2020 Milestones Highlight Maritime Air Quality Improvements Globally and Locally
By Mike Jacob, Vice President & General Counsel, Pacific Merchant Shipping Association
As we ring in the New Year, 2020 has already proven to be a year of hitting exceptional milestones for the maritime industry with respect to its ongoing investment in air quality and continued environmental progress. Globally, the January 1st implementation of the IMO 2020 fuel rules represented one of the single largest one-day air quality improvement events ever. In California, which is already home to the strictest suite of port and maritime air quality regulatory measures in the world, the state’s cold-ironing regulations ratcheted up to their highest compliance requirements for nearly all container and cruise ship fleets for 2020 as well.
The results from the culmination of these global and local rules are dramatic. The IMO 2020 rule reduced the allowable sulfur content in ships’ fuel from 3.5% to 0.5%. This means no longer burning standard bunker fuels and heavy fuel oils but instead converting to marine gas oils, very low sulfur fuels, or installing post-combustion exhaust scrubbers. For many of us living in coastal areas covered by IMO Emissions Control Areas (ECAs) and in California, we have already benefited from these and comparable significant reductions in sulfur content. However, these improvements pale in comparison to the dramatically improved air quality at scale across the globe represented by IMO 2020 as well as in high population coastal communities in Asia.
According to the IMO, this single fuel rule will result in a 77% overall drop in SOx emissions from ships, which in turn should result in a 68% overall reduction in shipping’s negative effects on human health through air pollution, in addition to the beneficial results of less acid rain and a reduction in ocean acidification. Such dramatic improvements in emissions are possible because vessel fuels currently account for about 90% of all sulfur emissions globally. One study submitted to the IMO Marine Environment Protection Committee estimated that this reduction in marine fuels would translate to the avoidance of 570,000 premature deaths worldwide between 2020-2050 from significant reductions in stroke, asthma, lung cancer, and cardiovascular and pulmonary disease symptoms.
In California, not only have vessels been investing in cleaner fuels ahead of the IMO and the North American ECA, but ships have also been plugging in to shoreside power when at-berth for the past six years. Over the course of the phase-in of this rule, which has not been without its hiccups, the industry has collectively been steadily underwriting the improvements necessary on vessels, through port infrastructure, and in terminals to first get fleets to a 50% compliance rate, then 70%, and now 80% statewide. And, under the applicable terms of some state grants used to improve various berths, that number is actually now 90% for fleet calls in many locations.
2020 represents the culmination of 13 years of work to implement this ambitious and unprecedented shorepower regulation. The complementary benefits of cleaner fuels and shoreside power for vessels when at-berth in California are simply phenomenal: even if no other actions were taken to further adjust the shorepower rules, the California Air Resources Board (CARB) estimates that the total emissions reductions from 2006-2031 would be reduced from 1.43 tons per day of Diesel Particulate Matter to 0.10 tons per day. This is a 93% reduction in the emissions of the state’s highest prioritized localized air pollutant, not to mention significant reductions in SOx, NOx, and GHGs.
This substantial progress does not come cheaply though. The 51,000 ships composing the global fleet demand some 2.1 billion barrels of fuel annually – that’s 244 million gallons per day. To meet the IMO 2020 rule, oil refiners worldwide will need to produce an additional 84 – 168 million gallons per day of cleaner fuels. According to Goldman Sachs estimates, this clean fuels shift will add approximately $40 billion in increased direct shipping costs, but due to higher competition for refined fuels, IMO 2020 costs could also cascade through the entire economy, ending up costing as much as $240 billion in overall impacts to consumers worldwide.
As for just the costs of vessels in California, achieving the clean air benefits shoreside while the vessel is at-berth also did not come cheap. The current regulation was forecast to cost the container and cruise industries $1.8 billion for shore power infrastructure and vessel improvements to comply over and above cleaner fuel costs.
As we move forward, there will be less and less “low-hanging fruit” in the regulatory world, which makes it imperative for everyone to work harder to find avenues for cleaner operations and investment in new technology that fosters results where costs and cleaner air are not mutually exclusive. To enact solutions that meet this criteria, we will need to continue to work to develop a level of trust and coordination between industry and our regulatory bodies and continue to educate the public on the benefits of both the long-term health of the industry as well as the environment.
But our partners should take solace, and as these two rules show, that the maritime industry is not afraid of committing resources to environmental clean-up efforts. As a result of the billions of dollars of investments already being made in cleaner fuels and operations around the world, 2020 will be the cleanest on record for the maritime industry. Happy New Year.