International Maritime Organization's Regulation of Sulfur Emission

• Publication year: 2015

International Maritime Organization's Regulation of Sulfur Emission

Jennifer M. Greene

INTERNATIONAL MARITIME ORGANIZATION'S REGULATION OF SULFUR EMISSIONS

Jennifer M. Greene^*

The ocean has captivated the essence of humanity since the dawn of time. Great adventurers and explorers have traversed its vast span and still it is unconquered and alive. There are still unchartered depths, immense unknowns, and a raging power that reside in the ocean and its tides. President John F. Kennedy summarized the human spirit and its fascination with the ocean:

I really don't know why it is that all of us are so committed to the sea, except I think it is because in addition to the fact that the sea changes and the light changes, and ships change, it is because we all came from the sea. And it is an interesting biological fact that all of us have, in our veins the exact same percentage of salt in our blood that exists in the ocean, and, therefore, we have salt in our blood, in our sweat, in our tears. We are tied to the ocean. And when we go back to the sea, whether it is to sail or to watch it we are going back from whence we came.¹

This interconnectivity and innate sense of wonder is merely the start. The seafaring vessels that traverse the ocean have since evolved from the humble wooden whaling ship to hulking behemoths as long as the Empire State building is tall.²

I. An Age of Giant Ships and Giant Problems

The international shipping industry accounts for ninety percent of world trade by volume³ and contributes only 2.7 percent of global greenhouse gases⁴

[Page 42]

Shipping continues to be the most carbon efficient and least environmentally harmful way to transport goods internationally.⁵ However it is far from environmentally friendly. The international shipping industry is still responsible for approximately one billion tons of greenhouse gas; to put this amount into perspective, it is a little more than the country of Germany.⁶

With a growing world economy and advancements in technology, the use of these seafaring vessels has developed an industry with its own set of unique challenges. The biggest obstacle for maritime trade is the environment. Presently, the environment has become a beacon for hope, a political buzzword, a commercial burden, and a difficult topic for all involved in both in demise and hopeful rejuvenation. The environment is being harmed, and the maritime shipping industry is contributing to this bleak fact.

The International Maritime Organization (IMO) predicts a correlated increase in both the demand on the shipping industry and harmful pollution resulting from increased demand; rough estimates predict pollution to increase between 50% and 250% in the next 35 years.⁷ This is a grim projection for the future, but emission controls may be the key to avoiding this bleak statistic.⁸ The big question for maritime trade is the environment: how can we protect our oceans, how can we prevent further harm, and how can we continue to grow this industry in an ecofriendly way?

There is positive news; steps have been taken to answer these questions and develop solutions. Guidance and regulations have been issued on sulfur oxide emission, , environmental standards are being enforced, and industry leaders, like Maersk, have taken strides to both set an example and increase compliance regarding new regulations.

While addressing environmental concerns, there are many problems new regulations cannot control. The International Maritime Organization (IMO), an international regulation body, created standards, but enforcement is not managed by IMO. The cost of compliance is expensive, more than fines for non-compliance. IMO created global standards, but countries have created additional regulations making compliance practically impossible. Lastly, technology is not cost-effective. The difficulties of enforcement and global

[Page 43]

compliance are incentive enough for industry players to skirt responsibilities and avoid environmental regulations.

II. Sulfur Oxide: What, Why and How?

It is estimated that approximately 106,000 seafaring cargo vessels⁹ traverse the oceans. The sheer volume of oceanic traffic greatly impacts the environmental stability of the ocean and the production of greenhouse gases. In particular, the new environmental regulations are targeting the release of sulfur oxides, an atmospheric emission.¹⁰ The sulfur oxide content is caused by the use of bunker fuel to propel the behemoth shipping vessels.¹¹ Bunker fuel is defined as a cheap crude oil distillate, not particularly refined, which produces 3.5% sulfur oxide in vapor.¹² This noxious gas is the reason for the IMO's stringent regulation to stem emissions caused by bunker fuel consumption; the regulation took effect January 1, 2015.¹³

The International Maritime Organization proposed international regulations to reduce the maximum sulfur emission for all seafaring vessels.¹⁴ The IMO created two separate acceptable sulfur emission levels depending on where a vessel is located.¹⁵ The ocean is either an Emission Control Area (ECA) or not.¹⁶ The ECAs are the Baltic Sea, the North Sea, The English Channel, and waters up to 200 miles from the coast of the United States and Canada.¹⁷ The sulfur oxides allowed within the ECAs shifted from 1.0% to 0.1% by January 1, 2015.¹⁸ This regulation is a 90% decrease of sulfur content in ECAs and has

[Page 44]

caused backlash from shipping industry giants.¹⁹ The IMO has also approved maximum permissible sulfur content outside of ECAs from 3.5% to 0.5% by 2020.²⁰ The regulation will be implemented immediately, but will be revisited in 2018 to assess the feasibility of technological upgrades.²¹ The revisit will determine if the deadline for implementation will need to be postponed to 2025.²² This non-ECA IMO regulation has a more dramatic impact than the first regarding the ECAs because the non-ECA area will experience a 600% decrease in sulfur output.²³ \

III. ENFORCEMENT PROBLEMS

The vessels are not solely owned by one company or manned by one particular country; this causes great difficulty in regulating vessels both in and out of ECAs.²⁴ The IMO and the UN Framework Convention on Climate Change (UNFCCC) have both taken steps towards stricter regulations of greenhouse gas emissions.²⁵ The difference between the two entities is noted in the geographic activity areas the regulations affect.²⁶ The IMO is mainly concerned with activities outside of the national boundaries and does not promote a more favorable treatment for different countries; the UN looks to cut emissions by focusing on a developed country holding itself to a higher standard of compliance.²⁷ The UN framework is derived by comparing the financial stability of developed nations with the social responsibility to shoulder the burden of global standards in order for less developed countries with weaker economies to grow while enjoying the ability to partake in international maritime trade.²⁸ These different frameworks create tension as the IMO has released a blanket regulation that will negatively affect the ability of less developed countries to compete in international maritime trade.

[Page 45]

IV. Problematic Regulatory Additions

In concurrence with the IMO regulation in non-ECA areas, the European Commission has decided to also enact the 0.5% sulfur limit by 2020; it will not be reconsidering or evaluating the feasibility of this action.²⁹ This particular regulation has caused dismay with both international shippers and predominantly localized European shippers because it adds an additional layer of confusion to the already strained regulatory scheme.³⁰ The European Commission is standing firm on its decision to regulate at a stringent level, regardless of the finding the IMO determines in 2018.³¹ This duel standard of regulation causes considerable challenges for vessels operating predominantly in European Commission ECA, and also poses an increased risk for non-complaint vessels only sporadically entering the European Commission ECA³² With different regulatory schemes impacting different vessels in different ECAs at different times, it is understandable why the shipping industry is up in arms about the problems bound to arise from the lack of uniform regulations.³³ An official from the Cyprus Shipping Chamber explains "[the] regulations proposed will require that ships trading to Europe introduce additional [environmental compliance] measures both in terms of procedures, monitoring, reporting [and] equipment".³⁴

Shipowners have threatened to "flag out", a backhand solution to the European Commission's ECA regulation, by adopting a non-EU country to home the vessel.³⁵ This negatively affects the credibility of the regulation and also causes internal strife within EU shipping companies and non-EU countries.³⁶ Instead, it is argued that the regulatory changes must be enacted at an international level via the International Maritime Association.³⁷ In order for the regulations to take affect and truly make a difference in the sulfur oxide pollution levels, a communal acceptance will need to be reached.

[Page 46]

V. The Cost Benefit Analysis of Conservation

The cost of decreasing sulfur oxide pollution is dramatic; the London-based International Chamber of Shipping approximates that the increased regulatory environment will cost the shipping industry an average of $50 billion dollars a year.³⁸ This dramatic increase in cost to an already budget-constrained industry will create an influx of unemployment.³⁹ A present-day example is the Swedish Stena Line, a European ferry operator, who has already shed 800 jobs, equal to 30% of its workplace in order to accommodate the increased cost of compliance.⁴⁰ Stena Line's CEO explained that "[vessels] in the [European Union] area will adopt the new rules, but the vessels that are just crossing this area will have every incentive in the world to cut a corner".⁴¹ The price of compliance is considerable, not only to the...