Merchant Shipping (Monitoring, Reporting and Verification of Carbon Dioxide Emissions) (Amendment) (EU Exit) Regulations 2018

Baroness Sugg Excerpts

Wednesday 24th October 2018 Grand Committee

Moved by

[Baroness Sugg]

That the Grand Committee do consider the Merchant Shipping (Monitoring, Reporting and Verification of Carbon Dioxide Emissions) (Amendment) (EU Exit) Regulations 2018.

[The Parliamentary Under-Secretary of State, Department for Transport (Baroness Sugg) (Con)]

My Lords, the draft regulations that we are considering will be made under powers in the European Union (Withdrawal) Act, and are needed if the UK leaves the EU in March without a deal. The regulations will amend EU regulation 2015/757 on the monitoring, reporting and verification of carbon dioxide emissions from maritime transport. The effective monitoring and reporting of carbon dioxide is an important step towards achieving a more environmentally sustainable shipping sector. The emissions data gathered will help the international community to develop more effective measures to reduce greenhouse gas emissions from ships.

The EU regulation established rules for monitoring, reporting and verifying CO₂ emissions from ships above 5,000 tonnes that make voyages starting or finishing in a port in an EU member state. Shipping companies have already prepared monitoring plans and have been collecting data since 1 January this year. Ships within scope are required to carry a valid document of compliance from 30 June 2019. The EU regulation applies only to ships visiting ports that are under the jurisdiction of an EU member state. Currently, it would therefore cease to have effect when the UK leaves the EU.

The changes made in the regulations are therefore necessary to ensure that the monitoring, reporting and verification requirements of the EU regulation continue to apply to ships serving UK ports. If we failed to correct the EU regulation, ships calling at EU ports would still need to report under the EU system but those trading between the UK and non-EU ports would not need to report. Not only would this create an uneven playing field between companies but the evidence on greenhouse gas emissions would be weakened.

The UK is a strong supporter of global action to tackle climate change. In April this year we helped lead a high-ambition coalition to secure agreement at the International Maritime Organization on an initial strategy on greenhouse gas emissions. That included an historic first emissions reduction target for ships of at least 50% by 2050, which is an important step forward in tackling emissions from international shipping, one of the last major sectors not to have an emissions reduction plan.

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Let us take the reference to business. If we do not yet know what this revised reporting regime is going to be, how can we assert so confidently that there is no significant impact?

[Baroness Sugg]

My Lords, I thank noble Lords for their consideration of these draft regulations. Again, I will endeavour to answer as many questions as I can; those that I cannot, I will follow up in detail in writing. Shipping, like other modes of transport, has a responsibility to control emissions. That is what we are doing with this SI, which replicates the current EU regulations.

My noble friend Lady McIntosh and the noble Lord, Lord Berkeley, asked about monitoring and enforcement. I will go through the main requirements of the current regime. By August 2017 ship owners had to send the monitoring plan for their vessels to an approved verifier. That plan includes information such as the fuel consumption of the ship and how it will be monitored. It will be done in many different ways. The noble Lord described an interesting way of monitoring, which I had not come across. It will be up to the owners of vessels to explain how they are doing the monitoring and to get that approved. From January this year, ships have had to collect CO₂ data on their voyages for the calendar year. That data is collected and recorded separately for each voyage. By 30 April 2019 ship owners must submit their accumulated yearly data to the verifier. By 30 June each year after the reporting period, the document of compliance for the ship will be issued by the verifier and will be valid for 18 months from the reporting period.

[Lord Berkeley]

I am grateful to the Minister for her explanation. Can she explain who they submit these documents to?

[Baroness Sugg]

Yes, absolutely. They are issued by the independent verifiers and then checked by the MCA. On compliance and enforcement, the existing regulations bring in fines if people fail to comply. That also allows for the detention of non-compliant ships that come into UK ports. Inspectors from the Maritime and Coastguard Agency will ensure that ships have the correct documentation and will do the enforcement on UK-flagged ships. Other ships using UK ports will also be liable for inspection as part of the port state control regime. Non-compliant ships can be detained and their owners prosecuted via the courts and fined. The enforcement will stay the same, it will just be done under the UK regulation rather than the EU regulation.

I hope I have answered the point made by the noble Lord, Lord Teverson. Rather than it being about greenhouse gas emissions or carbon, it is about the fuel consumption and reducing that over time.

[Lord Teverson]

I am trying to understand whether this is about just carbon dioxide monitoring or greenhouse gas monitoring because if it is just carbon, it is not compatible with UK carbon budgets, which include national shipping. There is a big difference. It seems a fairly straightforward question to me—yes or no? The Minister is welcome to write to say yes or no.

[Baroness Sugg]

I probably will have to write to the noble Lord with details on that. The current monitoring system is about fuel consumption by vessels. When collated, that information will help inform future policy on the reduction of emissions, which will obviously cover greenhouses gases and carbon. I will take up the noble Lord’s offer of writing to him in detail on that.

The noble Lord also asked about the documents of compliance. We want to ensure that the MRV system works as smoothly as possible after we leave the EU so we have taken the decision to recognise all EU MRV certificates issued by other member states as being equivalent to our own. We have the capacity to issue our own but we have already stated that we will recognise those from member states and we hope, of course, that the EU will mutually recognise ours.

We will also ensure that there is no duplication of reporting for ships travelling between the UK and EU states. If a ship notifies us that it has submitted all its verified voyage data to the EU we will not require it to provide us with a duplicate report. We are trying to minimise the burden on businesses as we leave the EU.

[Lord Teverson]

I thank the Minister and I will not intervene again. I welcome the fact that we will recognise EU documentation. That is an excellent decision that will reduce bureaucracy. Do we need to invent a new IT system ourselves and have we managed to do that? I suppose that that is the key point here.

[Baroness Sugg]

No. We already have the ability to issue these certificates so a new system is not needed.

Reference was made by the noble Lords, Lord Teverson and Lord Rosser, to expulsion orders. It is not the Government’s policy to ban or exile ships from a port unless there is an immediate risk to safety, as both noble Lords said. Neither of those conditions would apply to the requirements under this regime. It is a reciprocal requirement that will no longer be relevant when we are not a member state. There will be a practical problem in that when we exit the EU, there is no requirement under the European regulations to notify non-EEA states that a vessel has been banned from an EU port. There is actually no mechanism if we leave without a deal either for us to tell the EU or vice versa. That is why it has not been replicated. However, there is no reason why we cannot share data in the future. As we made clear in the White Paper, it is in our interests and those of the EU that we should continue to co-operate through the EMSA. However, that will be subject to negotiations.

The question of reporting was raised in the other place and I will certainly forward the letter from my honourable friend Nusrat Ghani on this to the noble Lord, Lord Rosser, and others. On the assessments of the impact of the maritime sector on carbon dioxide, we have not retained the paragraph on that in the draft regulations because that obligation applies specifically to the European Commission rather than to member states or to the UK in particular. It is necessary for the effective functioning of the MRV system, so the Secretary of State has taken over responsibility for what was previously held by the Commission. There will be an obligation on the Secretary of State to publish the results of the CO₂ data which we will receive annually from ships in much the same way as the Commission will be doing with the other 27 member states. We will just be taking on the responsibility to publish the data, which obviously will be made available to all those who are interested in it.

Under our domestic legislation, the Secretary of State would not be required to conduct a similar biennial review of the impact on the global climate. The fact that it is not in retained EU legislation of course does not preclude us from undertaking such a review and we are keen to maintain our position of leading the way in this area. I have already spoken about our leading role in the agreement with the IMO in April.

The noble Lord, Lord Rosser, mentioned the IMO system which will take effect on international voyages from 1 January 2019. The systems are very similar in that they both apply to vessels of 5,000 gross tonnes and over, but there are a few differences. The European regime which we are carrying over applies only to voyages undertaken to carry passengers and cargo for commercial purposes rather than other maritime activities such as dredging. It requires more information such as on the cargo being carried by the vessel and more transparency in terms of disclosing data. It also includes a more robust verification process. Ideally, we want to see the IMO and EU systems become aligned while maintaining the environmental integrity of the overall scheme. That is something that we will continue to work on with our international partners in order to achieve it going forward. However, as I said in my opening remarks, at the moment we are allowing the systems on UK-flagged vessels to collect the data so that they are able to report to both systems easily enough.

I hope that I have covered the points which were raised, but if I have not gone into them all in detail, I will certainly write to noble Lords. I hope that noble Lords will agree that the objective of the regulations, which is to maintain an effective regime to monitor emissions from ships, is the right thing to do.

Motion agreed.