DeCarbonizing the Shipping Sector Can we get Consensus

De-Carbonizing the Shipping Sector – Can we get Consensus Professor Samantha Hepburn Deakin Law School Deakin Energy

Why is Shipping a Concern? • Over 90 percent of world trade is carried across the world’s oceans by some 90, 000 marine vessels. • The sector is growing • These ships use dirty fossil fuels and produce carbon dioxide emissions that significantly contribute to global climate change and ocean acidification as well as being damaging to human health. • Ships emit various global warming pollutants, including carbon dioxide (CO 2 ), black carbon (BC), nitrogen oxides (NOx) and nitrous oxide (N 2 O). • These pollutants all contribute to global climate change either directly, by acting as agents that trap heat in the atmosphere, or indirectly by aiding in the creation of additional greenhouse gases.

Global Climate Change Imperatives – COP 21 and Beyond • • • • COP 21 Paris Conference shifted emphasis towards national action; Confirmed the below 2 °C goal and made reference 1. 5 °C; Sought to balance emissions and removals as supplementary goals; Introduced global stock-taking every five years with no backsliding; Clearer differentiation between developed and developing countries; Improved recognition of adaptation and the inclusion of loss and damage; New developments on climate finance, including stronger reporting provisions; Renewed recognition of market mechanisms. Focused these core issues: Targets need to be exceeded and strengthened Implementation rules must be developed Support for developing countries actioned. A new sustainable growth model is underway

Shipping Emissions and Climate Change • According to International Maritime Organization (IMO) estimates, world shipping is responsible for about 3 per cent of global CO emissions. • Of the total emissions from the transportation sector, shipping accounts for 10 per cent, road traffic 73 per cent and air traffic 12 per cent. • Losses from pipelines contribute 3 per cent, and rail traffic 2 per cent. • Experts predict that, unless further measures are taken to protect the climate, emissions from the transportation sector will double by 2050. • The prediction is that they could treble in the shipping sector • Without introducing measures to reduce emissions from shipping, carbon dioxide emissions from the industry could rise to 1. 48 billion metric tons by 2020 - equivalent to putting 65 million new cars on the road • If global shipping were a country it would be the sixth largest producer of greenhouse gas emissions. Only the United States, China, Russia, India, and Japan emit more carbon dioxide than the world’s shipping fleet 2

Shipping Emissions and Climate Change • Black carbon –soot - is made up of fine particles created by the incomplete combustion of a carbon fuel source, such as oil or coal. • Aging engines and poor engine maintenance can also contribute to incomplete combustion. • Black carbon is a potent warmer both in the atmosphere esp when deposited on snow and ice. • Black carbon contributes to warming in two ways – through direct absorption of heat in the top of the atmosphere, and by lowering the Earth’s albedo, or reflectivity • Reduced albedo means less solar radiation is reflected back into space and will instead be absorbed, thereby heating the Earth’s surface. • Since more light is reflected from the Earth’s surface in the polar regions it is likely that the impacts of black carbon will be more acutely felt in these areas

Shipping emissions and Climate Change • • • A quarter of all black carbon occurs in environmentally sensitive regions like the Arctic where it has a unique ability to exacerbate warming. On snow and ice – even at very low concentrations – black carbon triggers melting. Black carbon predicted to be responsible for at least 30 percent of Arctic warming. The Arctic is currently warming at twice the rate of the rest of the world International shipping contributes about 133 thousand metric tons of black carbon to the atmosphere each year, approximately 1. 7 percent of global anthropogenic emissions of black carbon. While black carbon from shipping is mainly emitted over the oceans, plumes can travel great distances and deposit on areas far from the initial emission source. For example, plumes of black carbon from Asia are believed to deposit on snow in the Arctic. In some regions, including the Gulf of Alaska, shipping can contribute an additional 40 percent to atmospheric concentrations of black carbon. The Alaska region is particularly vulnerable to black carbon pollution from shipping as the routes between North America and Asia significantly increase the amount of black carbon found in this region

Shipping Emissions and Climate Change • The increasing amounts of carbon dioxide being absorbed by the ocean is changing their very chemistry, causing them to become more acidic and jeopardizing the future of coral reefs and other organisms that produce calcium carbonate shells and skeletons, which could result in the breakdown of many important marine food webs, including those upon which humans depend. • The oceans are also warming, which is causing sea ice to melt and sea levels to rise, all of which disrupts marine ecosystems and ocean circulation. • Huge impacts of these changes as large areas of coastline are lost, weather patterns change and food production methods are altered

What to do? • Immediate reductions in black carbon emissions could play a particularly important role in slowing climate change, because reductions will result in almost immediate cooling benefits.

What to do? • The need to reduce emissions from ships has been clearly understood by the IMO. • In 1997 the Protocol to the International Convention for the Prevention of Pollution from Ships, known as MARPOL Annex VI, was implemented which currently regulates air emissions from 95. 4% of the worlds’ shipping tonnage. • However, more stringent global measures to reduce emissions from individual ships by 30 per cent by 2030 are crucial.

What to do? • Shipping companies have many methods at their disposal for reducing emissions of global warming pollutants. These include: • Slowing down, which not only reduces emissions but saves fuel and therefore money for ship operators; • Switching to cleaner fuels; • Implementing technical and operational measures that can improve fuel efficiency. • Many shipping lines, including Germanischer Lloyd, Hapag-Lloyd, Nippon Yusen Kaisha (NYK), and Maersk, have already implemented slower steaming protocols to both save money and cut their emissions.

Slowing Down • • Slowing down, even by a small amount, can result in significant fuel savings and emissions reductions. Slowing some ships by just five knots, or 20 percent, resulted in savings of around 50 percent on fuel costs. Restrictions on vessel speed would reduce emissions of carbon dioxide, black carbon, nitrogen oxides, and nitrous oxide. Recently, as the price of fuel has been increasing, shipping lines have been voluntarily reducing their speeds to realize financial gains through fuel savings. • The French line CMA CGM stated that in order to minimize fuel consumption most lines will begin steaming at “economic speeds. ” • Compared to other forms of transport, ships traveling at slow speeds have been found to be far more efficient and less polluting roughly ten times more efficient than trucks and at least a hundred times more efficient than air transport. Ships travelling at very high speeds have been found to have similar energy demands to those of airplanes. • Since the fuel consumption of a ship does not depend primarily on its size, but rather on its speed, the same amount of transport work can be achieved by more, slower ships, as by fewer, faster ships

Switching to Cleaner Fuels • Residual oil used by most oceangoing ships is of low quality. It is used because of its low cost, around $550 per metric ton. • Residual fuels must be heated to about 140°C before being used. A proportion of the fuel, the sludge which cannot be put though the engine, must be removed, and is regularly burned on board for disposal. • The sulfur content of residual fuels varies according to the crude stock, but globally averages about 2. 5 percent. • In contrast, cleaner fuels such as marine diesel oil contain 0. 5 percent sulfur, while marine gas oil contains only 0. 1 percent sulfur. • Switching to low-sulfur fuels would reduce emissions of fine particles, including black carbon, as well as carbon dioxide, nitrogen oxides and nitrous oxide, and enable the use of other emissions control equipment that the sulfur levels in residual fuel would otherwise impede. • Use of marine diesel oil and marine gas oil causes a reduction in particulate matter and nitrogen oxide releases compared to the use of heavy fuel oil. • The IMO projects a switch from heavy fuel oil to marine diesel oil would result in a four to five percent reduction in carbon dioxide emitted per metric ton of fuel consumed. • The switch to clean fuels would also eliminate the need for purifiers, heating of fuel tanks and sludge burning, which will reduce costs for vessel owners and operators.

Technical and operational measures to improve fuel efficiency • Weather routing, improved efficiency of logistics and voyage planning, fuel-economy standards for ships, and optimal ship and engine operations. • The use of “cold ironing” at ports, where ships shut off their diesel engines and are connected to shore-based power for their electrical needs reduces direct emissions in port areas and allow energy needs to be met by low-emission sources, such as wind or solar energy. • Improved hull design can achieve reductions in emissions through reduced fuel consumption. • A bulbous bow can increase a ship’s fuel efficiency by reducing its wavemaking resistance. • A stern flap, a small plate that extends behind a ship’s transom, lengthening the bottom surface of the hull, can reduce a ship’s resistance and thus increase fuel efficiency by a few to several percent. • Special coatings applied to propellers may reduce fuel use by four to five percent, while simultaneously reducing maintenance requirements. This practice could likely pay for itself within a year. • Sail or kite-assisted propulsion can provide zero-emissions wind power, and plans are already underway to employ such technologies on some new and existing cargo vessels. • DK Group has developed an Air Cavity System (ACS), which it says can reduce the shipping industry’s emissions by up to 15 percent per year.

Legal Position to Date • Modern shipping operates under a complex set of international and domestic regulations. • Traditionally, changes in regulations have been event-driven. For example: the Titanic disaster, which ultimately led to the International Convention for the Safety of Life at Sea (SOLAS) Convention , the Exxon Valdez oil spill, which resulted in the USA, the Oil Pollution Act (OPA 90) , and the ‘ 9/11 attack’, which resulted in the International Ship and Port Facility Security (ISPS) Code. 33 34 35 • Environmental regulations have generally lagged behind those of other industries. • But - increased focus on both global and local environmental issues in general, combined with the growing realisation of the actual pollution burden imposed by shipping, has led to an upsurge in both international and national regulations.

UNCLOS • Article 21 permits states to “establish particular requirements for the prevention, reduction and control of pollution of the • This article states that coastal states may adopt laws and regulations for the preservation of the • However, for ships in innocent passage, national regulations will not apply. • A vessel is only subject to such regulations when it is calling at one of the nation’s ports. • Hence, for the individual states there are no legal means of regulating international traffic only passing through

MARPOL (International Convention on the Prevention of Pollution from Ships) • MARPOL is the main IMO Convention regulating emissions to air from shipping. MARPOL was designed to minimize pollution of the environment through the complete elimination of pollution by oil and other harmful substances and the minimization of accidental discharge of such substances. • All ships flagged under countries that are signatories to MARPOL are subject to its requirements, regardless of where they sail and member nations are responsible for vessels registered under their respective nationalities. • The Convention is split into six annexes concerned with preventing different forms of marine pollution from ships. Annex VI of MARPOL regulates emissions to air from marine engines. • Annex VI applies to all ships 400 GT and above, and to all fixed and floating drilling rigs and other platforms. • The revised Annex VI implements requirements for a considerable reduction of air pollution from ships, especially in relation to SOx and NOx, and in the so-called ECA areas.

No Sector Involvement with Climate Change • Despite being a major contributor to climate change, lobbying occurred to preclude being involved in Kyoto or 2015 Paris Agreement. • No sector-wide emission reduction targets under the UNFCC • Sectoral targets not set because of heavy international trade exposure

Developments – New IMO Deal • IMO entered into a deal that its 170 members will reduce emissions by 50% compared wth 2008 levels. • Ships will be required to be more energy-efficient and use cleaner energy – solar, wind. • Following this – member states need to introduce domestic laws setting emission reduction targets for their shipping industry. • These targets could also be applied to ships that call at their ports. • Domestic laws could connect with international regulation eg European Union regulation requiring ship owners and operators to monitor, report and verify CO₂ emissions from certain vessels that dock at European ports. • May alter the way shipping companies operate. • It is an opportunity to address climate change.

Impediments • Not all countries are on board. • Island nations wanted a higher target. United States, Brazil, Panama and Saudi Arabia strongly oppose it. • Difficulty in accurately calculating the precise amount of fuel used during shipping operations. • Difficulty to allocate maritime emissions to specific countries. • Confusion – eg flags of convenience. A ship’s owner registers the vessel in a country other than their own, and fly the flag of the country where registered. • Shipping corporations may potentially also use flags of convenience to avoid mandatory emission reduction targets.

Impediments • Compliance is a problem. • While the flag State has the primary responsibility to implement relevant rules concerning the regulation of greenhouse gas emissions from international shipping, the flag State responsibility alone is inadequate to secure effective compliance with relevant rules. • The real issue is the extent to which coastal and port States can regulate greenhouse gas emissions from vessels in international law. • While port States perform a valuable role in effectuating global rules provided in MARPOL Annex VI, and now the IMO deal, port State control can be difficult

Recommendations for Regulation • Shipping fleets should implement technical and operational measures to reduce global warming pollution immediately in accordance with IMO deal. Such measures include speed reductions, weather routing, fuel switching and specialized hull coatings. • Fleets should begin to implement longer-term measures to reduce global warming pollution, such as fuel efficient design of new ships and engines created specifically for slow steaming. Domestic environmental protection authorities should find that the carbon dioxide, black carbon, nitrogen oxides and nitrous oxide emissions from ships significantly contribute to climate change and ocean acidification and therefore pose a threat to public health and welfare. • Domestic environmental protection authorities should regulate global warming pollutants for ships operating within the Exclusive Economic Zone. This can be done by setting emission standards and by requiring specific operational procedures, such as speed restrictions. • The IMO should set international emission standards to reduce global warming pollutants from the shipping industry.

Australian Emissions Regulation • The Australian Maritime Safety Authority (AMSA) is the Commonwealth authority that regulates maritime certification of commercial vessels. AMSA ensures maritime safety and ship sourced pollution prevention in Australian instituting compliance with international guidelines (including SOLAS, MARPOL, STCW, etc. ). More specifically, AMSA was established under the Commonwealth Australian Maritime Safety Act 1990 with the power to promote maritime safety and protect the marine environment from pollution from ships. • It has the power to do all things necessary or convenient in their discharge of these responsibilities and may arrange for a State to provide services or undertake a function on its behalf. The jurisdiction of AMSA extends to all defined Australian waters up to 350 n. M off shore. • The current sulphur limit in NSW is 3. 5% as set by AMSA as there is no current reference to IMO MARPOL Annex VI - Regulations for the Prevention of Air Pollution from Ships in the NSW Regulations. The EPA has issued an introduction to emission components and their health effects. Further, the Commonwealth does not have emission regulating legislation for internationally flagged vessels beyond what is ratified by the IMO. • Several ports around the world offer reduced port fees and/or investment subsidies for visiting ships with emission abatement measures installed. • There also clean cargo initiatives, targeting owners with improved fuel efficiency/ One of the most recognized port initiatives in order to reduce port emissions is The Clean Shipping Index, CSI. This index is an online tool which gives a rating to ships and shipping companies based on their environmental performance. • Currently, NSW has not included reference or formal adoption of Commonwealth Orders related to Air Pollution from Ships (MARPOL Annex VI)

The Future: • All new ships are also designed to use less fuel per cargo unit; this also reduces CO 2 emissions proportionally. The first hurdle to overcome for ships operating in Australian waters is the global limit of 0. 5% sulphur in fuel by 2020 (or 2025 at latest, pending 2018 fuel availability review) • Ship owners do not benefit commercially by having SOx abatement measures in place before this regulation is enforced; the typical charterer does not pay extra for low-emitting ships. Ship owners now also monitor closely how the new sulphur regulations will be enforced. • Since there is quite low chance to be checked for compliance and fines are modest (approximately $7, 000 AUD in EU and approximately $30, 000 AUD in the USA), many owners may be tempted to be non-compliant unless the scrutiny regime is tightened. • Since all emission reducing solutions, perhaps except LNG fuel, increase the ONLY be achieved by stricter regulations.