the Directive 2009/21/EC on Compliance with Flag State requirements. The package will include proposals for revisions of the Directives on Flag State, Port State Control, Maritime Accident Investigation, Ship Source Pollution, as well as of the EMSA Regulation. The revision will primarily align with already agreed rules in the context of International Maritime Organisation (IMO) in general.

Summary of Developments

The “Maritime Safety Package” is now expected to be published in late May 2023,

 Green Deal Industrial Plan for the Net-Zero Age

Background

The Commission seeks to set the direction towards achieving net-zero industrial transformation and will propose a Net-Zero Industry Act, laying down clear clean tech objectives for 2030 with the aim to focus and streamline investments on strategic projects along the entire supply chain.

Summary of Developments

During the EU Summit of 9 February, Member States’ leaders signed off the Conclusions on the Green Deal Industrial Plan put forward by the Commission on 1 February.

 Ship Recycling

The Commission is planning to adopt the 11th update of the EU SRR list during the 2nd quarter 2023.

 Survey on the Capacity for Greening of European Sea Ports

As part of an ongoing Commission’s study on the Capacity for Greening of European Sea Ports, a survey has been launched to identify the factors affecting the capacity for greening of European seaports, including legislative bottlenecks at EU or national level. The survey can be completed by 31 March at this link

Summary of developments in EU and the EU Fit for 55 policy package-

January 2023

EU ETS

Reference to the agreement to include shipping in the EU’S Emission Trading System from 2024, the final text of the full ETS Directive has been finalized but it is still not public, as it is currently undergoing the final legal checks. It is expected to be formally adopted and published in the Official Journal of the EU in the coming months.

Next steps

• 8 February: Final adopted by the Council
• 14 February: Final adoption by the Parliament.

 Draft Catalan taxing ships’ emissions of NOx and PM in ports

Members may note that the Catalan authorities are preparing a law aiming at taxing emissions of nitrogen oxides and particulate matter from ships over 5000 GT when they manoeuvre, dock and anchor in a Catalan ports.

• Taxable base of the tax: The sum of emissions of NOx and PM expressed in kg produced by main and auxiliary engines in each of the phases of operation of the vessel in port and for each type of each fuel used and as per the result of applying the following tax rate in the table below to the taxable base (minus possible reductions):
• Several Spanish associations and ECSA signed a joint statement that was presented to the Catalonian government as part of this public consultation process. They are affirming that specific and regional taxes for the maritime sector should be avoided and, instead, the greatest possible ambition of environmental regulations should be promoted through the International Maritime Organization and the European Union.

Green Deal Industrial Plan for the Net-Zero Age

The Commission has published its Communication on a “Green Deal Industrial Plan for the Net-Zero Age”.  The full text can be found here

• While this document is not legally binding, it seeks to set the direction towards achieving net-zero industrial transformation while fostering its competitiveness and leading the way on the global stage. Following the discussions on the U.S. Inflation Reduction Act (IRA), the US’ $369 billion green subsidy package, Commission’s President Ursula von der Leyen announced the Commission’s intention to establish its own Green Deal Industrial plan to foster clean-tech and industrial innovation in Europe.
• In this context, the Commission will propose a Net-Zero Industry Act, laying down clear clean tech objectives for 2030 with the aim to focus and streamline investments on strategic projects along the entire supply chain.

Regulation on shipments of waste

On 17 January, the Parliament adopted in plenary the report on the revision of the waste shipment regulation.

Members may note:

• the Parliament’s report clarifies the legal framework applicable to the recycling of EU flagged ships when they become waste outside the EU.
• The proposal of the Commission confirms that they can be recycled in recycling facilities located outside the OECD, if they meet the requirements of the EU SRR and are added to the EU list.

Next steps

The Parliament and the Council will now start the trilogue negotiations.

EU  Parliament vote positive step towards competitive ship finance in Europe

The European Parliament’s Committee on Economic and Monetary Affairs adopted its position on the implementation of the latest Basel prudential requirements into EU law (Basel III).

• The Commission and the Parliament recognise the risk level associated with ship financing and have put on the table effective measures on capital requirements to ensure European banks have the tools to continue lending to European companies. These provisions are crucial to keep European shipping companies on equal footing with other jurisdictions when it comes to ship financing, in particular for the many SMEs who are facing difficulties to seek alternative finance outside of Europe.

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