NAMEPA - Strengthening Your Culture Of Compliance NAMEPA - Strengthening Your Culture Of Compliance.  Understanding EU MRV (Monitoring Reporting Verification) November 6, 2015 Wim Peetoom Americas Operations Manager MMSO (Marine Management Systems Office(s))

Efficiency Measures Reduction Targets Data Collection MRV is part of a wider EC strategy for GHG emissions reduction All sectors of the economy → transport sector → shipping Efficiency Measures (not specified) Reduction Targets Data Collection There is a binding EU target for at least 40% domestic reduction of GHG emissions by 2030 compared to 1990 levels. All sectors of the economy should contribute, including the transport sector and, within the transport sector, shipping (whether it is international operating within EU waters or domestic) However, we are only in the beginning of this process. There is no discussion about targets or measures at this stage. The idea for the EC is to collect data, understand the current level of GHG emissions in order to make informed decisions. MRV is only that Timescales are not specified Data collection only starts in 2018 We are here

Scope of MRV Regulation All voyages to, from and between ports under Member State jurisdiction Time at sea and at berth/anchor All ships >5,000GT Regardless of Flag Except Warships Naval Auxiliaries Wooden Ships of Primitive Build Ships not Propelled by Mechanical Means Government Ships on Non-Commercial Service Scope includes some 14,371 ships of main types over 5000GT as of 2015 (from IHS Fairplay data) Growing at the anticipated 3.3% annual rate, we can expect 16,364 ships by 2019 Source: Marine Traffic

Implementation schedule EIF: Entry into force 3. Monitoring plans to be submitted to verifier 6. First report submitted to verifier 1. EIF 2. Preparation time 5. First monitoring period 2015 2016 2017 2018 2019 2020 JUL AUG APR JUN – Preparation and adoption of supporting technical legislation in 2015/2016 including broad stakeholder and expert involvement – Accreditation of verifiers in 2017 – 31st August 2017 – Monitoring plan to be prepared and submitted for approval by an accredited verifier – 1st January 2018 – Commence per-voyage and annual monitoring – 2019 onwards – By 30th April each year, submit a verified emission report to the EC and relevant flag state – 30th June 2019 onwards – Ships will need to carry a valid document of compliance relating to the relevant reporting period. – 30th June each year – the EC will make each ship’s emissions reports publicly available including information specific to that ship, its fuel consumption, CO2 emissions, technical efficiency (EEDI or EIV as appropriate) along with other parameters. 4. Assessment of monitoring plans by verifier 7. Document of Compliance

What will it mean to me? Regulation could be called MVR instead of MRV To be prepared and reviewed by 2017 for each vessel Will cover the method to monitor CO2 The plan will be assessed for conformity by an accredited verifier Monitoring Plan Owner/operators need to engage with a 3rd Party Verifier to review and approve their reports Verification On an annual basis, reports are submitted to the EU Reporting These are discussed in more detail in the following slides

What we don’t know? Detailed guidance documents from the EC expected in 2016 Materiality Accreditation bodies and methods Monitoring plan format Use of electronic templates Data exchange formats Uncertainty calculation guidance Penalties for non-compliance Future harmonization with IMO Other? Provide definition of materiality: How much we don’t have to check Note that for penalties, the regulations state that 2-years of non-compliance will result in expulsion. Shorter term penalties will be decided by national administrations in the enacting legislation. On Accreditation: The Commission shall be empowered to adopt delegated acts in accordance with Article 23, in order to further specify the methods of accreditation of verifiers.

Four permitted methods to measure fuel consumption May vary in complexity and cost. They can be used in combination Bunker delivery note and periodic stocktake of fuel tanks* Bunker fuel tank measurements on board Fuel flow meters for applicable combustion processes Direct emissions monitoring

Monitoring plan – what it may look like Monitoring plan – what it may look like? An example from the aviation industry http://ec.europa.eu/clima/policies/ets/monitoring/docs/t2_mp_aircraft_en.xls

What do I need to include in the annual report What do I need to include in the annual report? Most of this will also be made publically available by the EC Monitoring method and uncertainty DoC issue and expiry dates Identity of ship and owner Name, IMO No., Port of Registry Name, address and place of business EIV Estimated Index Value Technical efficiency (EEDI or EIV) Ice Class (if available) Who approved the emissions report Technical details Identity of verifier

Verification report – what it may look like Verification report – what it may look like? An example from the aviation industry http://ec.europa.eu/clima/policies/ets/monitoring/docs/avr_verfication_report_en.xls

Understanding MRV - Summary General framework is known but key details are missing until mid 2016 Monitoring Different monitoring methods and combinations are allowed Reporting First period 2018-2019 First report April 2019 Verification Comparable schemes exist and early preparation is possible

Verification – how will it work? Verifiers will: Be accredited by a recognized body Assess conformity of monitoring plans Assess emissions reports and verify they are accurate and correct to a reasonable level of assurance Detail inconsistencies and give an opportunity to correct Issue a verification report and document of compliance (DoC) Inform the Commission and Flag State of DoC issue Companies will: Demonstrate compliance with the monitoring plan Demonstrate how they have obtained, calculated, and arrived at, final reporting information and data In a reasonable assurance engagement, the verifier will essentially want to see raw / source data and information. It is a moderate to high degree of scrutiny with a lower level of risk that limited assurance, which tends to look at aggregated data.

MRV: Strong parallels with EU Emissions Trading Scheme Includes similar terminology Guidance for interpretation is available Operators effectively have permits and ‘monitoring plans’ Verifiers and Operators complete an AEM Report (Emissions Report) containing a Verification Opinion Statement (Document of Compliance) Approved formats and templates are used Automated systems are used (e.g. ETSWAP in UK, EC EU ETS Registry)

LR already has experience of similar schemes EU ETS Corporate reports Aviation Land-based installations UKAS accredited GHGs verification CO2 data and information verification ISO 14064 We already provide Verification Gap Analyses Training Facilitation Quantification and reporting of GHG emissions verification UKAS accredited

Thank you for your attention More information on www. lr Thank you for your attention More information on www.lr.org/co2measurement The content of this presentation (with more details) is available on our guidance document which can be downloaded from our website.