Gardere01 - 8749284v.2 Global Climate Change – Air and Sea Pollutant Emissions from Shipping: A Global Problem with Global (and Local) Solutions By Peter A. McLauchlan and Ben Stephens1 The issue of global climate change is becoming more relevant in every aspect of the economy. The aviation and maritime industries face a variety of regulations around the globe as everyone seeks to reduce carbon dioxide emissions. This paper will provide an overview of current worldwide regulations and report on regulations that are expected. Maritime commerce is a global industry. International seaborne shipping is responsible for the carriage of about 90% of world trade, and is vital to the functioning of the global economy.2 From 2000 to 2007, the volume (in tons) of world merchandise exports increased an average of 5.5 percent per year (nearly twice as fast as world GDP, with over 80 percent of that trade volume moved via ship.3 However, due in no small part to the very scale that makes it so vital, the maritime industry is also a significant contributor to pollutant emissions.4 Barring a fundamental shift in the nature of global trade, the maritime industry will continue to expand, and management of pollutant emissions will only become more important. There are a number of approaches that may help address greenhouse gas emissions from maritime trade. On a global level, the marine industry is the only industrial sector which is already covered by a legally-binding global agreement to reduce its CO2 emissions, through measures promulgated by the International Maritime Organization, a United Nations agency.5 These measures have thus far contributed to significant emissions reductions. According to the 1 Mr. McLauchlan is a partner of Gardere Wynne Sewell LLP and Mr. Stephens is an associate with the firm. 2 World Trade Organization (WTO), International Trade Statistics 2008. 3 Id. 4 World Shipping Council, Industry Issues: Carbon Emissions, http://www.worldshipping.org/industryissues/environment/air-emissions/carbon-emissions (last visited June 12, 2016). 5 International Maritime Organization, http://www.imo.org/en/Pages/Default.aspx (last visited June 12, 2016). Gardere01 - 8749284v.2 IMO, global maritime shipping produced only about 2.2% of the world’s total greenhouse gas (GHG) emissions during 2012, down from 2.8% in 2007, while total shipping emissions have declined by 10% during the same period.6 But this progress is not necessarily forecasted to continue. Under current policies, the IMO predicts that shipping CO2 emissions could increase by 50% to 250% by 2050, representing an astonishing 6%-14% of total global emissions.7 The world fleet of sea-going merchant ships of more than 100 gigatons comprises over 104,000 ships and there is no reason to believe this number will diminish.8 On a practical front, shipping-related greenhouse gas emissions can be mitigated by increasing efficiency (i.e., decreasing fuel consumption per ton-mile) and using less greenhouse gas intensive fuels or power sources.9 Operational measures, such as speed reduction, may offer near-term progress, while taking other measures to ensure the energy efficiency of new ships and switching to alternative fuels may present a longer-term option. Nevertheless, shipping demand is growing so rapidly that even taking advantage of all available mitigation strategies is likely only to slow the growth in greenhouse gas emissions from the global shipping fleet, perhaps limiting absolute emissions from shipping to roughly current levels despite very large increases in ton-miles of shipping.10 I. What’s Now and What’s Next on the International Level A. The Kyoto Protocol One of the important developments of the Kyoto Protocol to the United Nations Framework Convention on Climate Change (UNFCCC) was to treat both the shipping and 6 Third IMO GHG Study, 2014; available at http://www.imo.org/en/OurWork/Environment/PollutionPrevention/AirPollution/Documents/Third%20Greenhouse %20Gas%20Study/GHG3%20Executive%20Summary%20and%20Report.pdf. 7 Id. 8 International Maritime Organization, “International Shipping Facts and Figures – Information Resources on Trade, Safety, Security, Environment,” March 6, 2012. 9 See Center for Climate and Energy Solutions, Marine Shipping Fact Sheet. 10 International Maritime Organization (IMO) Updated Study on Greenhouse Gas Emissiosn from Ships, 2008. Gardere01 - 8749284v.2 aviation sectors as different from other land-based sources of greenhouse gas emissions.11 The Protocol delegated authority to pursue emissions reduction measures for the marine industry to the IMO, and delegated the authority to pursue measures to reduce greenhouse gas emissions from aviation to the International Civil Aviation Organization (ICAO). The trend of separating the transportation industries from land-based emission sources has continued to the present day.12 Reaction to the decision to sever the global transportation sectors from the most significant climate change treaties enacted to date has been varied.13 One purported justification for treating the shipping and aviation industries differently is that, unlike land-based sources of emissions, the shipping and aviation sectors are both global and mobile (unlike, for example, a factory).14 The challenges of measuring emissions and enforcing targets are multiplied immensely. Therefore, the proposed solution was to grant the authority to set emissions reductions goals to each industry’s respective global association. At least to date, the IMO has taken this charge seriously. B. MARPOL The International Convention for the Prevention of Pollution from Ships (MARPOL), represents the legal underpinning for most of the regulations and laws promulgated by the IMO. MARPOL Annex VI is the main international treaty addressing air pollution prevention requirements from ships, and has been signed by virtually all of the IMO’s member nations. Annex VI targets exhaust gas emissions such as SOx and NOx, as well as emission control 11 Kyoto Protocol to the United Nations Framework Convention on Climate Change, Dec. 10, 1997, U.N. Doc FCCC/CP/1997/7/Add.1, 37 I.L.M. 22 (1998); United Nations Framework Convention on Climate Change, May 9, 1992, S. Treaty Doc No. 102-38, 1771 U.N.T.S. 107. 12 See, for example, the European Union Emissions Trading Scheme (the EU ETS), which was enacted to meet the EU’s Kyoto Protocol commitments and specifically excluded shipping and aviation from its purview. 13 Papers or articles discussing? 14 See ReedSmith, Maritime GHG emissions: The Paris Agreement, an IMO MRV and ‘market-based measures’ – looking forward to MEPC 69, March 21, 2016, available at https://www.reedsmith.com/Maritime-GHG-emissionsThe-Paris-Agreement-an-IMO-MRV-and-market-based-measures--looking-forward-to-MEPC-69-03-21-2016/. Gardere01 - 8749284v.2 areas,15 volatile organic compounds for tankers, and shipboard incineration. The U.S. implemented Annex VI into U.S. law through the Act to Prevent Pollution from Ships in 2007,16 and its requirements are illustrative of current pollution control measures that have garnered acceptance from the international community. Enforcement is an important issue because the IMO itself does not have power to enforce any conventions. Instead, enforcement relies on the member parties, and each party is free to decide how to enforce the regulations upon its own ships and within its own borders. In the United States, as mentioned, the EPA and U.S. Coast Guard share enforcement responsibility for Annex VI, and may initiate investigations or set financial penalties in case of non-compliance.17 In the European Union, EU member states are required to establish financial penalties for noncompliance, and in Canada, Transport Canada checks compliance of Canadian vessels through periodic inspections, issuing fines when requirements are not met.18 C. Efficiency targets The IMO has adopted significant technical and operational measures in recent years at the port, regional, and international level. One significant recent development was the July 2011 IMO adoption of the mandatory “Energy Efficiency Design Index” (EEDI) for new ships, and the “Ship Energy Efficiency Management Plan” (SEEMP), for all ships.19 Both measures will certainly contribute to a reduction of maritime greenhouse gas emissions, and are significant 15 Emissions control areas, or ECAs, are specific areas where more stringent emissions regulations have been established. Some ECAs deal only with sulphur regulations and are designated Sulphur Emissions Control Areas (SECAs). 16 APPS, 33 U.S.C. §§ 1905-1915. 17 See APPS, 33 U.S.C. §§ 1905-1915. 18 Transport Canada, Canada’s Proposed Marine Air Emissions Regulations: Domestic Regulatory Regime, www.marineservices.gc.ca/eng/cmac/archived/documents/Air-Emissions-Regulations.pdf. 19 IMO, Low Carbon Shipping and Air Pollution Control, http://www.imo.org/en/MediaCentre/HotTopics/GHG/Pages/default.aspx (last visited June 12, 2016). Gardere01 - 8749284v.2 because they are legally binding across the entire shipping industry and are applicable to all countries. Both EEDI and SEEMP were adopted as amendments to MARPOL Annex VI in 2011 and entered into force on January 1, 2013.20 The regulations establish a series of baselines for the amount of fuel each type of ship burns for a certain cargo capacity.21 Ships built after the enactment of the regulations will be required to surpass that baseline by a set amount, which will scale progressively over time.22 The 2025 emissions reduction target is for new ships to be 30% more energy efficient than ships built in 2014.23 For existing ships, there is now a requirement to enact an energy efficiency management plan, which focuses on improved voyage planning, ship maintenance and cleaning, and the introduction of technical improvements such as waste heat recovery systems.24 EEDI and SEEMP represent the most important technical measures for promoting the use of energy efficient equipment and engines, in no small part because of the flexibility of the regulations: designers and builders are free to use the most cost-efficient solutions for the ship to comply with the regulations, allowing for cost-saving measures and creativity in implementation.25 20 Resolution MEPC.203(62), Amendments to the Annex of the Protocol of 1997 to Amend the International Convention for the Prevention of Pollution from Ships, 1973, as Modified by the Protocol of 1978 Relating Thereto (Inclusion of regulations on energy efficiency for ship in MARPOL Annex VI). 21 Id. 22 Id. 23 Id. 24 Id. 25 DNV-GL, EEDI and EEOI, https://www.dnvgl.com/maritime/energy-efficiency/eedi-and-eeoi.html (last visited June 12, 2016). Gardere01 - 8749284v.2 D. The Paris Agreement The Paris Agreement was a wide-ranging, complex agreement subject to extensive negotiation and compromise.26 The purpose of this paper is not to provide a full summary, in part because the Paris Agreement severed the maritime industry from its mandates, consistent with the Kyoto Protocol’s treatment of the industry.27 However, because the Agreement symbolizes the most recent and most far-reaching global action on climate change to date, it is important to address briefly. The Agreement was subject to intense negotiation, with the effect that certain obligations created under the treaty are binding, and certain other obligations are not. Significantly, perhaps the most discussed provision of the Agreement – the commitment to hold global temperature increases to no more than two degrees Celsius – is not binding. This has, of course, exposed the Agreement to significant criticism from climate change activists and other interested parties,28 since from a purely legal perspective the Agreement does little to build on the binding obligations already imposed by the 1992 UNFCCC. While this may be true, it overlooks the symbolic and political import of the fact that 195 nations agreed to put their names to an agreement stating essentially that climate change is a pressing issue and that prompt action must be taken. With regards to the maritime industry, the text of the Agreement itself contains nothing. Language urging countries to pursue concrete measures to reduce international emissions was 26 Paris Agreement, 7 FCCC/CP/2015/L.9/Rev.1, Dec. 12, 2015, http://unfccc.int/documentation/documents/advanced_search/items/6911.php?priref=600008831. 27 This decision was to the disappointment of many groups and activists. Citing projected increases in emissions from the shipping industry, many groups called for the Paris Agreement to include specific mandates for the shipping and aviation industries within the emissions reduction plans. See, e.g. TRANSPORT & ENVIRONMENT, Road to Paris: A climate deal must include aviation and shipping, available at https://www.transportenvironment.org/road-paris-climate-deal-must-include-aviation-and-shipping (last visited June 12, 2016). 28 See, e.g. BBC.COM, Cop21 climate change summit reaches deal in Paris, http://www.bbc.com/news/scienceenvironment-35084374 (Dec. 13, 2015). Gardere01 - 8749284v.2 withdrawn from the Agreement at an advanced stage in the negotiations. Perhaps this signifies the trust of the global community in the actions underway and already taken by the IMO. Perhaps it signifies the desire of the Agreement’s negotiators to avoid yet another complicated and divisive issue among the dozens already on the negotiating table. Regardless of the reason, the effect is the same: the Kyoto Protocol’s delegation of emissions reduction action to the IMO is still the status quo. MEPC 69 reflects the IMO’s most recent action on this front. E. MEPC 69 The signing of the Paris Agreement coincided with the IMO Marine Environment Protection Committee meeting, or MEPC69, which addressed the narrower question of the route forward for the shipping industry.29 The committee did not adopt any regulations or proposals specifically addressing greenhouse gas regulation. Nevertheless, the IMO did impose a measure requiring ships over 5,000 gross tons to report fuel consumption, including CO2 emissions, to their respective flag states. The burden then shifts to each flag state to determine whether the data has been reported in accordance with the IMO’s requirements. If the requirements have been met, the flag state will issue a Statement of Compliance to the ship and report the compliance data to the IMO Ship Fuel Consumption database.30 At the upcoming MEPC meeting in October, the agenda includes the next step of formalizing the MEPC69 measures as a required amendment to the MARPOL Convention. The IMO will continue to discuss and determine ways to further the CO2 reduction commitments of the marine industry.31 29 IMO.ORG, Marine Environment Protection Committee (MEPC), 69th session 18-22 April 2016 (opening address), http://www.imo.org/en/MediaCentre/SecretaryGeneral/Secretary-GeneralsSpeechesToMeetings/Pages/MEPC-69- opening.aspx. 30 THE MARITIME EXECUTIVE, The Power of the Paris Agreement is in the Market Place, http://www.maritimeexecutive.com/article/power-of-paris-agreement-is-in-the-market-place (Apr. 25, 2016). 31 From maritime-executive: “ECSA particularly supports the proposal of its international partner ICS (International Chamber of Shipping) to develop an ‘Intended IMO Determined Contribution’ for CO2 reduction on behalf of the Gardere01 - 8749284v.2 Admittedly, the progress made at MEPC 69 did not go far enough for some. The Sustainable Shipping Initiative,32 or SSI, has suggested that MEPC 69 did not achieve even the minimal targets set for its agenda. SSI and other advocacy groups, member states, and industry bodies, had previously called for an agreement that would specifically tie the marine industry’s greenhouse gas emission reduction targets to the targets agreed to in Paris in 2015.33 While such an agreement may be reached in October, it was not agreed to at MEPC 69. As previously discussed, this seeming failure to hit ambitious, but realistic, targets for emissions reductions may contribute to a perception that the maritime industry is not willing to contribute to global reduction targets to the same degree as other industries. Consequences to the reputation of the maritime industry aside, a seemingly overt lack of commitment to reduce emissions may take the choice out of the industry’s hands entirely. At this point in time, the maritime industry still “has the helm” with regards to setting its own targets, goals, and methods for reducing emissions. Should public (or more importantly, regulators’) perception pivot to a point where the maritime industry’s self-prescribed methods are viewed as insufficient or even obstructive, concrete reduction targets may be imposed outside of the regulatory framework of the IMO. Whether or not such a development may be desirable is largely a matter of perspective.34 sector. This would mirror the commitments or Intended National Determined Contributions (INDCs) which governments have made for their national economies, but from which international transport is currently excluded. 32 Link to SSI website and describe what they do. 33 Maritime-executive; also link to Paris results. 34 The perception of delay may be out of the industry’s hands entirely. The CEO of the Sustainable Shipping Initiative, Alastair Fischbacher, has noted that the results of the data collection system agreed to at MEPC 69 will be unavailable, or at least unable to be placed in a useful context, for some years. Per maritime-executive.com: “The IMO’s 2014 greenhouse gas study was conclusive that on a business as usual scenario, shipping will increase its greenhouse gas emissions output by up to 250 percent or nearly three billion tons by 2050. We must move on from the debate about collecting data and the shipping industry’s impact on the environment and using this as a reason to delay action. While developing a robust data collection is an important part, the IMO must actually demonstrate commitment to drive progressive change and take responsibility with the rest of the world in meeting global warming reduction targets.” Gardere01 - 8749284v.2 F. Market Action and Private Sector The role of the private sector in reaching climate change goals agreed to by the global community proved to be a point of much contention and negotiation in the buildup to the finalization of the Paris Agreement. The Agreement ultimately settled on two processes for the private sector: market approaches35 and non-market approaches.36 The market approach is itself subdivided into two “tracks”: the cooperative approach and the centralized trading mechanism. Under the cooperative approach, linked markets created through voluntary bilateral or multilateral linkage will trade units designated as “internationally transferred mitigation outcomes” or ITMOs. ITMOs are generic and even vague in nature, presumably to allow for the many various types of emission rights that may have induced two parties to enter into a bilateral linkage in the first place. Under the centralized trading mechanism, a party is permitted to use achieved emission reductions to demonstrate achievement of that party’s nationally determined contribution. The actions unilaterally taken by private companies also provide insight into the future of emissions reductions in the shipping industry. In an effort to achieve Environmental Protection notations from the American Bureau of Shipping,37 Harvey Gulf, a U.S. based maritime operator of offshore towing vessels in the Gulf of Mexico, has built a dual fuel offshore support vessel to bunker liquid natural gas (LNG) as a marine fuel, and has to date also successfully completed truck to vessel transfers of LNG, both of which are global firsts.38 Plans are to develop up to six dual-fueled LNG-powered offshore supply vessels currently under construction, and recently 35 Article 6 (1-7). 36 Article 6 (8-9). 37 See AMERICAN BUREAU OF SHIPPING, Guide for The Environmental Protection Notation for Vessels, September 2009, available at https://www.eagle.org/eagleExternalPortalWEB/ShowProperty/BEA%20Repository/Rules&Guides/Current/99_Env irProtecNotationVessels2009/Enviro_Vess_Guide. 38 See MARINE LOG, Harvey Gulf Makes LNG Fueling History, http://www.marinelog.com/index.php?option=com_k2&view=item&id=8703:harvey- (last visited June 12, 2016). Gardere01 - 8749284v.2 opened the first LNG fueling facility in North America in Port Fourchon, Louisiana.39 This facility symbolizes a small but significant transition towards cleaner burning LNG. The marine industry is somewhat divided on the suitability of LNG as a long-term solution to greenhouse gas emissions. While economically promising,40 LNG’s high flammability and toxicity creates higher risk.41 Additionally, current fleets may be unsuitable for the transition to LNG due to age and lack of infrastructure.42 Harvey Gulf’s LNG fueling facility is an important development on the infrastructure front, and is related to the oft-cited emissions reduction proposal to use onshore power to fuel ships using inland electricity while those ships are in port. The EU recently mandated this technology, obliging its member states to implement shore-side power technology.43 Currently, 22 ports worldwide utilize shore-side power supply, including the ports of Long Beach and Los Angeles, San Francisco, and San Diego.44 II. Local Enforcement Regimes – what are the regulations currently affecting the marine industry? There are three general categories under which strategies for reducing greenhouse gas emissions may be grouped: operations, ship efficiency, and alternative fuels. An operations approach mitigates emissions by focusing on practical measures - reducing vessel speed, increasing port efficiency and cargo loading, and the like. A ship efficiency approach focuses on what might be called the “hardware” – making larger ships, optimizing hulls and propellers, 39 Natural Gas Intel’s Daily Gas Price Index, First North American LNG Marine Fueling Terminal Opens in Louisiana, February 16, 2016, available at http://www.naturalgasintel.com/articles/105354-first-north-american-lngmarine-fueling-terminal-opens-in-louisiana. 40 Emissions Reduction in the Shipping Industry, sustainalytics.com (last visited June 12, 2016). 41 LLOYDS REGISTER, “LNG-fuelled deep sea shipping,” August 2012. 42 BIMCO, Air Pollution – BIMCO’s Position, April 2012. 43 The directive provides that Member States shall ensure that the need for shore-side electricity supply for inland waterway vessels and sea-going ships in maritime and inland ports is assessed in their national policy frameworks. Such shore-side electricity supply shall be installed as a priority . . . by 31 December 2025, unless there is no demand and the costs are disproportionate to the benefits, including environmental benefits.” See http://www.ops.wpci.nl/implementation-1/legal-analysis/e-dot-u-dot--policy/. 44 See WORLD PORTS CLIMATE INITIATIVE, Ports Using Onshore Power Supply, http://www.ops.wpci.nl/opsinstalled/ports-using-ops/ (last visited June 12, 2016). Gardere01 - 8749284v.2 innovating in the field of low-resistance hull coatings, and so on.45 Finally, the alternative fuel approach somewhat closely tracks the global conversation on reducing pollutant emissions from land-based sources, by exploring the use of low-emissions energy sources such as biofuels, or asyet underdeveloped technologies like solar power or hydrogen fuel cells.46 While this framework holds promise, actual advances in the sector have been slow. Fuel efficiency has undergone relatively few changes in the past 20 to 30 years,47 although private companies are in some instances beginning to take measures into their own hands.48 And, of course, regional and local governments have implemented a variety of regulations and laws with the ultimate goal of reducing pollutant emissions from shipping. Certain of these regulations and laws are discussed in the following section. A. Regional Targets for Emissions Reduction Apart from the global guidelines, regulations, and rules established by transnational and international agencies, local jurisdictions and even individual companies impose a host of their own rules regarding pollutant emissions from ships.49 45 See THE NEW ECONOMY, Shipping Industry Sails Towards Environmentally Friendly Future, March 27, 2014, available at http://www.theneweconomy.com/business/shipping-industry-sails-towards-environmentally-friendlyfuture. 46 The U.S. Government’s Maritime Environmental Technical Assistance Initiative (META) incorporates a blend of these approaches in its efforts to further develop sustainability in the maritime industry. META supports research efforts focused on the using liquid natural gas (LNG) as marine propulsion fuel, and conducts studies on the risks of methane slips/leakage during transportation, bunkering, and vessel handling operations. META also conducts research on fuel cell technology, with a short-term focus on powering port equipment and the long-term goal of powering vessel propulsion. See TRANSPORTATION.GOV, Maritime Sustainability Initiatives, available at https://www.transportation.gov/mission/sustainability/maritime-sustainability-initiatives. 47 Faber, J., B. Boon, et al., Aviation and Maritime Transport in a Post 2012 Climate Policy Regime, Netherlands Environmental Assessment Agency, 2007. 48 See Harvey Gulf discussion above. 49 For example, examine the federal, state, and local governing entities regulating the San Pedro Bay ports of Los Angeles and Long Beach, the first and second largest container ports in the United States. Among others, the ports must comply with regulations imposed by the U.S. Environmental Protection Agency, the U.S. Coast Guard, the California Air Resources Board, the South Coast Air Quality Management District, the California Water Resources Control Board, the Southern California Association of Governments, the Cities of Los Angeles and Long Beach, and the California State Lands Commission. See Environmental Impacts of International Shipping—the Role of Ports: Case Study of the Ports of Los Angeles and Long Beach, Working Party on National Environmental Policies Working Group on Transport, Organization for Economic Co-operation and Development (2 Feb. 2010). Gardere01 - 8749284v.2 1. United States The United States government offers certain incentives for companies that pursue sustainable, green energy initiatives. Various bills have gone before Congress suggesting, for example, to amend the Internal Revenue Code to impose fees on: (1) fossil fuel products producing carbon dioxide emissions, including coal, petroleum products, and natural gas; (2) fluorinated greenhouse gases; (3) emissions of any greenhouse gas from any greenhouse gas emission sources; and (4) methane emissions.50 Furthermore, in compliance with MARPOL Annex VI, Congress has established limits on NOx emissions from marine diesel engines with a power output of more than 130 kilowatts, and imposes additional limits on the sulfur content of marine fuels.51 Ships operating up to 200 nautical miles off of U.S. shores must meet the most advanced standards for NOx emissions and use fuel with lower sulfur content.52 Each regulated diesel engine in U.S. flag vessels must have an Engine International Air Pollution Prevention certificate, issued by the EPA and documenting that the engine meets Annex VI NOx standards.53 Ship operators must maintain records on board documenting their compliance with the emission standards, fuel requirements and other Annex 50 See Senate Bill 1548 before the 114th Congress (2015-2016). The proposed bill additionally directs the Department of the Treasury to: (1) establish, implement, and report on a program to collect data on methane emissions by major non-natural sources, including emissions attributable to the extraction and distribution of coal, petroleum products, and natural gas; (2) pay a refund of fees imposed by this Act to exporters of energy-intensive manufactured goods; (3) make one $500 payment each calendar year to certain social security beneficiaries, veterans, and disabled individuals; (4) make costs mitigation grants to states to assist low-income and rural households and provide training and worker transition assistance; and (5) establish a website to make regular disclosures concerning revenue, tax savings, and benefits attributable to this Act. The bill further proposes a reduction of the maximum income tax rate on corporations to 29% of taxable income over $75,000 and allows a new carbon fee offset tax credit for the lesser of: (1) 6.2% of earned income, or (2) $500. 51 See ENVIRONMENTAL PROTECTION AGENCY, MARPOL Annex VI, available at https://www.epa.gov/enforcement/marpol-annex-vi (last visited June 12, 2016). 52 Id. 53 Id. Gardere01 - 8749284v.2 VI provisions.54 Finally, U.S. flag vessels are subject to inspection for compliance with Annex VI, and either the U.S. Coast Guard or the EPA may bring enforcement actions for violations.55 U.S. based maritime groups have additionally created incentives and initiatives for promulgating environmental rules. The American Bureau of Shipping, a classification society that focuses on safety, design and inspection, has specified requirements and criteria for achieving the optional notations Environmental Protection (ENVIRO) and Environmental Protection Plus (ENVIRO+), which identifies the level of compliance with international environmental protection requirements and integrates associated ABS requirements which influence environmental protection.56 The notations are issued only once the vessel has achieved compliance with Annexes I, II, IV, V, and VI, MARPOL 73/78. In short, the focus is to reduce negative impacts on the environment resulting from both the air and sea discharges of the vessel by addressing fundamental design characteristics and shipboard management and support systems.57 The regulations require that the vessel owner/operator create the position of Vessel Environmental Officer, who monitors compliance with IMO regulations, implements ballast water, sewage, and garbage management plans, maintains logs and records, and provides training on environmental practices.58 The actual design of the ship is also subject to scrutiny. The vessel must hold a certification from the ABS, have a technologically advanced and safe electronics package, and an ergonomic bridge layout.59 Requirements are also imposed on the sea and air discharge of the vessel. For sea discharge, the vessel must have a sewage and garbage 54 Id. 55 Id. 56 See AMERICAN BUREAU OF SHIPPING, Guide for the Environmental Protection Notation for Vessels, September 2009, available at https://www.eagle.org/eagleExternalPortalWEB/ShowProperty/BEA%20Repository/Rules&Guides/Current/99_Env irProtecNotationVessels2009/Enviro_Vess_Guide. 57 Id. 58 Id. 59 Id. Gardere01 - 8749284v.2 management plan, be fitted with an IMO-compliant sewage treatment system, and have a valid International Anti-Fouling System Certificate.60 For air discharge, the vessel must have an approved refrigerant systems management plan, firefighting systems that do not utilize halon or superfluorcarbons, and HVAC systems must be environmentally friendly and have leak detection systems.61 Furthermore, diesel engines are to satisfy certain international and domestic emission standards for nitrogen and sulfuric oxide.62 2. European Union The European Union has set its own targets to reduce greenhouse gas emissions by 20% by the year 2020 as compared to 1990 levels, and aims to reduce shipping emission by 40-50% by 2050.63 In October 2012, the EU announced that it was considering adopting a system for the monitoring, reporting and verification (MRV) of fuel-based emissions, and on April 29, 2015 a mandatory MRV regulation was indeed adopted. Beginning January 1, 2018, the Regulation requires operators of large ships (i.e., over 5,000 gross tons)64 calling at EU ports65 to: • Monitor and annually report the verified amount of CO2 emitted on journeys to, from, and between EU ports and also when in EU ports; • Monitor and annually report additional parameters, such as distance, time at sea and cargo carried, to enable the determination of the ships’ average energy efficiency; and 60 Id. 61 Id. 62 Id. 63 ENVIRONMENTAL SCIENCE & TECHNOLOGY, Mortality from Ship Emissions: A Global Assessment, October 2007. 64 Ships of this size account for 90% of total shipping emissions. See European Union, Stakeholder meeting on monitoring, reporting, and verification (MRV) of greenhouse gas emissions from ships – Background document, 5 December 2012. 65 This regulation applies regardless of where the vehicle is flagged. Gardere01 - 8749284v.2 • Submit to the European Commission an emissions report containing externally verified annual aggregated data, which will then be made available to the public.66 The MRV system is estimated to cut CO2 emissions from relevant voyages by up to 2%, and could reduce net costs to owners by up to 1.2 billion euros per year by 2030.67 Whether or not these projected estimates come to fruition, the data collection aspect of the MRV will certainly provide insight into the performance of individual ships, benefitting ship owners and regulators in their future decisions. 3. Asia Of course, the above-described laws were enacted under the framework of an IMO ECA. In areas where ECAs are not established, but shipping still represents a major source of emissions (for example, Asia), local jurisdictions have embraced voluntary initiatives anticipating future ECAs. In Singapore, port authorities offer financial incentives for companies that use low-sulphur fuel abatement technologies, and vessel owning and operating companies have in turn set up their own voluntary initiatives to reduce SOx emissions.68 In Hong Kong, 19 shipping companies entered into a voluntary pact (the Fair Winds Charter) to use fuel with no more than a 0.5% sulphur content.69 The agreement was renewed once and finally expired at the end of 2015, at least partially because regulations mandating emission control measures in port were anticipated.70 Shenzhen, the world’s third largest container port in nearby mainland China, has stated its intention to follow Hong Kong’s voluntary efforts by applying to the IMO for 66 http://ec.europa.eu/clima/policies/transport/shipping/index_en.htm 67 Id. 68 CNN, Shipping looks to clean up its act, 18 December 2012. Companies voluntarily participate in the Singapore initiative despite public complaints. Maersk, for example, participates in the initiative despite repeated claims that switching to the more expensive, but lower-sulphur, fuel has resulted in financial losses. 69 A significant agreement considering that the current legal obligation is a relatively high 3.5%. 70 THE MARITIME EXECUTIVE, The Demise of the Fair Winds Charter, http://www.maritimeexecutive.com/features/the-demise-of-the-fair-winds-charter (last visited June 12, 2016). Gardere01 - 8749284v.2 permission to create an emission control area for the Pearl River Delta.71 The Shenzhen plan will purportedly refund 100% of extra fuel costs if 0.1% or less sulphur fuel is burned and 75% if less than 0.5% is burned. Shenzhen also plans to implement shoreside power, a relatively easy project considering that many of Shenzhen’s terminals are new compared to Hong Kong’s.72 III. The Future of Emissions Reductions in the Shipping Industry Ninety percent of international trade is carried on ships, and there is little sign that this will decrease in the near or distant future. Although the marine industry is considerably more sustainable than the alternatives, there is little question that further modernization and continuous efforts to explore a more sustainable future are necessary. As discussed, ports have made improvements to comply with tightened environmental regulations, and the IMO, EEDI and SEEMP regulations indicate promising developments in the construction of new ships. Regional laws and regulations continue to pursue the goal of emissions reduction, and signs of compliance from previously stubborn jurisdictions like China are certainly a welcome development. Efficient marine transport, with minimal ecological damage and economic benefits for everyone are certainly possible. But marine environmental policies must be applied worldwide to be effective and fair. The IMO’s current focus on energy efficiency, particularly as it pertains to newly constructed vessels, is a fine start. Imposing an ECA on the Asian region and thereby removing the necessity for somewhat haphazard voluntary emissions reduction initiatives would be a promising next step. In any event, it is safe to say that the global trend towards concerted and targeted action on the ever-present issue of improving our environment has established a strong and growing foothold in the maritime industry. 71 See id. 72 NRDC, China Acts to Control Shipping Air Pollution and Greenhouse Gas Emissions, December 8, 2015, available at https://www.nrdc.org/experts/barbara-finamore/china-acts-control-shipping-air-pollution-andgreenhouse-gas-emissions.