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Start to work towards compliance now

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In an interview with HANSA, Julien Dufour, CEO and founder of Verifavia Shipping, talks about the European Union’s (EU) MRV regulation. By August 2017, shipowners will have to prepare a CO2 monitoring plan according to the European Union’s MRV regulation. Julien Dufour, CEO of Verifavia Shipping, explains the implications for the industry.

How do you inform companies about the EU MRV?

Julien Dufour: To support shipowners and operators in navigating the requirements of the EU’s Monitoring, Reporting & Verification (MRV) legislation we launched Verifavia Shipping on 1 July 2015, when the regulation came into force. Since then, we have been actively trying to inform ship owners and ship operators about MRV. By speaking at conferences, organizing seminars and writing articles, we aim to demystify the legislation and ensure that owners and operators understand what’s required of them. In addition, we help them to get ready for MRV by performing pre-verification Gap-Analysis audits. Furthermore, we are a member of the European Commission's Shipping MRV subgroup of experts on verification and accreditation under the European Sustainable Shipping Forum (ESSF). We have therefore been an active member of the group responsible for finalising the Implementing Acts of the legislation. In addition, we have recently been appointed the task leader on the task force responsible for drafting the guidance document on the verification of the emissions report.
What does the EU MRV mean for the ship owners?

The EU MRV requires ship owners and operators to annually monitor, report and verify CO2 emissions and transport work for vessels equal to or larger than 5,000 GT and which call at any EU port. The results will be published on a regular basis. The legislation came into force on 1 July 2015, and the first regulatory deadline is on 31 August 2017, which is when ship operators have to prepare and submit a monitoring plan. In this plan they have to detail the procedures in place to monitor and report the fuel consumption, carbon emissions, transport work, and activity data on all voyages to, from, and between European ports. With most of the technical details of the regulation already agreed legally or at working group level, there is enough information available for ship operators to start MRV today and avoid the MRV verification bottleneck expected in 2017. The monitoring report and emissions report templates have been released by the European Commission, as have the rules for verification, the rules for the accreditation of verifiers, and the rules for monitoring transport work. So ship owners can start to work towards compliance now. As with any complex legislation, it makes sense to start upon the road to compliance early on, ensuring sufficient opportunity to identify and address any issues early and ahead of time.
Who are your customers?

Dufour: We work with companies across the globe, for example DFDS in Copenhagen, Seaspan in British Columbia, Synergy Marine Group in India, Dynacom in Greece, Compagnie Maritime Nantaise in France, and Grimaldi in Italy. Greece-based Neda Maritime Agency, an independent ship management company which manages and operates a fleet of large tankers and bulkcarriers, was one of the first shipping companies to become MRV ready. We completed the gap analysis for them in February 2016.
How many vessels are affected?

Dufour: Approximately 12,000 ships are affected by the regulation according to the European Commission. Each of them must have its own monitoring plan that will have to be assessed by an independent verifier before the end of 2017 . This is why we are working with ship owners, operators, and ICT solutions providers now to ensure that they have the required data, information, and procedures to navigate the path to MRV compliance in a secure and timely manner.
Is compliance linked to higher costs and what are the main challenges?

Dufour: As MRV is only a data collection system, the associated costs really aren’t that significant. The only requirement is to collect accurate data and then put it into a report, which must then be verified. A document of compliance must also be held onboard. The only mandatory cost, therefore, is the cost of verification, which will also depend on the size of fleet and the associated economies of scale. Costs will vary from one shipping company to the next depending on their needs. For example, costs may be incurred if the shipping company decides to use a consulting company to develop its monitoring plan or take care of the preparation of the emissions report. There may be a need to purchase a dedicated EU MRV IT system to facilitate the collection of data and automate the generation of the emissions report.  And some shipping companies may have to develop in-house tools to allow the collection of the required data.

The first immediate challenge is to prepare the monitoring plan to meet the 31 August 2017 deadline. Owners and operators need to design all sorts of procedures, some of which may already exist but may not be appropriately described yet. The objective is to identify and formulise the procedures that have to be reported and determine what has to be done. The other key challenge is to capture relevant data for analysis and ensure its quality, either automatically with sensors or manually. One immediate concern is to decide which of the four allowable fuel consumption monitoring methodologies - Bunker Fuel Delivery Note (BDN) and periodic stock-takes of fuel tanks, bunker fuel tank monitoring on board, flow meters for applicable combustion processes, or direct emissions measurements – is best for each ship. The ship owner must select one, plus a secondary methodology to act as backup. The key advice for shipowners is to select an EU MRV monitoring methodology as close as possible to their existing monitoring system. In case two monitoring methodologies can be used (e.g. methods A or B and C), shipping companies are recommended to select the most accurate monitoring methodology and use the other monitoring methodology to cross-check, or as a back-up.
Are there penalties for incorrect data?

Yes, every EU member state will establish its own penalty regime. Shipowners and operators will be penalised if they cannot show upon inspection by a port authority a Document of Compliance (DoC). They might also be penalised if they cannot show an assessed monitoring plan, although this decision will be subject to each Member State. In addition, the regulation says that if a ship is not compliant for two or more consecutive years, the port state authority can issue an expulsion order that bans it from entering any EU port until the company fulfils its monitoring and reporting obligations.

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