6 Sulphur content of marine fuels
| (a)
(33034)
13016/11
+ ADD 1
COM(11) 441
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Commission Communication on the review of the implementation of Directive 1999/32/EC related to the sulphur content of certain liquid fuels and on further pollutant emissions reduction form maritime transport
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| (b)
(33028)
12806/11
+ ADDs 1-2
COM(11) 439
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Draft Directive repealing Directive 1999/32/EC as regards the sulphur content of marine fuels
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| Legal base | (a) —
(b)Article 192(1) TFEU; co-decision; QMV
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| Documents originated | 15 July 2011
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| Deposited in Parliament | 19 July 2011
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| Department | Transport
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| Basis of consideration | EM of 19 August 2011
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| Previous Committee Report | None, but see footnotes
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| To be discussed in Council | No date set
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| Committee's assessment | Politically important
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| Committee's decision | Not cleared; further information awaited
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Background
6.1 Emissions of nitrogen oxides and sulphur dioxide from sea
going ships can be harmful to human health and the environment
(being in the latter case a cause of acidification), and their
relative significance has been increasing in light of the reduction
achieved in recent years in land-based emissions. As a result,
various measures have been taken to address this problem at both
international level through the International Maritime Organisation
(IMO) and by the EU, notably by seeking to reduce the sulphur
content of the relevant fuels. In the former case, Annex VI to
a Protocol to the International Convention for the Prevention
of Pollution from Ships (the MARPOL Convention) has sought to
set a global sulphur limit of 4.5% for heavy fuel oil burned on
ships, with a lower limit of 1.5% in designated Control Areas
(including the Baltic, North Sea and English Channel), whilst,
within the EU, Directive 1999/32/EEC set sulphur limits of 0.2%
for certain fuels, including marine gas oils and diesel oils used
by ships in inland waterways and territorial waters.
6.2 However, a Commission Communication[28]
in November 2002 noted that, although the Control Areas under
the MARPOL Convention would significantly reduce acidifying emissions,
other aspects were not sufficiently stringent, and moreover that
the number of countries which had so far ratified the Protocol
was considerably fewer than that required for it to come into
force. It therefore recommended that Member States should ratify
the Protocol as soon as possible, and that the EU should continue
to press within the IMO for tougher measures to be taken to reduce
emissions. It also put forward a draft Directive which would amend
Directive 1999/32/EEC by introducing a 1.5% sulphur limit for
marine fuels used by all seagoing vessels in the North Sea, English
Channel and Baltic Sea in line with the provisions in the MARPOL
Convention; introduce such a limit for marine fuels used by passenger
vessels on regular services to and from any EU port; ban the sale
of marine diesel fuels having over 1.5% sulphur; amend the existing
provisions for marine gas oils used by seagoing and inland vessels
so as to require marine fuels used by ships at berth in all EU
ports to contain 0.2% of sulphur or less, and to ban the sale
of marine gas oils having more than 0.2% sulphur. These measures
were subsequently enacted in Directive 2005/33/EC.
The current documents
6.3 The Commission has now brought forward these
two further documents—(a) a Communication on the operation
of Directive 1999/32/EEC and on ways of further reducing pollution
from maritime transport, and (b) a draft Directive, which proposes
further amendments to that Directive in the light of developments
since 2005, particularly in relation to the MARPOL Convention.
COMMISSION COMMUNICATION
6.4 The Commission says that the contribution of
emissions from maritime transport to air quality problems in the
EU continues to increase, that this extends beyond coastal regions,
and that the Thematic Strategy on air pollution[29]
in 2005 concluded that sulphur emissions from shipping would exceed
those from all land-based sources in the EU by 2020. It notes
that, although the earlier amendments to Annex VI of the MARPOL
Convention had finally come into effect in 2005, the parties subsequently
agreed in 2008 further reductions in the sulphur content of fuels.
As a result, the current limit of 4.5% applicable in all areas
is to be reduced to 3.5% from 1 January 2012, and to 0.5% by 1
January 2020 (though, if a review of the availability of such
fuel to be carried out in 2018 shows that ships would be prevented
from complying with the new limit, the implementation date could
be deferred to 1 January 2025): likewise, the current limit of
1.0% in Emission Control Areas would be reduced to 0.1% from 1
January 2015.
6.5 In each case, the Convention provides for the
reduction in emissions to be achieved by other means, such as
exhaust gas cleaning systems ("scrubbing") or alternative
clean fuels such as liquified natural gas. States which are parties
to the Convention are required to promote the availability of
compliant fuel, and, where a ship which fails to comply with the
fuel oil standard can demonstrate that, despite its best efforts
(without deviating from its intended voyage or unduly delaying
its voyage), no such fuel oil was available for purchase, a state
has discretion to determine the appropriate action (which may
include not taking control measures against the ship).
6.6 The Commission says that these new provisions
represent a major step in reducing emissions from the shipping
sector, and can be expected to lead to a decrease of 90% in sulphur
dioxide emissions in Emission Control Areas, and of more than
75% in other sea areas bordering the EU, with there also being
a significant reduction in emissions of particulates. It adds
that the benefits arising from improved health and reduced mortality
within the EU are expected to range from €15-34 billion a
year in 2020, whereas the costs would range from €2.6-11
billion, the precise amount depending upon the extent to which
the alternative compliance methods are used. Either way, however,
the Commission points out that the high ratio of benefits to costs
reflects the effectiveness of tackling marine sources, as compared
with those which are land-based where considerable reductions
have already been achieved.
6.7 In the meantime, the Commission notes that implementing
these measures, and in particular the alternative means of complying
with the new standards, will require capital investment by both
the private and public sectors, and that it may be necessary to
provide financial incentives. It notes that, in the short term,
support is already available under the current financial perspective
through mechanisms such as the Trans-European Transport Networks
(TEN-T) and the Marco Polo II Programme,[30]
and that investments targeting research, development and innovation
to reduce emissions from ships and to promote energy efficiency
could be financed through the European Clean Transport Facility.
It also suggests that Member States' funds could be used, for
example to develop onshore infrastructure.
6.8 As regards the medium to longer term, the Commission
says that it is developing a multi-dimensional action approach
which would address in an integrated manner the environmental
challenges facing the waterborne transport sector, and which would
explore regulatory measures, green ship technology and alternative
fuels, adequate green infrastructure, economic and funding instruments,
research and innovation, and international cooperation. It adds
that these measures will be put in place following the adoption
of the White Paper[31]
outlining a Roadmap to a Single European Transport Areas, the
new TEN-T policy, and guidelines based on further consultations
with stakeholders, including Member State authorities.
6.9 Finally, the Communication discusses briefly
the case for additional measures to reduce emissions, such as
an extension of the sulphur Emission Control Areas and the introduction
of new Control Areas for nitrogen oxides. However, it says that
the Commission is not in a position to propose this formally prior
to agreement being reached internationally through the IMO.
DRAFT DIRECTIVE
6.10 The aims of the proposed Directive expressly
include aligning it with IMO rules on fuel standards (including
the standards applicable outside Control Areas) and on emission
abatement methods. However, there are a number of areas where
the Commission's proposal deviates from the international measures
contained in the revised Annex VI:
- the proposed Directive does
not replicate the provision relating to non-availability of fuel;
- it refers to the fact that, based on the IMO's
review of fuel availability, the effective date for the application
of the 0.5% global fuel standard will be 1 January 2020 or 1 January
2025, but does not explicitly state that the effective date contained
in the Directive will be the same date as that agreed upon by
the IMO;
- the proposal contains a provision relating to
passenger vessels which goes beyond the regulations contained
in Annex VI, in that it introduces a 0.1% sulphur limit for those
passenger ships navigating outside Control Areas which operate
on regular services to or from any EU port (though the operative
date would be delayed by 5 years—ie to 1 January 2020—in
order to avoid potential problems with fuel availability).
- the proposal contains a further additional provision,
empowering the Commission to specify the frequency of sampling,
the sampling methods and the definition of a sample representative
of the fuel examined, and to adapt the method for determining
the sulphur content and the fuel verification procedure to the
newest international technical standards.
6.11 The proposed Directive contains some provisions
relating to combustion plants and combustion in refineries which
would have the effect of avoiding "double regulation"
by removing from its coverage those plants of greater than 50
MW rated thermal input which are subject to the current large
combustion plants Directive (2001/80/EC) and to the industrial
emissions Directive (2010/75/EU) which will replace it from 1
January 2016, as well as updated provisions for any combustion
plants not subject to those Directives. The proposal also seeks
to address concerns that the new standards might lead to a shift
from maritime back to land-based transport, and the Commission
will be closely monitoring the impacts of the shipping sector's
compliance with the new fuel quality standards.
The Government's view
6.12 In his Explanatory Memorandum of 19 August 2011,
the Parliamentary Under-Secretary of State at the Department for
Transport (Mr Mike Penning) notes that the Commission considers
its proposal is in accordance with the principle of subsidiarity,
bearing in mind the global dimension of shipping and the cross-border
impact of air pollution, which require common rules in order to
ensure the effective implementation and application of the international
fuel standards across Member States.
He says that,
although the Government
maintains its right as a sovereign state to implement in national
law the provisions of the MARPOL Convention to which it is a party,
it agrees that EU intervention is justified in accordance with
the principle set out in Article 5 of the Treaty on European Union.
6.13 More generally, he says that the Government
strongly supports the outcome of the revision of Annex VI because
this will significantly reduce emissions of sulphur oxides from
ships (as well as nitrogen oxides and particulate matter) and
consequently improve UK air quality. He adds that the UK has also
consistently taken the view that the revised Annex VI represents
a global compromise as a result of many hours of difficult negotiations,
and would be most reluctant to unpick that agreement. It therefore
welcomes the proposed Directive's adherence to the provisions
for a staged introduction of stricter sulphur limits in fuel,
noting that the environmental and health gains will be substantial,
with the North Sea Control Area in particular continuing to be
important in reducing the impact of shipping on air quality in
the UK. Implementing these changes would also bring the maritime
sector more into line with the other transport methods which have
for several years been using low sulphur fuels to reduce emissions.
6.14 Nonetheless, the Minister says that the Government
recognises there is serious concern on the part of some elements
of the ferry and short-sea shipping industry at the cost impact
of the revised sulphur limits, and is aware that some studies
have indicated that a shift from maritime back to land-based transport
might occur in parts of Scandinavia and around the Baltic (although
it has not seen any evidence to suggest that this is likely to
be the case in the UK). The Commission's intention to monitor
the impacts of the shipping sector's compliance with the new standards
is therefore welcome. He also welcomes the recognition in the
proposal of alternative compliance methods which are at least
as effective as sulphur limits in fuel in reducing emissions,
and he points out that the inclusion of this provision in the
revised Annex VI was largely the result of strong negotiation
by the UK.
6.15 However, the Minister says that the Government
is deeply concerned that the proposal does not replicate the provision
in Annex VI relating to non-availability of fuel, as this represents
the removal of one element of a hard-won compromise package, without
which the shipping industry would not have been content with the
standards contained in the revised Annex. In particular, he suggests
that, if ships are liable for non-supply of fuel overseas, a substantial
number of detentions of vessels trading from Asia and Latin America
can be expected, and make it likely that the shipping industry
will resist implementation. He adds that the UK understands this
was a deliberate omission, since, when officials raised the matter,
the Commission said that it wished to provide legal certainty
in order to increase implementation, and that any suggestions
which raised doubts about availability of fuel were unhelpful.
The Government will therefore clarify the likely consequences
of this omission with UK industry stakeholders, and will raise
the issue with other like-minded Member States.
6.16 The Minister also says that:
- the Government is concerned
that the proposal does not explicitly state that the effective
date for the application of the 0.5% fuel standard contained in
the Directive will be the same date as that agreed by the IMO
in the light of its review of fuel availability, and it sees no
merit in having an effective date in the EU which deviates from
the internationally agreed date determined in the IMO;
- the Government will consider the proposal to
apply the 0.1% sulphur limit to those passenger ships navigating
outside Control Areas which operate on regular services to or
from any EU port: although this goes beyond the revised Annex
VI, it is essentially a tightening of an existing provision in
the relevant EU Directive, the Commission's rationale being that
this makes a link between the requirement for passenger ships
operating inside and outside Control Areas, and represents an
additional health and environmental safeguard (on the grounds
that passenger ships operate mostly in ports or close to coastal
areas and therefore have a greater adverse impact than other ships);
- the Government has serious concerns with the
Commission being given the power to specify the frequency of sampling,
the sampling methods and the definition of a sample representative
of the fuel examined, and adapt the method for determining the
sulphur content and the fuel verification procedure, believing
that there is little evidence of widespread non-compliance with
the current regime, and that the proposal could result in a significantly
increased regulatory burden, at a time when the Maritime and Coastguard
Agency is not resourced or equipped to carry out any form of routine
fuel sampling and testing;
- the Government is pleased that the provisions
relating to combustion plants and combustion in refineries will
avoid "double regulation" of such plants.
- the Government would prefer a transposition period
of 18 months, rather than the 12 months proposed.
6.17 The Minister goes on to observe that, although
the Commission's impact assessment contains sufficient evidence
to conduct a reasonable benefit-cost analysis, there are a number
of detailed points which need to be clarified. He also says that
the assessment does not attempt to monetise the potential risks
associated with a switch to low sulphur diesel, including possible
technical issues, and nor does it cover any benefits other than
those to human health (such as reduced damage to agriculture,
forests and buildings). Also, the Commission's approach to valuing
air quality differs from that used by the UK, so that the benefit
cost ratios may vary in the impact assessment which the Government
will be producing in due course.
6.18 The Minister also comments that the Commission's
overall cost benefit figures (quoted in paragraph 6.6 above) include
annual costs of between €57 and 300 million arising from
the 0.1% fuel standard for passenger ships operating on regular
service outside the Control Areas, with the corresponding monetised
health benefits being put at between €102 and 339 million.
Finally, with specific reference to the UK, he says that the Scottish
Government provides support for lifeline ferry services, particularly
between the mainland and the Northern Isles (Orkney & Shetland),
and that implementing the Directive for this service would cost
the Scottish Government around £4,250,000 through increased
subsidy costs.
Conclusion
6.19 Although this draft Directive would in large
measure give legal effect within the EU to reductions in sulphur
emissions from ships agreed internationally, and appears likely
to produce significant environmental and health benefits, it is
also clear that it gives rise to a number of concerns, particularly
in those areas we have highlighted where it goes beyond the measures
contained in Annex VI to the MARPOL Convention (and could therefore
disturb what the Minister refers to as a hard-won compromise).
6.20 We note that the Government proposes to pursue
these issues, and that it also intends to provide an Impact Assessment
setting out the costs and benefits so far as the UK is concerned.
We think it would be sensible to await this further information
before taking a definitive view on how these documents should
be handled, but we are in the meantime drawing them to the attention
of the House.
28 (24065) 14933/02: see HC 63-ix (2002-03), chapter
2 (22 January 2003). Back
29
(26900) 12735/05: see HC 34-xvi (2005-06), chapter 9 (25 January
2006). Back
30
This gives priority to projects aimed at the implementation and
use of innovative technologies or operating practices which significantly
reduce air emissions from ships. Back
31
(32639) 8333/11: see HC 428-xxvi (2010-12) chapter 3 (11 May 2011). Back
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