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

Volume 793: debated on Wednesday 24 October 2018

Considered in Grand Committee

Moved by

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

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.

The IMO has also produced its own system for monitoring CO2 emissions from ships. Its data collection system has a similar objective to that of the EU monitoring, reporting and verification regime, but it will be effective from 1 January 2019, a year later than the European system. The UK is allowing ship owners to develop data collection systems that cover both the MRV system and the IMO’s data collection system so that they have a unified system on board. The EU regulation aims to provide robust information on emissions from ships. If it did not continue to have effect, we would be weakening the evidence base on which the development of effective and proportionate measures depends.

The amendment to the regulations replaces references to an EEA state with references to the United Kingdom to ensure that legislative requirements continue to apply within the UK when it is no longer a member state. It amends the certificate of compliance to include a reference to a certificate of compliance issued by an EU member state, and repeals the provision about the expulsion order. It amends Commission Implementing Regulation (EU) 2016/1927, which provides ship owners with the templates needed for their monitoring plans and emissions reports, and the templates for the documents of compliance that are used by the verifier.

As well as amending the main EU regulation, this instrument makes a number of other changes, mainly technical and operational in nature, to ensure that the system continues to work. These changes are to Commission Implementing Regulation (EU) 2016/1927 on templates for monitoring plans, emissions reports and documents of compliance, and the Merchant Shipping (Monitoring, Reporting and Verification of Carbon Dioxide Emissions) and the Port State Control (Amendment) Regulations 2017. The latter regulations provide an enforcement mechanism for the EU regulation in the United Kingdom. In addition to ensuring that the same regulatory requirements continue to apply to UK-registered ships, the amendments ensure that UK regulators are able to enforce these standards against foreign vessels in UK waters, including EU vessels.

These regulations are intended to ensure that all ships visiting UK ports are subject to the same reporting requirements and that the UK continues to play its part in international action on greenhouse gas emissions from shipping. I commend them to the Committee.

My Lords, I am grateful to the Minister for introducing these draft regulations. Before I get into the substance, I would be interested to know how much monitoring has happened in the UK up to now, both in the ports and on the seas between the ports. As the Minister implied, and taking the Dover Strait as an example, ships going in a south-westerly direction may be going from a continental port to somewhere else in the world but they are still in UK waters for a time. It would be interesting to know what monitoring has taken place inside and outside the ports.

I declare an interest: until last year I was a trustee of Plymouth Marine Laboratory, which developed a very interesting means of checking the emissions from ships from up to five miles away; it was mainly CO2 but other emissions as well. It tested it off Rame Head in Plymouth. I think it found that the few naval ships that were running on this kind of fuel were the worst offenders but I am sure that has changed. It does not really matter; the point is that it could do it. The idea would be to put this equipment in the middle of the Dover Strait, for example, where you could check ships going both ways. I do not know where that has got to, but it is important that monitoring is carried out not just in the ports but out at sea where the emissions can still be quite dangerous.

Can the Minister explain what the difference will be when we have left the EU? If a ship in the Dover Strait has set off from Rotterdam and is due to end up in China, how will we monitor the emissions, let alone enforce any limits? What are we going to do about that? It is all very well having these regulations. I believe that there is another regulation which requires cleaner fuel to be burnt when you are travelling in the English Channel, which I think is to the east of Lizard or Scilly and up to the North Sea. I think that that is going to change in a few years’ time in order to cover the whole of the UK. Has that position changed as a result of our potentially leaving the EU? How will the monitoring be done?

It is good that the Minister has brought forward these regulations, but my doubts are around whether there will be any monitoring at all, whether there is any monitoring, and what action will be taken if a ship is found to be exceeding the limits. I look forward to hearing her comments.

My Lords, I will follow the noble Lord in the same vein by asking a simple question. I remind the Committee of my historic interest as the Conservative spokesman in the European Parliament on transport issues. Can my noble friend the Minister explain the current enforcement mechanism if either a UK-registered ship or an EU-registered ship breaches the carbon dioxide emissions limit? How does she imagine that that enforcement mechanism will change in the future? Presumably the whole point of having carbon dioxide emissions limits is to ensure that, along with every other form of transport, maritime shipping abides by air quality standards. Will we be able to enforce this unilaterally going forward?

I turn to something that is very topical. Is there currently any jurisdiction for the European Court of Justice over a breach of these emissions standards?

My Lords, I should declare that I am a board member of the Marine Management Organisation. I do not think that it conflicts with what we are considering here, but I mention it for the avoidance of doubt. I would like to respond to the noble Baroness, Lady McIntosh, by saying that in her role as leading the group in the European Parliament when the Conservatives were part of the EPP, which is exactly where they should still be, she was a fantastic advocate for her position. I was in a different group that sometimes became involved in things like trans-European networks, and I noted that she was very successful in what she tried to do. She presented a difficult opposition.

I want to come back to a few points about carbon budgets, which is what this comes down to. In her remarks the Minister alternated between talking about carbon emissions and greenhouse gas emissions. There is a very important difference between those two phrases. I would be interested in understanding whether these regulations are in fact concerned with greenhouse gases or carbon dioxide emissions. I know that they refer to carbon dioxide, but most of the monitoring that is done is for greenhouse gases. Although emissions of methane are lower, it is a much more potent greenhouse gas. The difference is important and I presume that it is particularly relevant to the shipping industry, given its emissions.

I congratulate the Minister on reminding us that international shipping is the one area where we still have not solved this issue internationally. In aviation we have this rather dodgy—if I am honest—offset system. We will see how it works, but I suspect that the Amazon rainforest will not grow at the rate that aircraft emissions will. Given that sympathy, I am interested to understand whether, given the fact that we have international paralysis, and with the Government perhaps frustrated by the fact that that sector is not represented within European or British carbon budgets, the UK, as the Climate Change Committee has often advocated, will take on its leadership role in this area again and start to reconsider whether the sector should be. I am not expecting a policy decision today in the Moses Room, but I will be interested to know if the Government will start to look at that issue.

When it comes to individual matters of these particular regulations, I shall quote from the Explanatory Memorandum as the legislation refers to European regulations all the way through and it is very difficult to read, as I am sure the Minister understands:

“The amendments … remove what will become redundant requirements on the UK to make certain reports to the Commission”.

I wanted to clarify whether those requirements, whatever they are, or those reports will actually now be made within the UK anyway.

I am in particularly interested in documents of compliance. I do not know much about this topic although I am sure the noble Lord, Lord Berkeley, is clued up on them. I presume that they will be issued by the Marine and Coastguard Agency. I am interested to understand whether these are existing EU systems. If they are, are we having to replace the IT systems? Are they ready? How many of these things do we issue at the moment and how many are we going to have to issue after March 2019, or after the transition period if we manage to come to an agreement? As we all know, IT systems and the increase in documentation and red tape are one of the biggest challenges in making Brexit work.

I have to ask about this ability to expel ships from a port, which we are getting rid of because we already have the ability to get rid of ships for safety and environmental reasons. I am interested to understand, in terms of EU legislation, what other scenarios the Government were thinking of in that legislation other than safety and the environment, in order to understand what rights we are forgoing.

My Lords, these regulations have already been through the Commons, as obviously the Minister knows better than I do. We indicated our support for them when they were considered there last week, and I hope she will not be too surprised when I say that that is still our position today. In the Commons, in response to points that we raised about the impact of these regulations on compliance with the IMO strategy and targets for carbon reductions from shipping by 2050, the Government said they would provide assurances in writing. I am afraid I genuinely do not know yet whether those assurances—I see the Minister is waving the letter, so if one is not already on its way to me, I would be extremely grateful to receive a copy.

I turn to Part 2 of the annex to the Explanatory Memorandum, headed:

“Statements required when using enabling powers under the European Union (Withdrawal) 2018 Act”,

which refers to the undertaking that has been given by the Parliamentary Under-Secretary of State that:

“In my view the draft Merchant Shipping (Monitoring, Reporting and Verification of Carbon Dioxide Emissions from Ships) (Amendment) (EU Exit) Regulations 2018 does no more than is appropriate”.

The Explanatory Memorandum to the previous SI that we were considering went on to say that the changes,

“do no more than is strictly necessary”.

This one does not contain those words. It says:

“This is the case because the amendments being made do no more than ensure the continuing effectiveness of the existing regulatory regime”.

Although I think I know the answer to the question I am asking, I would nevertheless be grateful if the Minister could say why there is no reference to “strictly necessary”. This raises the difference in definition between “appropriate” and “necessary”. Of course, “appropriate” could mean whatever the Government think is appropriate, whereas “necessary” is a rather tighter definition. I think I know what the Minister will say in response to that point, and I would be grateful to hear it direct from her, rather than assume that I have got it right.

The noble Lord, Lord Teverson, raised the fact that the amendments,

“remove what will become redundant requirements on the UK to make certain reports to the Commission”.

I think the noble Lord said, in effect, that the reports are going to be made elsewhere. I reiterate the question he asked about that: are the reports going to be made to Parliament, for example, that were previously made to the Commission? I also note that paragraph 7.4 of the Explanatory Memorandum says that the amendments,

“insert, omit or amend definitions to ensure compatibility or consistency with other legislation”.

Is that a reference to UK domestic legislation, to other EU legislation, or to both?

Paragraph 7.5 of the Explanatory Memorandum says:

“While the amended legislation is intended to preserve the exiting regulatory framework it will not do so in its entirety”.

I suspect that that is going to be the nature of the Minister’s response about the non-use of the word “necessary”. However, it goes on to say:

“Ships visiting ports in the United Kingdom will be required to carry a Document of Compliance which will in future be issued under the United Kingdom regulatory framework”.

Will the Minister say a bit more about precisely what that will involve, since it appears to me—I may be wrong—that these regulations are bringing in something new and different. It goes on to say that,

“legislation will not require ships to monitor and report on voyages which do not start or end at a port in the United Kingdom”,

and to make reference to a broadly similar regime being introduced, I think by the IMO, through an amendment to the International Convention for the Prevention of Pollution from Ships. It refers to it being covered subsequently, or implemented into domestic law, under a separate statutory instrument. When is that going to happen? Is this an IMO amendment that is some way away, or is it, to use a maritime term, something that is on the horizon?

Another point raised by, I think, the noble Lord, Lord Teverson, was the power to issue expulsion orders. I will be very interested in the response he gets, but I will come at it from a different angle. Although it says quite clearly in the Explanatory Memorandum that it is not our policy to ban or expel ships from a port unless there is immediate risk to safety or the environment, why, nevertheless, do we not keep this discretionary power in, since there may be an occasion in the future when we would wish to use it? I do not see the point in taking out a discretionary power when circumstances could change: we do not know what is going to happen in the future.

Paragraph 11 of the Explanatory Memorandum says:

“The Maritime and Coastguard Agency will issue guidance to industry on the revised reporting regime which will apply after the UK withdraws from the European Union”.

Will the Minister say a bit more about this revised reporting regime? What form will it take? I notice that over the page, under “Impact”, it says:

“There is no, or no significant, impact on business, charities or voluntary bodies”.

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?

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.

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

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.

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.

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.

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.

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.