JULY 25TH – SECA Timing Now Clear

Last week, the implementation of two key pieces of legislation affecting shipping emissions was set in train, with the enforcement dates for the North Sea SECA and the European Directive on Sulphur in Marine Fuels becoming clear.

On July 22nd the European Union officially published the re-numbered Directive 2005/33/EC, amending Directive 1999/32/EC. Member states now have 12 months and 20 days to enact their own legislation and commence enforcement of the EU requirements.

During the 53rd meeting of the IMO Marine Environment Protection Committee in London last week, the tacit adoption of the North Sea SECA occurred, confirming that a 1.5% limit on sulphur in marine fuel will apply for the North Sea SECA area from November 2007.

While the timing for the implementation of both pieces of law is now clear, they are not ideally aligned.

A summary of the key dates:

	May 19 2006 Baltic SECA 1.5% limit commences (IMO)
	August 11 2006 Baltic SECA 1.5% limit enforceable by EU member states (EU)
	1.5% limit for all passenger ships between EU ports enforceable (EU)
	August 11 2007 North Sea SECA 1.5% limit enforceable by EU member states (EU)
	November 2007 North Sea SECA 1.5% limit commences (IMO)

Please go to the SEAaT Library to view a timeline of legislative requirements: Legislative_overview.ppt - Overview of implementation timing for legislation affecting sulphur levels in marine fuels, as at July 2005 or click on the image below to view larger version.

SEAaT comment on EU sulphur directive

April 15th, 2005

Shipping Emissions Abatement and Trading (SEAaT) has been working to raise awareness of abatement and emissions trading as complementary methods to the use of low sulphur fuel to reduce emissions from ships.

The recently finalised EU Directive on sulphur in marine fuels makes excellent progress towards a flexible legislation framework that allows industry to improve the environment in a cost effective way.

"The new laws are a vast improvement on the original proposals, which did not permit the use of technology to reduce sulphur emissions, and did not support the development of emissions trading for shipping.", says Lisa Dwyer, Secretary General of SEAaT.

To comply with the Directive, shipowners can now choose to use low sulphur fuel, or to install innovative abatement technology which could significantly reduce SOx and other pollutants such as particulate matter. This means that the shipping industry has options to reduce shipping emissions in a variety of ways, and ship owners can choose the most cost effective method for their fleet and trading patterns.

The potential of emissions trading is also clearly recognised by the Parliament, and the legislations calls for "economic instruments to be developed as an incentive to achieve significant reductions."

The Directive requires the Commission to submit, by 2008, a report including proposals to ammend the legislation, and has been asked to "give particular consideration to proposals for S. alternative or complementary measures" and to "consider submitting proposals on economic instruments."

The Directive also encourages the Commission to work through IMO in the development of future air emissions legislation.

SEAaT believes this is a clear signal for the industry to engage in the exploration of an appropriate model for emissions trading for shipping, and to work with the Commission and IMO to shape the future of emissions regulations.

As a first step, SEAaT launched an Offsetting Pilot Project in April, and is co-ordinating over 40 ships from 7 international fleets to "offset" their sulphur emissions and learn about how this might cost effectively reduce emissions. Participants will work together to understand the challenges and benefits facing ship owners in implementing emissions trading, and will involve a broad range of stakeholders in discussing and documenting the outcomes.

"We congratulate the Commission, Council of Minister and Parliament on finalising the Directive, and look forward to continuing to work with regulators, IMO and the shipping industry to develop economic instruments that can benefit the environment and industry", Lisa Dwyer, SEAaT.

EU Parliamentary Environment Committee votes on Sulphur Directive

March 15th, 2005

This morning in Brussels the Parliamentary Environment Committee voted on the proposed amendments to the Common Position on Directive 99/32, sulphur content of marine fuels. The Committee reviewed the Rapporteur's report and amendments submitted by Committee members in February. The outcome of the voting will form the recommendations that go forward for debate at the Parliament Plenary session next month.

In summary, the Committee supported the introduction of 0.5% sulphur fuel mandate by 2010, made some small changes to the 0.1% at berth provisions, supported tighter SOx removal requirements on abatement technology and accepted the suggestion of offsetting.

The key outcomes:

	Amendment 10: Accepted that from 2012 all Member States shall ensure fuels >1.5% sulphur are not used in their territorial seas and exclusive economic zones outside the SECAs, applying to vessels of all flags.
	Amendment 14: Accepted that from the date the Directive takes effect, member states shall ensure that 1.5% fuel is available in sufficient quantities to meet EC demand
	Amendment 15: Accepted the phased approach to introduction of 0.5% sulphur fuel, with 0.5% being mandated in SECAs by 2010 and in territorial seas and outsides SECAs by 2014. Accepted that passenger vessels on regular services between any community ports must use 0.5% sulphur fuel by 2010.
	Amendment 16: Rejected the proposal that the enforcement date for the use of 0.1% fuel in berth be brought forward from 2010 to 2008. (Common Position proposal of 2010 will stand)
	Amendment 17: Rejected the proposal that the derogation for ships at berth be changed from 2 hours to 1 hour. (Common Position proposal of 2 hours will stand)
	Amendment 17: Rejected the proposed derogation for ships burning 0.5% at all times and ships using abatement technologies but accepted the derogation for ships using shore side power.
	Amendment 18: Accepted the proposal that ships using abatement technologies must reduce their total emissions to 2.0g SO2/kWh (0.5% sulphur fuel equivalent)
	Amendment 24: Accepted the proposal that offsetting schemes shall be permitted provided that the environmental and health benefits compared to the use of low sulphur marine fuels can be clearly demonstrated.

A possible compromise…
It seems that although their positions are far apart, the Commission, Council and Parliament are eager to avoid the costly and lengthy process of Conciliation, where selected members of Council of Ministers and the Parliament must “reconcile” to a solution that all parties can agree on.

Between now and April 14/15th, when the Directive is expected to have its 2nd Reading in Parliament, everyone will be working to come up with a compromise that will enable the legislation to enter into force.

One possibility heard discussed is to strengthen the Commission's report on this issue, due in 2008, in exchange for removing the requirement to move to 0.5% by 2010. If this were agreed, the Commission would be expected to report on the full cost/benefits of moving to lower sulphur levels, and propose a firm date for introduction of lower limits, when they review and report on the implementation of the Directive in 2008.

Another compromise suggested would be to bring further forward the introduction date of a 1.5% sulphur limit to all European waters – this would not align with IMO Marpol Annex VI, and would receive little support from Member States outside the currently defined SECAs, but is a possibility.

Whether these ideas will be enough to sway those in Parliament preferring a fixed timeframe for the introduction of 0.5% remains to be seen….

SEAaT will continue to work with Member States in the lead up to the Parliamentary Plenary in April, seeking support for a flexible legislative framework that allows ship owners to choose the most cost effective means of meeting air quality requirements.

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Spotlight on the European Union - the Battle Lines are drawn

Last week we saw clear indications of the deep divisions within the EU over the so-called Marine Sulphur Directive.

The timing of implementing lower limits on sulphur in marine fuels emerged as the key issue for debate, with core European political institutions polarised and seemingly unwilling to compromise at this stage. The Common Position, agreed by the Council of Ministers and backed by the Commission, recommends that 1.5% sulphur fuel be used in the SECAs, in line with international law, and that further reductions may be appropriate after a review in 2008. The Rapporteur is calling for Parliament to reject the Common Position, and is demanding 0.5% sulphur limits by 2010.

With two months before the planned 2nd reading in Parliament, there is time and room for both sides to manoeuvre, but initial positions were tightly held during Wednesday’s first real airing for the Directive.

At a special workshop for Members of the European Parliament on February 2nd, the Commission pleaded for the Directive to be adopted “as is” rather than risk further delays during a lengthy and cumbersome conciliation process. Aimed at informing the Shadow Rapportuers and members of the Environment Committee, the workshop gave the Commission, industry representatives and environmental NGOs the opportunity to comment on both proposals.

After presentations by Europia on behalf of the oil industry, ECSA (European Community Shipowners Associations) on behalf of the shipping community, and the Swedish Secretariat on Acid Rain on behalf of a coalition of environmental NGOs, the move towards tighter limits emerged as the key issue, with groups lining up on either side of the “0.5% barrier”.

SEAaT presented at the workshop on the use of abatement technology and the inclusion of emissions trading – our messages were well received, and supported by ECSA, Europia and Parliament. The Rapportuer spoke of her wish to "open the door" for emissions trading for shipping to be explored, and no objections to the proposed clauses on abatement and trading were raised.

Support for emissions trading was qualified from the Commission and the environmental NGOs, with these groups wishing to see more work and understanding before commencing a full blown trading scheme.

More in an article on later pages of this month's newsletter…

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Rapporteur's recommendations – the big issues for the industry Following is a summary of recommendations made by the Rapporteur, Ms Satu Hassi, for the Parliament to consider. These are essentially the same as amendments made by Parliament at the 1st Reading. By 1 January 2008, the maximum sulphur content of marine fuels for use by vessels on inland waterways and in ports should not exceed 0.1% by mass By 1 January 2010, the maximum sulphur content of marine fuels within SECAs should not exceed 0.5% by mass. This should apply to all vessels of all flags, including vessels whose journey began outside the Community. By 1 January 2010, the maximum sulphur content of marine fuels should be 0.5 % by mass for passenger ships operating to or from any Community port By 1 January 2012, the maximum sulphur content of marine fuels used in the areas of Member States' territorial seas and exclusive economic zones outside SOx Emission Control Areas should not exceed 1.5% by mass. This should apply to all vessels of all flags, including vessels whose journey began outside the Community By 1 January 2014, the maximum sulphur content of marine fuels should be 0.5% by mass in the areas of Member States' territorial seas and exclusive economic zones outside SECAs Member States should ensure that marine fuels containing no more than 1.5% by mass are made widely available by the date of entry into force of the obligations of the directive As an alternative or complement to using marine fuels meetings the directive's requirements, Member States may allow ships to use an approved abatement technology, provided that these ships:   reduce the total emission of sulphur oxides, including both auxiliary and main propulsion engines, to 2.0g SO2/kWh or less calculated as the total weight of sulphur dioxide emission; Top of page

SEAaT’s messages – and some wins for abatement and trading

SEAaT’s message to Members of Parliament last week focused on the theme of implementation, and the complementary solutions of abatement and emissions trading.

In contrast with the 1st reading of this Directive in Parliament, the draft text now includes some key clauses which, if finally adopted, will be a step towards a truly flexible legislative framework.

	Vessels fitted with abatement technology are exempt from the requirement to use 1.5% fuel inside the SECA provided that total emissions of sulphur oxides are reduced to 2.0g SO2 per kW hour (see below for more on this)
	Vessels fitted with abatement technology are exempt from the requirement to burn 0.1% sulphur fuel on inland waterways and in port
	A proposed clause proposing emissions trading states “as regards possible proposals where ship operators or groups of ship operators using abatement technologies would be allowed to offset SO2 emissions against non-modified ships, such schemes shall only be permitted provided that environmental and health benefit compared to the use of low sulphur marine fuels can be clearly demonstrated.”

While more discussions in Brussels are critical to ensuring that abatement technology and emissions trading are options for compliance with the Directive, these proposals are a positive development.

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The Environmentalists' Europe Christer Agren of the Swedish Acid Rain Secretariat presented the following key messages to MEPs at the workshop in Brussels on February 2nd. Emissions from land-based sources are coming down, while those from ships show a continuous increase. By 2015, ships in the seas surronding Europe will emit more SO2 than all land-based sources in EU-25 combined. Air pollution causes significant damage to human health and to the natural as well as the man-made environment. Ship emissions contribute markedly – and increasingly – to this damage. To protect health and the environment, considerable further reductions in emissions are needed. Measures to reduce air pollution from ships are cost-effective. Emission abatement is necessary for the environmental credibility, and thus the future competetiveness, of shipping. SEAaT sponsors and members believe that abatement technology and emissions trading can reduce harmful emissions from ships in ways that are cost effective, sustainable and achievable. Top of page

SO2 emissions from shipping in European sea areas

Projections of future emissions from the EU’s Clean Air For Europe
(CAFE) Programme baseline (CP) scenario (November 2004), including
implementation of IMO MARPOL Annex VI.

For more information follow this link...

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International vs unilateral – can the EU really go it alone?

A topic of much discussion lately has been the legal ability of the European Union to enact laws which fall outside international shipping legislation.

On both the marine sulphur directive and on reform of the Civil Liability Convention and International Oil Pollution Compensation funds, European institutions are pushing to unilaterally tighten the rules.

With the Commission and Parliament working to insert themselves into the IMO and influence international legislation, maritime nations in Europe are resisting calls for the EU to speak with one voice at IMO.

For the sulphur emissions issue, the question is one of enforcement – can the EU command internationally trading vessels to comply with laws that are not aligned with UNCLOS??

The legal eagles are considering…

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So what happens in Brussels next? February 2nd The Rapporteur’s recommendations to Parliament were tabled at the Parliamentary Environment Committee on February 2nd. At this meeting, Mrs Hassi presented her paper and it was briefly discussed by the Committee. February 15th This is the deadline for submitting amendments to the Directive. The Committee will then discuss and consider all proposed amendments. March 15th The Environment Committee will meet and vote on amendments. April 14th The Parliament votes on the Directive at plenary session in Strasbourg. IF THE COUNCIL OF MINISTERS AND THE COMMISSION DO NOT ACCEPT THE PARLIAMENT'S VOTING OUTCOME, THE DIRECTIVE WILL GO TO "CONCILIATION". Conciliation is a time consuming process, with a Conciliation Committee being appointed and compromises sought. To avoid this, all parties will be working to agree a compromise before the Parliamentary voting in April. Top of page

What is SEAaT doing? We are working hard to ensure that the options of abatement and trading remain in the European legislation, meeting with MEPs and member states, and raising awareness of these solutions between now and April. We have prepared a number of suggested amendments to the Directive for submission to the Environment Committee: The proposal that abatement technology must achieve 2.0g SO2 per kWh is not aligned with MARPOL Annex VI and requires ship owners using this technology to achieve emissions standards in excess of those required for owners using 1.5% sulphur fuel We request clarity around the clause discussing offsetting to ensure that ships to engage in trials of offsetting The wording of some of the exemption clauses is loose and may result in different country regulations when transposed by Member States. We have asked the Environment Committee to consider our amendments when discussing the Directive over the next few weeks. Top of page

SEAaT Offsetting Pilot Project

Demonstrating that emissions trading for shipping is possible will be a critical step in gaining further support for trading schemes.

The SEAaT Offsetting Pilot Project is being finalised and we are talking with a number of shipping companies and stakeholders ahead of launching the Project in April.

The Project will explore how offsetting might be applied to ships trading in and through the North Sea SECA, and will report on the economic and environmental benefits of emissions trading.

The Pilot Project will seek input from SEAaT members before the launch - for more information, please contact lisa@seaat.org.

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