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Feb 29, 2016
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Lockton Edge

Nigerian Pirates shifting their focus on kidnapping of crew and extends range

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:

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02003L0087-20230605

https://climate.ec.europa.eu/eu-action/transport/reducing-emissions-shipping-sector_en

https://climate.ec.europa.eu/eu-action/eu-emissions-trading-system-eu-ets/what-eu-ets_en

MAREX earlier this week published the following article:


“On Monday, Nigerian authorities reported the arrest of six suspected pirates and gave new details on the recovery of the product tanker MAXIMUS (ex-name SP Brussels), highlighting the growing risk of piracy in the region. Rear Admiral Henry Babalola said that the suspects’ apprehension followed an intense firefight that killed another alleged pirate. “The hijackers refused to surrender and opened fire on the security agents. It was at that point the deceased pirate was gunned down because he came out of the ship to confront the boarding party. ”On February 21, Indian Minister of External Affairs, Sushma Swaraj announced that ten Indian crewmembers of the Maximus were rescued by Nigerian forces. Unfortunately, two pirates got away with two crew member hostages, one Indian and one Pakistani, Babalola said. Adm. Babalola thanked naval forces of neighbouring nations for their co-operation. The incident of the MAXIMUS corresponds closely with the predictions of global risk advisory firm PGI Intelligence, which released a memo Tuesday warning that hijackings – with intent to kidnap – are set to rise in the Gulf of Guinea. PGI cites Nigerian corruption, political change and insurgent groups as risk factors for piracy in the region. “PGI recorded four attacks on ships at sea that involved successful kidnappings in January, compared to one per month from October to December 2015,” with no significant oil cargo thefts, suggesting that pirates are moving away from their historical pattern – and may begin targeting a wider variety of vessels as they prey on crew instead of crude oil cargoes. Since his election last year, Nigerian President Muhammadu Buhari has prioritised the destruction of illegal oil refineries in the Niger Delta, with some success – limiting the market for stolen oil cargoes and de-incentivising crude theft, PGI said. Additionally, shore-side insurgency in the Niger Delta is on the rise, with multiple pipeline attacks in recent months. The unrest may be in response to government initiatives. Buhari intends to halve the payments made to Niger Delta militants under a 2009 amnesty agreement, with the intention of ending disbursement by 2017, and has not renewed many security and surveillance contract programs employing former militants – increasing the incentive to engage in piracy as a source of funds. Further, piracy might be enabled by government officials, PGI says. Pirates have attacked vessels as far as 100 nm off the coast, indicating planning and targeting skill – and perhaps assistance in locating the ships from maritime officials, some of whom face charges. “Since the beginning of the year, several officials from the Nigerian Maritime Administration and Safety Agency (NIMASA) have been arrested on corruption charges, including the organisation’s former director general Patrick Akpobolokemi, highlighting the extent of high-level corruption within the organisation,” PGI said. Overall, given the financial prospects of ransom payments and the ability of pirates to reach far off the coast, PGI sees a poor outlook for shipping security in the Gulf of Guinea for the next six months. “The ongoing fall in revenue to militant gangs from oil theft and amnesty payments will continue to incentivise criminal activity at sea, resulting in a steady increase in kidnappings of the crew of commercial vessels,” the firm concluded.”

SOURCE: MAREX BULLETIN, PGI INTELLIGENCE

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