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Cost-effective to cut ship NOx emissions

By supplementing NOx Emission Control Areas with economic instruments, ship NOx emissions can be cut faster and further.

A new study has analysed the effectiveness, costs and health benefits of applying two specific policy instruments for reducing NOx emissions from shipping in the Baltic Sea, the North Sea and the English Channel up to 2040. One instrument was to establish a NOx Emission Control Area (NECA), the other to supplement the NECA with a NOx levy, where the revenue would be used to fund the uptake of NOx abatement measures in the sector.

Emissions of air pollutants – including sulphur dioxide (SO2), nitrogen oxides (NOx) and small particles (PM2.5) – from shipping in European sea areas, contribute significantly to serious damage to health and the environment. According to a Danish study, ship emissions cause about 50,000 premature deaths per year in Europe. In several coastal countries, ship emissions are responsible for more than one fifth of the total fallout of sulphur and oxidised nitrogen – pollutants that cause damage to ecosystems and biodiversity through acidification and eutrophication.

As a result of both EU and global regulations, sulphur emissions from ships are expected to gradually come down, but there is currently no regulation that will ensure any significant cuts in their NOx emissions (see box).

An analysis of the potential for reducing NOx emissions from shipping was presented last year in a study prepared jointly by IVL Swedish Environmental Research Institute and CE Delft (see AN 3/2016). Projections were given for two main scenarios – one business-as-usual (BAU), and another with a NECA in place from 2021. In addition, the study evaluated several policy instruments that could be implemented in addition or as an alternative to the NECA. These policy instruments would address NOx emissions from the entire fleet, not only from newly built ships.

This new study builds on the one from last year by using the same emission projections. It has been expanded to include a more in-depth analysis of the abatement costs and new estimates of the resulting health benefits, thus making it possible to compare the monetised health benefits with the costs. It has also estimated the resulting reductions in nitrogen deposition on land and at sea.

Current NOx emissions from ships in the Baltic Sea and the North Sea were estimated to amount to 830,000 tonnes. Under the BAU scenario, emissions in 2040 are expected to come down slightly, by about 14 per cent, to 715,000 tonnes. Assuming that a NECA is in place from 2021, emissions in 2040 would instead be reduced by nearly two-thirds, to 306,000 tonnes.

Introducing a levy & fund on top of the NECA could reduce ship NOx emissions further and much faster. As early as 2025, emissions could be cut by more than two-thirds, and by 2040 they could be cut by three-quarters, to 220,000 tonnes (see Figure).

Figure 1: NOx emissions from international shipping in the Baltic Sea, the North Sea and the English Channel 2005–2040 under a) business-as-usual (BAU); b) a NOx emission control area (NECA), and; c) a NOx levy & fund system.

Figure 2: Comparison of costs and monetised health benefits (VSL) for the NECA and the combined NECA + levy & fund scenarios (million euro).

It should be noted that the study used the rather cautious assumption that only three-quarters of the existing ships would be retrofitted with emission abatement technology. Despite this, the use of economic instruments would cut NOx emissions by about 500,000 tonnes per year on average throughout the 2020s. For comparison, this is nearly as much as the current annual total land-based NOx emissions of Sweden, Norway, Denmark and Finland combined.

Altogether over the 20-year period 2021–2040, the establishment of a NECA would cut ship NOx emissions in the Baltic Sea and the North Sea by 4.5 million tonnes at a cost of about €6.2 billion. Using the lower health valuation (VOLY – value of life year lost), the accumulated     health benefits amount to €12.5 billion, resulting in a net socio-economic benefit of €6.6 billion.

When the NECA is combined with a levy & fund system, the accumulated emission reductions would more than double to reach 9.9 million tonnes, increasing the monetised health benefits to €28.3 billion (VOLY). The costs would amount to €16.5 million, also more than a doubling, resulting in a net socio-economic benefit of €11.8 billion.

A comparison of annual costs with annual monetised health benefits that instead uses the higher health valuation (VSL – value of statistical life) results in even higher benefit-to-cost ratios, where the benefits exceed the costs by between five and eight times.

Not surprisingly, it is the coastal countries that will gain the most from ship NOx reductions – the biggest health improvements are expected in France, Germany, UK, Netherlands, Poland, Belgium and Denmark.

On top of these significant health benefits, there will also be environmental gains as a result of lowered input of eutrophying nitrogen to terrestrial and marine ecosystems. The nitrogen fallout on land areas would be reduced by up to 80,000 tonnes per year, and inputs of nitrogen to the Baltic Sea and the North Sea would be cut by up to 45,000 tonnes per year, which equals approximately 20 per cent of the current annual deposition of oxidised nitrogen to these two sea areas.

The authors conclude that a levy & fund appears to be a very effective complement to a NECA, with the potential to bring noticeable health and environmental benefits shortly after its enforcement.

Christer Ågren

The study “Cost-benefit analysis of NOx control for ships in the Baltic Sea and the North Sea” (March 2017) was commissioned by AirClim and prepared by IVL Swedish Environmental Research Institute. It can be downloaded at:

Table: Calculated costs and benefits for the NECA and the combined NECA + levy & fund scenarios (million euro).

Year NECA NECA + levy & fund
Benefits Costs Net Benefits Benefits Costs Net Benefits


2021 80 240 30 40 210 1,220 3,950 820 400 3,130
2025 350 1,190 170 180 1,020 1,490 5,050 940 550 4,110
2030 620 2,200 300 320 1,900 1,450 5,150 870 590 4,280
2035 880 3,360 430 450 2,930 1,420 5,320 760 670 4,560
2040 1,150  4,520 560 580 3,960  1,390  5,490 720 670 4,770
2020–2040 accumulated 12,700 - 6,200 6,600 - 28,300 - 16,500 11,800 -

Ship NOx control

The only existing regulation of NOx from international shipping is in Annex VI of the MARPOL Convention under the International Maritime Organization (IMO). However, the NOx emission standards in this regulation solely apply to newly constructed ship engines, and the currently (since 2012) applicable Tier II standard accomplishes just a modest 15 to 20 per cent emission reduction compared to an unabated Tier I engine.

There is however a stricter Tier III standard that requires emission reductions of about 80 per cent compared to a Tier I engine, but this applies only to newly built ships in designated NOx Emission Control Areas (NECA), which currently only exist in North America.

While the Tier II standard can be achieved by internal engine modifications that adjust combustion parameters, bigger changes are needed to reach the Tier III standard.

There are several different abatement options for reducing emissions of NOX from marine engines, including:
Exhaust gas after-treatment, where the main option is selective catalytic reduction (SCR).

Combustion modification using techniques such as exhaust gas recirculation (EGR) or methods where water is introduced into the engine.

Switching from marine fuel oils to, for example, liquefied natural gas (LNG) or methanol.

Reduced fuel consumption, e.g. through slow steaming.

SCR, EGR and using LNG as fuel can all reduce NOx emissions to Tier III levels. Of these, SCR has the longest history of marine applications, LNG is increasingly being used as a marine fuel, and while EGR is said by engine manufacturers to live up to the standard, so far there is limited data from practical applications.

Because the NOx standards apply only to newly built ships and ships have a very long lifetime, the introduction of economic instruments such as a levy & fund can provide a very useful complement, by also ensuring significant emission cuts in the short term.



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