by WFW's Partner Nick Walker and Counsel Valentina Keys
Posted on: 20 March 2025
The deadline of 31 March 2025 for submitting verified maritime emissions reports under the Maritime EU Emissions Trading Scheme (“EU ETS”) which commenced last year is fast approaching. With only 2,302 Maritime Operator Holding Accounts (“MOHAs”) opened thus far, out of 23,000 vessels expected to fall within scope, most shipping companies will inadvertently find themselves to be non-compliant with EU ETS once the deadline hits. This could result in financial penalties being incurred and, in some cases, operational restrictions. In this briefing we discuss the state of play in relation to MOHAs and the likely repercussions of not meeting the deadline.
Background
Since 1 January 2024, shipping companies responsible for vessels of 5,000GT and above have been subject to the expanded EU ETS, which imposes obligations to monitor their emissions in the first compliance year of 2024, open MOHAs and prepare for the submission of their first verified emissions reports by 31 March 2025. With only a week remaining before the first EU ETS reporting deadline and less than six months before the surrender of EU ETS allowances (“EUAs”) deadline of 30 September 2025, many shipping companies are either too relaxed or in a state of frenzied rush in trying to open MOHAs. We understand that registries in various member states continue to struggle to manage the large volumes of applications that have been made. The lack of understanding amongst registry staff of the complexities of the maritime industry as well as the lack of support and guidance from the European Commission to the registry staff stand as perhaps the biggest hindrance to the timely and effective opening of MOHAs.
MOHA requirement
Shipping companies falling within scope of Maritime EU ETS must be registered in the Union Registry with an active MOHA. This account is required to submit verified emissions reports by 31 March and surrender allowances on 30 September 2025 (see our previous articles on key requirements and key compliance deadlines under EU ETS). Without a proper registration in the Union Registry with an active MOHA, verification societies (i.e. class societies such as Lloyds, DNV, RINA and so forth) will not be able to submit verified emissions reports to administering authorities in each jurisdiction. This will inevitably create an additional backlog in compliance – the absence of MOHAs prevents proper reporting and verification of emissions as well as surrender of allowances. In the worst-case scenario, this could lead not only to non-compliance penalties under EU ETS (€100 per tonne of unreported carbon and the obligation to surrender missing allowances later) but also to operational restrictions, such as expulsion from or detention in port if shipping companies continue to run into difficulties with registration, reporting or surrender of allowances for two or more consecutive periods. Liability is on a company-wide basis, so if one vessel belonging to a shipping company is arrested in port, then all that company’s fleet could be subject to restrictions or suspension of operations.
Key Takeaways
It is important to keep a clear paper trail of all communications with the relevant registries to demonstrate efforts being made to open MOHAs. The same applies to any communications with administrative authorities in each jurisdiction as well as with class societies who are awaiting MOHA details to be able properly to verify emissions reports and submit them to administering authorities. Whilst there will be room to argue that any non-compliance arose due to administrative delays in the event of any penalties being levied, if there is no evidence of practical steps being taken to resolve this, any prospects of successfully mounting such defences will be considerably undermined. WFW is liaising with registries in different jurisdictions on a daily basis and helping clients to circumvent and surmount any administrative and regulatory obstacles whilst regularising any potential non-compliance.
