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Mar 26, 2024
Lockton P.L. Ferrari

Francis Scott Key bridge’s collapse

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:

Early morning breaking news from international networks reported a serious marine casualty that resulted in the complete collapse of the Francis Scott Key bridge in the US port of Baltimore, Maryland. The sight was jarring as sections of the bridge fell like dominos in the early morning hours of March 26.

The investigation into the incident has only just begun, but here is what we know so far:

• The MV DALI, a containership carrying 9962 TEU, departed Baltimore at 1:00am localtime bound for Colombo, Sri Lanka;

• A little before 1:30am local time, the crew of the DALI reported to local authorities that they had lost power aboard the vessel;

• At 1:30 am local time the vessel collided with a pylon of the Francis Scott Key Bridgeover the Patapsco River. Shortly thereafter the bridge collapsed;

• All crew members and 2 pilots onboard have been accounted for;

• Local authorities initiated rescue efforts and the Maryland governor declared a state of emergency. The incident has been categorized by local authorities as a "mass casualty event."


For those of us in the P&I sector, a maritime casualty of this magnitude typically signals potential liabilities involving P&I cover, which in this instanceis reported to be provided by the Britannia P&I Club. Accordingly, Britannia can expect to face multiple claims arising out of the incident,including potential claims for personal injury (crew and third parties),property damage, cargo damage, possible general average losses and others – allat a hefty cost.


More specifically, authorities have confirmed that as many as 20 vehicles that were on the bridge at the time of the collision landed in the Patapsco River. Damages arising out of this, including, casualties, injuries, and vehicle losses, will inevitably form part of the claims levied against the vessel andher Club.


The damageto the bridge itself also implicates the FFO coverage (collisions with fixedand floating objects) provided by the P&I Club. In addition, we expect tosee claims for damages due to the interruption of port activities, loss of useof the bridge, and potential claims for charter loss and delay expenses forother vessels that were scheduled to navigate through that section of theriver.


Investigations are also underway regarding possible fuel leakage from the ship, posing a risk of pollution, costs for which would also fall under P&I coverage.


Given the expected cost of repair to the bridge, and other anticipated P&I claims, we anticipate that ultimate cost of the incident will likely dwarf the International Group Pool retention limit of USD 100 million.


From an insurance standpoint, H&M coverage will come into play for the ship's damage, followed by its removal (unless the vessel is declared a Constructive Total Loss, in which case the cost of a wreck removal would likely fall under the vessel’s P&I cover as well). A more comprehensive assessment of the legal and insurance aspects of this casualty will be possible upon completionof further investigation.

Francis Scott Key bridge’s collapse
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