June 2023

EU Sanctions against Russia 11th Package - STS Transfers and AIS Manipulations

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:

On 23rd June 2023, the European Council adopted the 11th package of economic sanctions against Russia.

We would like to present to your information the most striking measures taken especially targeting STS transfers and AIS manipulations with the subject package which came into force as of 24th June 2023.

If the competent authorities of the EU Member States have reasonable grounds to suspect that a vessel is importing Russian crude oil and petroleum products by sea into the EU by ship-to-ship operations (STS) or breaching the Price Cap , these vessels are prohibited from calling at EU ports and locks.

Furthermore, in any event, unless the competent authorities of the relevant EU port or lock that the vessel is calling at are notified at least 48 hours in advance of arrival regarding to the STS operations performed within Exclusive Economic Zone of an EU Member State or within 12 nautical miles from the baseline of that EU Member State’s coast, these vessels are also prohibited from accessing ports and locks in the EU.

Similar prohibitions apply to the vessels suspected of carrying Russian crude oil or petroleum products that illegally interfere, switch off or disable their shipborne automatic identification system (AIS) by violation of SOLAS V/19 / 2.4. However, exemptions are provided to allow these vessels access to ports and locks in EU territory for maritime safety, including environmental concerns, saving lives at sea, and humanitarian purposes.

As can be seen, it is possible to restrict the access of the relevant vessels to EU ports and locks, based on the suspicion of the relevant authority, without any evidence. For this reason, it is of great importance to take all kinds of precautions to avoid subject violations and prohibitions.

You may find all the details of the EU 11th Economic Sanction Package and the circular published by all IG Clubs from the links below.,1KFRZ,5X2AHP,5VBVN,1

No items found.