Implementing the stricter ship fuel sulphur standard of 0.1 per cent in the Baltic Sea and the North Sea, is estimated to save up to 16,000 lives per year in the EU in 2020.
In July, the European Commission proposed to align EU legislation on ship fuel sulphur with the new international standards adopted by the International Maritime Organization (IMO) in 2008, a proposal that is now being debated in the European Parliament and the Council.
Concerns about the new standards have been raised by various industry groups, primarily over the perceived high implementation costs of the 0.1 per cent sulphur limit that will apply in designated sulphur emission control areas (SECA) from 2015. At present only two European sea areas, the Baltic Sea and the North Sea (including the English Channel), have such SECA status. (See Box.)
When this new SECA limit of 0.1 per cent sulphur comes into effect in 2015, emissions of sulphur dioxide (SO2) from international shipping in the Baltic Sea and the North Sea are expected to come down by more than 90 per cent, and those of primary particulate matter (PM) to shrink by 80-90 per cent. Emissions of nitrogen oxides (NOx) are not expected to be markedly influenced by the fuel standards as such. (See Table.)
Table. Emissions of SO2 and NOx in the Baltic Sea and the North Sea in the year 2000 and projections for 2015/2020 assuming no implementation of the 2008 IMO standards (Baseline) or full implementation (IMO). (tonnes)
Expressed in absolute figures, annual SO2 emissions in these two sea areas are projected to be cut by 466,000 tonnes in 2015, and by 528,000 tonnes in 2020. The overall emission reduction over the five-year period 2015-2020 would thus add up to approximately 2.5 million tonnes of SO2, equalling more than eighty times the current total national SO2 emissions from Sweden.
Through chemical reactions in the air, SO2 and NOx are converted into very small airborne particles, sulphate and nitrate aerosols, which are linked to premature deaths. A recent Danish study estimated the number of premature deaths in Europe caused by air pollutant emissions from international shipping to amount to approximately 50,000 per year.
According to the cost-benefit analysis prepared for the Commission, implementation of the SECA limit is calculated to reduce the number of annual premature deaths due to PM2.5 in the EU's 27 member countries by 12,000 cases in 2015 and by more than 16,000 cases in 2020 (see AN 3/10).
In addition to health impacts, emissions of SO2 are the main cause of acidification, severely affecting the biodiversity of freshwater as well as terrestrial ecosystems. In 2000, deposits of acidifying air pollutants exceeded the safe limits (critical loads) for acidifying substances over 280,000 square kilometres (22%) of sensitive forest ecosystems in the EU. Most of the affected areas are located in the northern parts of Europe and are highly impacted by emissions from shipping in the SECA areas.
According to the Commission, the cost to the shipping industry of the new SECA limit is expected to amount to between €0.6 billion and 3.6 billion per year in 2015 – the upper bound assumes a fuel switch to lower-sulphur distillates, while the lower bound of costs is based on ships fitting exhaust cleaning techniques (scrubbers).
However, these costs are far outweighed by public health savings of up to €16 billion per year in 2015. According to the Commission's Impact Assessment, the health benefits associated with implementation of the SECA limit amount to at least between €5 and €25 for every €1 spent. In addition, there are significant benefits associated with environmental improvements, such as reduced acidification of ecosystems and less damage to buildings and cultural monuments.
As regards the costs and the perceived risk of a modal shift from shipping to other means of transport, the European Maritime Safety Agency (EMSA) has analysed the findings of eight different studies (published in 2009 and 2010) on the impacts of implementing the 2015 SECA standard.
EMSA found that assumptions on the expected future price vary widely between the different studies, mostly ranging between US$500-900 per tonne. A price at the higher end of this range would imply a price difference (compared to 1 per cent sulphur HFO) of about 60 per cent.
Five of the eight studies tried to assess the effect of the increased fuel costs for shipping on the total transport costs, and the potential for modal shift from shipping to rail and road. EMSA concludes that there are certain risks for such a modal shift, but "only within certain limited routes and under certain (high-end) fuel price scenarios."
It is further concluded that if the price for low sulphur fuel stays around the levels predicted in most studies, "short sea shipping will remain competitive towards other modes even if volumes will be lost", and that if the fuel price reaches levels around US$1,000 per tonne, "the effects will be more severe but still many short sea shipping routes will remain competitive."
It is remarkable that only one of these five studies also takes into account the cheaper alternative abatement options available. Not surprisingly, this study found that where scrubbers were assumed to be applied by ship operators, the compliance costs were much reduced, so there would be almost no risk of modal shift.
Perhaps even more remarkable is that none of the studies appear to assume that ships will take measures to reduce fuel consumption, in spite of the fact that increased fuel prices will make a number of available operational and technical measures to reduce fuel consumption cost-effective. For example, a study on policy measures to reduce greenhouse gas emissions from ships found that at a ship fuel price of US$700 per tonne, it would be cost-effective (in this context meaning that savings would outweigh costs) to reduce fuel consumption by 31 per cent.
One obvious way to reduce fuel consumption is to reduce speed – an option that would simultaneously cut costs and reduce emissions of air pollutants, including the main greenhouse gas, carbon dioxide.
Responding to industry concerns over increased costs, the Commission presented in September a paper outlining a number of measures aimed at minimising the compliance costs, including various type of financial support (see AN 3/11).
The Commission has made it clear that a delay in the 2015 SECA limit – as has been suggested by some industry groups – is not an option, neither at EU level nor attempting to push for a delay at the IMO.
Interestingly, the overwhelming majority of respondents to the Commission's public consultation wanted more European sea areas to be designated as SECAs, as this would both bring much needed health and environmental benefits and address intra-sectoral competition issues.
While the Commission agrees that such an extension of the SECA coverage is likely to offer net benefits and address competitiveness concerns, it states that any such proposals to the IMO must come from member states bordering the sea area in question. The same applies to designation of nitrogen oxides (NOx) Emission Control Areas, of which there are currently none in Europe.
On the other hand, there is nothing to prevent the EU from establishing emission standards for all ships entering EU ports, for example a standard equivalent to the 0.1 per cent SECA sulphur limit, that could be included in the revised EU directive on sulphur in fuels. Legally, the standard could also be made mandatory in the non-SECA sea areas and apply to ships in EU territorial waters, and likely also within the exclusive economic zones.
The Commission's proposal and impact assessment can be found at: http://ec.europa.eu/environment/air/transport/ships_proposal.htm
Emission control areas – background It was back in the 1980s that Sweden and Norway brought the issue of ship air pollutant emissions, especially those of sulphur dioxide, to the attention of the United Nation's International Maritime Organization (IMO). After nearly ten years of negotiation, agreement was reached in 1997 to add an air-pollution annex (Annex VI) to the IMO's marine pollution (MARPOL) Convention. The annex came into force in 2005, and set a global cap of 4.5% on the sulphur content of marine fuel oil. For comparison, the global average ship fuel sulphur content is around 2.5 – 3%, a level that has stayed more or less constant for at least twenty years.
Annex VI also established provisions for the designation of special sulphur emission control areas (SECAs) with more stringent control on sulphur emissions. For these areas, a limit on the sulphur content of fuel used onboard ships was set at 1.5%. Alternatively, ships could fit an exhaust gas cleaning system (scrubber) or use other methods to limit their SO2 emissions. The Baltic Sea was the first SECA to enter into effect in 2006, followed by the North Sea in 2007.
Moreover, Annex VI set limits on the emissions of NOx from new ship engines from the year 2000, but these first NOx standards were so weak that in practice they did not have any appreciable effect.
These first international ship emission standards were obviously much too weak to achieve the needed reductions in emissions. So in October 2008, after three years of negotiating a revision of Annex VI, IMO member states unanimously agreed to strengthen the emission standards. It was decided that the sulphur content of all marine fuels would be capped at 0.5% worldwide from 2020 (subject to a review in 2018). In a first step, the global cap was lowered to 3.5% as from 2012. The SECAs faced stricter limits of 1% from July 2011 and 0.1% from January 2015.
NOx emission standards for new ship engines were also strengthened. In a first step, emissions would be cut by 16-22% by 2011 relative to the 2000 standards, and in a second step by 80% by 2016. The latter limit applies only in specially designated NOx ECAs, however.
In March 2009, the United States and Canada applied to the IMO to have their coastal waters out to 200 nautical miles (370 kilometres) designated as a combined sulphur and NOx emission control area. The North American ECA entered into force in August 2011. Consequently, the 0.1% SECA limit will also apply here as from 2015.
IMO's revised MARPOL Annex VI entered into force on 1 July 2010, which means that the new emission standards are already binding.