My presentation on emissions regulations may be a little controversial because I’ll discuss about things that more and more people start to realize but so far nobody likes to speak about.
The IMO makes environmental regulations by looking at one issue at a time and that sometimes results in regulations which have conflicting effects with other environmental issues. The pressure at IMO to do something fast is high and as a result, the regulation may come before technologies are ready or without enough scientific justification for the effectiveness of the regulation, such as the example of ballast water treatment or even by over simplifying the problem, like in my opinion is the example of EEDI and EEOI. This is not a 100% IMO’s fault because Member States threaten to proceed with their own regulations if IMO doesn’t do it.
ECAs will come down to a limit of 0.1% sulfur from next year with an intention for a global ECA for fuel to be used to contain only 0.5% of sulfur from 2020. However, science tells us that reducing SOx warms the atmosphere i.e. SOx cools the atmosphere according to an article from a scientific magazine actually written by eminent scientists, two of these scientists having actually been involved in the IMO studies. The article says that sulfur dioxide cools the atmosphere and if we enact these SOx regulations, it will be a general warming much earlier than before; after 70 years instead of 350 years. Also science is telling us that reducing SOx increases weather severity. The UK Met. office says ”because we’re reducing sulfur aerosols over the Atlantic the water in the Atlantic gets warmer and that creates bigger hurricanes and droughts” . In order to create a low sulphur fuel, we will emit more CO2. The IPIECA has made a submission to IMO saying that ”in order for us to comply with a demand that you are going to have in the future, we need to increase our CO2 emissions by 15 % from the refineries” However, SOx it’s not good to breath it but it has a short lifetime, therefore, in our sense and nonsense box we can say that it makes sense to use low-sulfur fuel near shores and populated areas, but I cannot see this sense of requiring low sulphur if you’re in the middle of the Atlantic when you actually need it to cool the atmosphere.
NOx destroys the methane in the atmosphere which is 25 times more potent in warming it than CO2. Also if the SOx reduction causes some warming there is a great fear that the warmer water over the East Siberian Sea will thaw the Siberian permafrost which will unleash vast amounts of methane. Also don’t forget that in order to comply with NOx reduce limits, the new type engines emit more CO2 in the atmosphere. So, again NOx being a health issue, it would make sense to require its reduction near ECAs but to let it loose in the middle of the Atlantic.
Ballast water treatment is also a big subject. NOAA advises that ocean currents carry live organisms for large distances. Currents go everywhere. I think the ballast water management systems requirement is very costly and in the end, the result will be minimal. Invasive species cause ecological and economic damages; actually the news are not all bad, for example, the zebra muscles cleaned the Michigan lakes water which was polluted, because they filter the water and now it’s totally clear! In our sense and nonsense box, we should require cost-effective measures such as the ballast exchange however we should not think that we can stop nature nor require machines not proven to be fit for purpose.
In order to regulate something you need to know how much it is. So how much CO2 is emitted from shipping? According to the updated IMO study, fuel consumption times 3.16 gives you the CO2 each tone of fuel emits to the atmosphere. Experts say 369 million tones, however the IEA says 234/ 247, that’s a 50% difference! In other words, we don’t know how much CO2 is emitting from shipping. Can we estimate how much the CO2 will be in the future if we regulate or if we don’t regulate? Again according to the IMO study, it may be 0.6 billion by 2050 or it may be 7+ billion; that is an order of 10 difference! Again that tells me that we have no idea if we need to regulate or if you don’t need to regulate CO2.
IMO has three types of measures; technical – the EEDI which is more or less finished, operational – the SEEMP which is finished? I put a question mark here as I believe they’ll come back to it soon and also market based instruments. I was surprised to see a submission by the World Bank to IMO telling how good the ETS system is and why IMO should go ahead and apply it to ships. I searched for other submissions by the World Bank to IMO but there wasn’t any; this is the only one ever!
I think, if you’re going to regulate you should go for a flat tax as it’s easy, it’s fair, it’s effective and also it’s efficient. However, ETS is what the ”system” seems to want. For ETS you need two things; a baseline and an index to rate ships.
Actually, it works like this: in order to be able to operate your ship, you need to spend some money to buy allowances permissions to emit CO2, in the carbon stock market. Now as time passes, the baseline drops, therefore even the good ships will need to go to the stock market to buy emission allowances and of course the bad ships will need a lot more money to buy those emissions allowances.
We should now step back to some basics:
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Owners are not stupid. They do not need a regulation to impose on them operational methods to cut their fuel bill or retrofits of magic energy saving devices. They can do the calculations themselves.
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Ships are not refrigerators. Unlike refrigerators, ships do not work in constant speed, fixed environment, constant load etc. Attempts to index the operational performance of ships (using EEOI or similar indexes as the EU MRV and MEPC thries to do) results in faulty (inapplicable) evaluations because the ship performance is partly controlled by the market, owner, charterer, God (Poseidon for bad weather) !
For example, EU doesn’t regulate cars, EU regulates the manufacturers of cars telling them that the total models they produce will have to comply with certain average figures; that’s why Mercedes came up with a smart car, because the average production of its world models has to comply with a certain maximum average CO2 emissions number. And they don’t of course regulate the drivers, they don’t tell you every year you have to consume less gasoline. However what is being discussed at IMO and with the EU MRV Regulation is like trying to ask drivers to reduce their fuel consumption every two to three years.In conclusion, sense to me is a tax on bunkers like we have tax on gasoline, everything else like trying to grade the ships to require them to reduce their fuel consumption with time and to require companies to buy emission allowances is nonsense!
According to Mr. Morooka, ICS chairman, the cost of these three new regulations to shipping (ballast water treatment NOx, SOx) without counting ETS is $50 billion every year for the next ten years!
Above article is an edited version of Panos Zachariadis presentation during 2014 GREEN4SEA Forum
More details may be found by viewing his Presentation video
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