Implementation of the EU ETS for maritime transport - Norway

The responsible entity under the Climate Quota Act will be the "ship operator". This is defined as the shipowner or any other organization or person that has assumed the responsibility for the technical operation of the ship from the shipowner as evidenced by the delegation of the ISM responsibilities. However, under the latest EU Commission implementation regulation to the revised EU ETS directive (EU regulation 2023/2599), it was clarified that shipowners will be the entity responsible for the ETS obligations unless another entity, such as the technical manager or bareboat charterer, has been duly mandated by the shipowner to comply with the ETS obligations. The clarification made in the latest EU Commission implementation regulation, imposing more formalised requirements for making an entity other than the shipowner liable for ETS compliance, has not yet been included in the Climate Quota Act which means that Norway has currently a less stringent approach for delegating / transferring such obligations. It is unlikely that further amendments to the Climate Quota Act will be made prior to the enforcement date of 1 January 2024. It can, however, be expected that the Act will be amended to reflect the latest developments from the EU regarding the implementation of the ETS directive before the deadline for surrendering of the first allowances which is 30 September 2025.

Norwegian authorities will be responsible for enforcing the ETS obligations for i) shipping companies that are registered in Norway according to THETIS-MRV, the system used for reporting emissions under the EU MRV regulation, ii) Non-EU shipping companies if Norway was the country within the EU ETS where the company had the most port calls in the last four years, and iii) Non-EU shipping companies that have not made any port calls within the EU ETS in the last four years, and where the first voyage within the EU ETS occurs in Norway. For shipping companies which have performed reporting in the THETIS-MRV as of October/November 2023, the EU Commission will by 1 February 2024 publish a list specifying the country which will be the administering authority for such shipping companies. Shipping companies that are not on this list will be allocated to an administering member state in accordance with the abovementioned rules for administering authority in respect of a shipping company.

Furthermore, the Climate Quota Act establishes an authority whose purpose is to monitor compliance with the obligations in the Climate Quota Act. In case of non-compliance, the authority is also mandated to suspend the right to transfer quotas, issue duties to correct and impose fines and measures, including ultimately to reject foreign-flagged vessels' entry to Norway and hold back Norwegian-flagged vessels from leaving Norwegian ports. Which Norwegian authorities are responsible for enforcing the ETS obligations will likely depend on the nature of the obligations and are not yet entirely clarified. According to the Climate Quota Act Article 12, the responsible entity must by 30 September each year surrender a number of allowances that is equal to its total aggregated emissions during the preceding calendar year to the administering authority responsible. The Norwegian Environment Agency (Nw. Miljødirektoratet) is the responsible administering authority for the reporting obligations and will most likely be nominated as the authority administering the climate quota register for surrendering of allowances from shipping.

It has not yet been determined which Norwegian authority will be delegated the responsibility for imposing measures in case of non-compliance, such as detaining vessels and refusing entry to Norwegian ports, but it is likely that the Norwegian Maritime Authority (Nw. Sjøfartsdirektoratet) will be delegated such authority. The definitive assignment of authority delegation will be established through regulations under the Climate Quota Act.

With 1 January 2024 fast approaching, the implementation of the revised EU ETS directive is taking shape, though certain aspects necessitate further clarification. Schjødt is closely monitoring the developments in the EU and Norway.