With emissions from the global shipping industry contributing an estimated 1 billion tonnes per year, 3% of the world’s total greenhouse gas emissions, efforts have been led by the EU, the US and the International Maritime Organisation to significantly reduce shipping’s environmental impact.<\/p>\n
Earlier this year, limit regulations of emissions of nitrogen oxides (NOx), sulphur oxides (SOx) and other matters came into force and compliance with such regulations will have a substantial impact on shipowners and, in turn, ports and terminal operators. This article seeks to outline key changes in the rules that took effect from 1 January 2015 and provides an overview of the anticipated impact on the shipping industry and what the future holds.<\/p>\n
New regulations<\/strong><\/p>\n From 1 January 2015 vessels operating in designated emission control areas (“ECAs”) – the Baltic Sea area; the North Sea area; the North American area (covering designated coastal areas off the United States and Canada); and the United States Caribbean Sea area (around Puerto Rico and the United States Virgin Islands) \u2013 must comply with the International Convention for the Prevention of Pollution from ships (MARPOL) Annex VI (Regulations for the Prevention of Air Pollution from Ships), which now requires that vessels have to use on board fuel oil with a sulphur content of no more than 0.10%.<\/p>\n Vessels are meeting this new requirement by using low sulphur bunkers, whilst others are also making use of gas as a fuel as this contains no sulphur and, when ignited, leads to negligible sulphur emissions.<\/p>\n The impact<\/strong><\/p>\n The new regulations have ultimately had an impact on a shipowner’s bottom line with the price for low-sulphur bunkers significantly more expensive than higher sulphur content equivalents. Several container lines have already started to implement low sulphur fuel surcharges for shippers which in turn get passed on to consumers.<\/p>\n Given that outside ECAs the current limit for sulphur content of fuel oil is 3.50% (falling to 0.50% m\/m from 1 January 2020), refineries are still producing higher sulphur content fuel and, until low-sulphur distillates are prioritised, the price differential is likely to remain in the near future. In light of such increased fuel costs, many operators are contemplating relatively substantial capital investments such as alternative fuel burning technologies or retrofitting scrubbers.<\/p>\n Compliance and enforcement<\/strong><\/p>\n To ensure compliance with the regulations a vessel’s flag state is required to issue it with an International Air Pollution Prevention certificate which states that the ship uses fuel oil with a sulphur content that does not exceed the applicable sulphur content as documented by bunker delivery notes or that it uses an approved equivalent arrangement (eg by using exhaust gas cleaning systems, commonly referred to as scrubbers).<\/p>\n Port State control is entitled to take fuel samples in order to verify the fuel onboard with some states also considering the use of drones for surveillance to assess vessel\u2019s smokestack plumes to identify possible violations. Port authorities will almost certainly also require sight of a vessel’s engine log books, bridge log books, the fuel oil changeover procedure, bunker delivery notes, the oil record book, SECA book and sounding tables.<\/p>\n Some countries, in particular in Europe, have expressed an interest in cross-border policing to coordinate efforts, although it remains to be seen how effective these will prove to be from both a practical and legal perspective in relation to enforcement.<\/p>\n In light of the cost consequences of complying with the regulations, there was much scepticism in the industry as to whether shipowners would in fact undertake the necessary steps in order to do so. There has, however, been to date very few reports of non-compliance and it is noteworthy that the Waterways Police in Hamburg reported earlier this year of a high level of compliance. Given the sanctions for non-compliance under German law – up to five years’ imprisonment or a fine of up to \u20ac50,000 \u2013 such level of compliance is not particularly surprising.<\/p>\n Shore side power<\/strong><\/p>\n Alongside the push by governmental authorities and the IMO to reduce pollutions levels whilst ships are under steam, there has also been an increased drive to reduce emissions whilst vessels are in port.<\/p>\n With it estimated by the European Commission that the associated health costs of emissions from international shipping in Europe could reach \u20ac64.1 billion per year by 2020 \u2013 largely because busy ports are often in very close proximity to urban areas \u2013 one method to reduce such health concerns is for vessels to turn off their main and auxiliary engines when at the berth and instead use shore-side electrical power.<\/p>\n Such shore-side power would come from an electric utility company via the national grid or by an external remote generator, which itself may be powered by diesel or renewable energy sources including wind or solar.<\/p>\n Although there are tax incentives to be had in relation to the supply of shore-side power in the EU pursuant to Directive 2003\/96\/EC, without specific international regulations in place, compelling ports and terminals to provide shore-side power, the significant costs involved in implementing the necessary infrastructure to do so has meant only a handful have done so to date. The environmental impact is, however, not to be underestimated and in Gothenburg, Sweden, where shore-side power is in place it has been estimated that greenhouse gas emissions have been reduced by up to 97% since its implementation.<\/p>\n Whilst there is clear evidence to show that shore-side power goes some way to reducing emissions, it remains to be seen whether port authorities globally will be given the necessary financial support to develop infrastructure to support shore-side power. <\/p>\n<\/p>\n Case study: The position in California<\/strong><\/p>\n When visiting a US port, in addition to the North American ECA, ocean-going vessels must comply with additional low sulphur fuel standards in California. In January of this year, the ECA fuel requirement dropped to 0.1% sulphur from 200 nm out from the coast of the US, Canada and the Caribbean. The ECA will allow either a distillate or non-distillate fuel to be used. However, California has required the use of a 0.1% sulphur distillate fuel from 24 nm from the coast in main and auxiliary engines and auxiliary boilers since January 2014.<\/p>\n California has been conducting a study to determine whether to \u201dsunset” its Ocean Going Vessel (OGV) Fuel Regulations. In accordance with the OGV regulations, this sunset would be based on a finding that the ECA obtains equivalent emission reductions to the OGV regulations. This review was set to conclude in April 2015, however, the evaluation process continues.<\/p>\n There are two key differences between the ECA and the OGV regulations. First, the ECA allows alternative emissions control technologies (AECT) to be used in place of low sulphur fuel. California does not presently allow AECTs. Second, the ECA requires heavy fuel oil to meet the lower sulphur content requirement, whereas, current California mandates the use of marine distillates.<\/p>\n During the sunset review period vessels calling in California ports may qualify for a “temporary research exemption”. In order to qualify vessel operators must notify the California Air Resources Board of their intentions to use the research exemption prior to entering California regulated waters. Vessels seeking the exemption for AECTs are required to provide information describing the equivalent emissions control technology they use, as well as any other measurement data concerning the emissions of particulate matter, SOx, and NOx in their possession. Documentation should include the vessel’s International Air Pollution Prevention certificate and any applicable attachments. Lastly, if the vessel is using a non-distillate fuel at or below 0.1% sulphur, the operator should note the fuel type in use and any ISO or ASTM specifications the fuel meets.<\/p>\n Joe Walsh II, Partner, Clyde & Co<\/i><\/p>\n","protected":false},"excerpt":{"rendered":" With new regulations to protect the environment having been on the horizon for a number of years and now slowly filtering into force, shipowners, ports and terminal operators are having to come to terms with the industrys move towards reducing emissions, writes Tom Gorrard-Smith, Associate, Clyde & Co.<\/p>\n","protected":false},"author":8,"featured_media":4598,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[12],"tags":[],"sponsor":[],"class_list":["post-4597","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-regulation-policy-greenport"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.portstrategy.com\/coastlink\/wp-json\/wp\/v2\/posts\/4597","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.portstrategy.com\/coastlink\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.portstrategy.com\/coastlink\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.portstrategy.com\/coastlink\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/www.portstrategy.com\/coastlink\/wp-json\/wp\/v2\/comments?post=4597"}],"version-history":[{"count":0,"href":"https:\/\/www.portstrategy.com\/coastlink\/wp-json\/wp\/v2\/posts\/4597\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.portstrategy.com\/coastlink\/wp-json\/wp\/v2\/media\/4598"}],"wp:attachment":[{"href":"https:\/\/www.portstrategy.com\/coastlink\/wp-json\/wp\/v2\/media?parent=4597"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.portstrategy.com\/coastlink\/wp-json\/wp\/v2\/categories?post=4597"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.portstrategy.com\/coastlink\/wp-json\/wp\/v2\/tags?post=4597"},{"taxonomy":"sponsor","embeddable":true,"href":"https:\/\/www.portstrategy.com\/coastlink\/wp-json\/wp\/v2\/sponsor?post=4597"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}