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Dec 24, 2024
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Lockton P.L. Ferrari

2022 Amendments to MLC

The European Union’s Emissions Trading System (EU ETS) was extended to cover emissions from shipping as of 1st January 2024.

The EU ETS is limited by a 'cap' on the number of emission allowances. Within the cap, companies receive or buy emission allowances, which they can trade as needed. The cap decreases every year, ensuring that total emissions fall.

Each allowance gives the holder the right to emit:

  • One tonne of carbon dioxide (CO2), or;
  • The equivalent amount of other powerful greenhouse gases, nitrous oxide (N2O) and perfluorocarbons (PFCs).
  • The price of one ton of CO2 allowance under the EU ETS has fluctuated between EUR 60 and almost EUR 100 in the past two years. The total cost of emissions will vary based on the cost of the allowance at the time of purchase, the vessel’s emissions profile and the total volume of voyages performed within the EU ETS area. The below is for illustration purposes:
  • ~A 30.000 GT passenger ship has total emissions of 20.000 tonnes in a reporting year, of which 9.000 are within the EU, 7.000 at berth within the EU and 4.000 are between the EU and an outside port. The average price of the allowance is EUR 75 per tonne. The total cost would be as follows:
  • ~~9.000 * EUR 75 = EUR 675.000
  • ~~7.000 * EUR 75 = EUR 525.000
  • ~~4.000 * EUR 75 * 50% = EUR 150.000
  • ~~Total = EUR 1.350.000 (of which 40% is payable in 2024)
  • For 2024, a 60% rebate is admitted to the vessels involved. However, this is reduced to 30% in 2025, before payment is due for 100% with effect from 2026.
  • Emissions reporting is done for each individual ship, where the ship submits their data to a verifier (such as a class society) which in turns allows the shipowner to issue a verified company emissions report. This report is then submitted to the administering authority, and it is this data that informs what emission allowances need to be surrendered to the authority.
  • The sanctions for non- compliance are severe, and in the case of a ship that has failed to comply with the monitoring and reporting obligations for two or more consecutive reporting periods, and where other enforcement measures have failed to ensure compliance, the competent authority of an EEA port of entry may issue an expulsion order. Where such a ship flies the flag of an EEA country and enters or is found in one of its ports, the country concerned will, after giving the opportunity to the company concerned to submit its observations, detain the ship until the company fulfils its monitoring and reporting obligations.
  • Per the EU’s Implementing Regulation, it is the Shipowner who remains ultimately responsible for complying with the EU ETS system.

There are a number of great resources on the regulatory and practical aspects of the system – none better than the EU’s own:

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02003L0087-20230605

https://climate.ec.europa.eu/eu-action/transport/reducing-emissions-shipping-sector_en

https://climate.ec.europa.eu/eu-action/eu-emissions-trading-system-eu-ets/what-eu-ets_en

The 2022 amendments to MLC 2006, adopted at the ILO 110th session in Geneva, will enter in force from 23rd December 2024. Here below we report the most relevant changes:

Recruitment and Placement

Further protection for seafarers if a recruitment or placement agent fails to meet its obligations under the seafarer’s employment agreement. Seafarers should be informed of their rights, prior to or in the process of engagement.

Repatriation

Flag and Port states must be proactive in facilitating and assisting seafarers who require repatriation, including those deemed abandoned. This includes replacement seafarers, who shall be afforded the same rights under the MLC 2006. Responsibility for replacement seafarers shall be on Port state, flag state and labor supplying states.

Accommodation and Recreational Facilities

Appropriate recreational facilities, amenities, and services, including telephone and internet services shall be provided. Any charge for the use ship to shore telephone or internet should be reasonable in amount.

Internet access should also be provided by States to seafarer’s on-board ships in their ports and at anchorage, with any charge for same again being reasonable in amount.

The ILO hopes that this amendment will have a positive impact on seafarers’ mental health.

Food and Catering

Adequate supplies of food and drinking water shall be on board, considering the number of seafarers on board, religious requirements, and cultural practices. The duration and nature of the voyage shall be suitable in respect of quality, nutritional value, variety and shall be provided free of charge during the period of engagement. Organization and equipment of the catering department shall be as such to permit meals to be prepared and served in hygienic conditions.

Medical care on board ship and ashore

States to ensure prompt disembarkation of seafarers in need of immediate medical care and access to medical facilities ashore. Where a seafarer has died on board, the State in whose territory the death has occurred (including its territorial waters) or into whose territory the ship next enters, shall facilitate the repatriation of the remains.

Seafarers should not be prevented from disembarking for public health reasons and ships should be permitted to replenish their stores, fuels, water, food and supplies.

Health and safety protection and accident prevention

There should be provision for appropriately sized personal protection equipment and measures in place to reduce the risk of exposure to harmful levels of ambient factors and chemicals. (In particular to suit the women seafarers)

All deaths of seafarers should be adequately investigated and recorded by the flag state of the ship and reported on an annual basis to the ILO.

Evidence of financial security

This is the Amendment involving the Certificates of Financial Security under Regulation 2.5.2 Standard A2.5.2 and Regulation 4.2. Standard A4.2.1 paragraph 1 (b) of the Maritime Labour Convention 2006 (as amended) (“MLC Certificates”)

The provision of adding registered owner's name, if different from the shipowner.

This amendment will now formally confirm the position that already exists between the International Group and Member States, making it clear to port state control officers that MLC financial security certificates are compliant if issued to either the shipowner or the Registered Owner.

This will rectify cases where previously certain PSCOs noted deficiencies if the entity named on a vessel's Declaration of Maritime Labour Compliance did not match to that of the entity named in the MLC financial security certificates issued by the IG P&I clubs

IG P&I Clubs will continue issuing MLC financial security certificates in the name of the Registered Owner.

2022 Amendments to MLC
2022 Amendments to MLC
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