COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL - A European Union strategy to reduce atmospheric emissions from seagoing ships

(presented by the Commission)

1. Introduction

Atmospheric emissions from seagoing ships include air pollutants, greenhouse gases and ozone-depleting substances. These emissions do not disperse harmlessly to the sea, and nor do they stop at national boundaries. Ships' air pollutant emissions, particularly in coastal areas and in ports, disperse to the land, causing environmental problems which affect human health, the natural environment and the built environment. Wherever they are emitted, ships' greenhouse gas emissions contribute to global climate change, and their emissions of ozone-depleting substances damage the ozone layer.

The Member States of the European Union (EU) have already achieved a great deal to reduce atmospheric emissions from land-based sources. EU and international regulations have been the main drivers - appropriately enough since air pollution, climate change and ozone depletion are transboundary problems. To cite some examples, recent directives on national emissions ceilings [1], on specific emission sources such as large combustion plants [2] and vehicles [3], and on the quality of fuels used in the EU [4], are delivering real air quality benefits. And under the Kyoto Protocol [5], ratified by the EU on 31 May 2002, Member States and the Community have demonstrated their commitment to reducing national emissions of greenhouse gases.

[1] Directive 2001/81 EC on national emission ceilings for certain atmospheric pollutants

[2] Directive 2001/80 EC on the limitation of emissions of certain pollutants into the air from large combustion plants

[3] Council Directive 1998/69 EC relating to measures to be taken against air pollution by emissions from motor vehicles and amending Council Directive 70/220/EEC

[4] Council Directive 1999/32/EC of 26 April 1999 relating to a reduction in the sulphur content of certain liquid fuels and amending Directive 93/12/EC; and also Directive 1998/70/EC of the European Parliament and of the Council of 13 October 1998 relating to the quality of petrol and diesel fuels and amending Council Directive 93/12/EC.

[5] Kyoto Protocol to the United Nations Framework Convention on Climate Change

But while environmental problems have been mitigated, none has gone away altogether, and evidence suggests that some, such as ground-level ozone, eutrophication and climate change, are becoming more serious. New awareness is also developing about the health effects of air pollutant emissions, particularly with respect to fine particles. This means that there remains considerable room for improvement. Seagoing ships are well placed to deliver that improvement since to date they have been exempted from most EU legislation on emissions.

For a number of pollutants, ships' emissions in EU sea areas are now relatively high, compared to land-based emission sources where action has already been taken, so ships now offer more scope for emissions reduction. The graph below illustrates the situation for sulphur dioxide and nitrogen oxides, two of the principal air pollutants under consideration in this strategy. In many cases, it is also clear that the cost of reducing emissions from ships is now considerably lower than further incremental abatement measures in other sectors.

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Figure 1.1. Graph showing ship emissions projections for 2010 compared to land-based emissions targets set for the EU 15 in Directive 2001/81 on National Emissions Ceilings. Source for ship emissions data: Entec study for the European Commission (see http://www.europa.eu.int/comm/environment/air/background.htm - transport).

1.1 Role of the strategy - and some definitions

The role of this strategy is to explain concisely the contribution made by atmospheric emissions from seagoing ships to environmental problems in the European Union, and to set out a broad series of objectives, actions and recommendations for reducing these emissions over the next 10 years. It is not intended to set out detailed measures at this stage. The main objective of this Communication is to deal with the effect of the emissions on the land, and on global aspects (climate change and depletion of the ozone layer). The problem of marine eutrophication is briefly discussed in this strategy, but this and other threats to EU seas are being considered in more detail in the Commission's new marine environment strategy adopted on 2 October 2002 [6].

[6] COM(2002)0539 of 2 October 2002, Communication from the Commission to the Council and the European Parliament: "Towards a strategy to protect and conserve the marine environment".

Three separate directives require the Commission to consider measures to reduce air pollutant emissions from the maritime sector.These are:

* Directive 2001/81 on national emission ceilings for certain atmospheric pollutants, which commits the Commission to report to the European Parliament and Council on the extent to which emissions from international maritime traffic contribute to acidification, eutrophication and the formation of ground-level ozone within the EU.

* Directive 1999/32 relating to the sulphur content of certain liquid fuels, which already sets sulphur limits for marine distillate oil used in EU territorial waters, but commits the Commission to consider which measures could be taken to reduce the contribution to acidification of the combustion of marine fuels other than distillates, and, if appropriate, make a proposal

* Directive 1994/63 on the control of volatile organic compound (VOC) emissions resulting from the storage of petrol and its distribution from terminals to service stations, which invites the Commission to look at extending the directive's scope to address volatile organic compounds emitted during the loading and unloading of ships.

This Communication aims to respond to these requirements. It also contributes to the Clean Air for Europe programme (CAFE) which was launched last year [7] with a view to adopting a thematic strategy on air pollution covering all relevant emission sources. The European Environment Agency has found a high level of urban air quality exceedances for both ground-level ozone and particulate matter [8], so the CAFE programme will give priority emphasis to these pollutants.

[7] COM(2001)245 of 4 May 2001, "The Clean Air for Europe (CAFE) programme: Towards a Thematic Strategy for Air Pollution."

[8] Environmental signals 2002 report from the European Environmental Agency: see www.eea.eu.int

For the purposes of this strategy, some brief definitions are set out below.

Atmospheric emissions include emissions of air pollutants, greenhouse gases and ozone depleting substances. The primary air pollutants addressed in this strategy are sulphur dioxide (SO2 or SOx), nitrogen oxides (NOx), volatile organic compounds (VOCs), and primary particulate matter (PM). Secondary pollutants under consideration are sulphuric and nitric acids, formed by oxidation of SO2 and NOx; ground-level ozone, formed by photo-chemical reactions of NOx and VOCs in sunlight; and secondary particulate matter (PM), including sulphate and nitrate particles created by the oxidisation of NOx and SO2. The principal greenhouse gas under consideration is carbon dioxide (CO2). The principal ozone depleting substance at issue is halon.

Seagoing ships are vessels of all size and purpose travelling in EU sea areas. This includes ships of all flags on international, intra-EU and domestic routes, including passenger ferries, fishing vessels and recreational craft. Vessels solely engaged in inland navigation are not within the scope of this Communication, though they are affected by the accompanying proposal on the sulphur content of marine fuels.

EU sea areas under consideration are the North Sea, Irish Sea, English Channel, Baltic Sea, Eastern Atlantic, Mediterranean Sea and Black Sea.

1.2 Overarching objectives

The 6th Environment Action Programme (6EAP) [9] establishes a programme of EU action on the environment. It addresses key environmental objectives and priorities based on an assessment of the state of the environment and of prevailing trends, including emerging issues that require a lead from the EU. The Programme promotes the integration of environmental concerns in all EU policies and contributes to the achievement of sustainable development.

[9] Decision No 1600/2002/EC of the European Parliament and of the Council of 22 July 2002 laying down the Sixth Community Environment Action Programme

One of the objectives of the 6EAP is to achieve levels of air quality that do not give rise to unacceptable impacts on, and risks to, human health and the environment. At present, air pollutant emissions from seagoing ships are causing such impacts and risks.

Another objective of the 6EAP is to stabilise atmospheric concentrations of greenhouse gases at a level that will not cause unnatural variations of the earth's climate. CO2 is the principal greenhouse gas under consideration in this strategy. Ships' CO2 emissions today are not insignificant, at around 2% of the global total, and they are rising inexorably as more fossil fuel is burned to move more goods faster and further than ever before.

With these two overarching objectives in mind, this strategy proposes a number of objectives, actions and recommendations to reduce atmospheric emissions from ships, in the short, medium and longer term. These are set out in Section 6 - The Way Forward.

2. Background

2.1 The EU context - promoting sustainable transport and modal shift

It is important to consider the issue of atmospheric emissions from ships in the broader policy context. Article 6 of the EC Treaty establishes the principle of integrating environmental concerns into sectoral policies with a view to promoting sustainable development. Transport has been identified as a priority sector in the framework of the so-called Cardiff process. The Transport Council's integration strategy of October 1999 highlights the urgent need for further action on harmful emissions from all modes of transport, including shipping.

The Commission recognises that ships compare well with other modes of transport, judged on a number of environmental criteria. For example, ships create less congestion and noise, and require less land take for infrastructure. For these reasons the Commission's White Paper on a Common Transport Policy [10] published last year set out the need to move the carriage of more goods from road to sea transport. But it is nonetheless important to examine the environmental impact of shipping and propose measures where necessary to bring shipping into line with other land-based sectors and transport modes. The goal should be to ensure that seagoing ships continue to maintain their strong environmental performance where it is good, and improve their performance in areas where they lag behind other sectors. Atmospheric emissions represent one area where ships can improve.

[10] European transport policy for 2010: time to decide, COM(2001)370 published 12/9/2001

The measures being proposed in this strategy are cost-effective compared to emissions abatement measures in other sectors, and should not significantly increase the cost of shipping relative to other transport modes. Cost-effectiveness will remain a primary consideration as the future measures set out in this strategy are developed.

2.2 The international context - MARPOL Annex VI

Because shipping is a global industry, it is clear that international solutions are valuable. In addition, international law, particularly the law of the sea, imposes some limits on what can be regulated on a regional or national basis. These practical and legal considerations point to the fact that to achieve effective global reductions in atmospheric emissions the EU and its Member States need to work closely with key shipping nations at the International Maritime Organization (IMO).

For this reason, the Commission and EU Member States worked with the IMO during the 1990s to help develop Annex VI of the MARPOL Convention [11]. MARPOL Annex VI sets regulations for the prevention of air pollution from ships, including designating special SOx Emission Control Areas in the Baltic and the North Sea. More details of its provisions are set out in Section 4 - Existing Measures. MARPOL Annex VI was adopted by a Diplomatic Conference hosted by the International Maritime Organization in 1997, but it does not enter into force until one year after it has been ratified by 15 countries representing 50% of world shipping tonnage.

[11] The Protocol of 1997 to amend the International Convention for the Prevention of Pollution from Ships 1973, as modified by Protocols of 1978 relating thereto.

The entry into force of Annex VI is a central plank of this strategy. The Commission is therefore very keen to promote EU Member States' ratification of this important international instrument, and to work together to tighten the global standards it sets.

2.3 Informing the strategy

This strategy has been informed by four studies for the Commission in the last two years, all available at http://www.europa.eu.int/comm/environment/air/background.htm - transport:

* 2002 study by Entec UK Ltd: quantification of ship emissions in EU waters on the basis of year 2000 ship movements

* 2002 study by Beicip Franlab: advice on the costs to fuel producers and price premia likely to result from a reduction in the level of sulphur in marine fuels marketed in the EU

* 2001 study by AEA Technology on measures to reduce emissions of VOCs during loading and unloading of ships in the EU

* 2000 study by BMT Murray Fenton Edon Liddiard Vince Ltd on the implications of an EU system to reduce ship emissions of SO2 and NOx

In addition, the strategy draws on modelling of emissions depositions and environmental impacts which has been done by the Norwegian Meteorological Institute in the context of the EMEP cooperative programme for monitoring and evaluation of long range transmission of air pollutants in Europe. Their year 2000 report "Effects of international shipping on European pollution levels" is particularly relevant [12]. EMEP have reviewed the new ship emissions data from Entec against the data used for that report. They believe that the differences are not significant, and therefore that the report's findings remain valid.

[12] See http://www.emep.int/reports/dnmi_note_5_2000.pdf

There has also been extensive consultation with key stakeholders, including EU Member States, candidate countries and Norway; shipping, oil and port industry representatives; and non-governmental organisations. The Commission held two stakeholder meetings in 2002 to discuss the strategy and the proposed marine fuel amendments to Directive 99/32/EC on the sulphur content of liquid fuels. Both meetings were well attended. A written consultation exercise was also held on the basis of a discussion document issued in January 2002. Around 40 responses were received to the questions raised. Copies of the discussion document, non-confidential responses, full minutes of the consultation meetings and lists of those who attended are available at http://www.europa.eu.int/comm/environment/air/future_transport.htm.

Stakeholders generally welcomed the proposal to develop an EU strategy on ship emissions, and were grateful for the opportunity to contribute. In turn, the Commission services were grateful to stakeholders for their constructive input, particularly with respect to the practicalities of ship emission reductions. Most stressed that the EU strategy should be aligned as much as possible with international measures to reduce air pollution from ships, as set out in Annex VI to the IMO's MARPOL Convention. Most Member States' representatives stated that their governments would ratify Annex VI by June 2003. Many also recognised that EU measures would be a good way to deliver local air quality improvements, and to increase momentum towards more stringent international standards at the IMO.

3. Current Environmental Situation

Ship emissions of air pollutants have various environmental and health impacts: SO2 and NOx cause acid deposition, which can be harmful to the natural environment (e.g. lakes, rivers, soils, fauna and flora) as well as the built environment (e.g. cultural heritage). NOx and VOC emissions contribute to the formation of ground-level ozone (photochemical smog), which can damage human health and vegetation.

SO2 and NOx emissions oxidise in the atmosphere to form sulphate and nitrate particles, which along with emissions of primary particles (such as soot and dust) result in fine particles which can harm human health [13]. NOx emissions also contribute to eutrophication, whereby an excess of nutrient nitrogen can harm the fragile balance of ecosystems, including marine ecosystems.

[13] Emissions of NOx (52%) and SO2 (24%) were the most significant pollutants contributing to atmospheric PM in 1998, with primary PM contributing only 11%. Source: European Environment Agency Topic report 5/2001 on Air Emissions.

Ship emissions of greenhouse gases, principally CO2, contribute to global climate change. Halon emissions from ships damage the ozone layer, which increases the amount of harmful radiation reaching the earth and consequently damages human health and the environment.

3.1 Emissions

The table below sets out ships' emissions of air pollutants and greenhouse gases in EU seas, based on year 2000 ship movements [14], and lists the environmental effects of those emissions. It also provides a projection of ship emissions in 2010, assuming 1.5% annual growth and no abatement measures, and provides some comparative data about land-based emissions.

[14] For more details see the study "Quantification of emissions from ships associated with ship movements between ports in the European Community" available online at www.europa.int/env/comm/air

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Halon emissions in EU seas have not been quantified. However the quantity of halon installed in fire extinguishing systems on board ships worldwide is known to be significant. It is estimated to represent 26,000 tonnes of ozone depleting potential, which exceeds the European fire industry estimate for the amount of halon installed in mainland Europe.

Halons are 8-10 times more damaging than chloro-fluorocarbons (CFCs), which were banned in all industrialised countries in 1995. Therefore, the removal and destruction of halon from ships would avoid significant future ozone layer depletion and enhance the prospects for early recovery of the ozone layer.

3.2 Impact of ships' air pollutant emissions in the EU

It is clear from the table above that the quantity of ship emissions in the EU is becoming increasingly conspicuous as emissions from other sources are abated. But prior to taking action to reduce air pollutants, it is necessary to evaluate the impact of ships' emissions in terms both of the resulting concentrations of air pollutants, and their deposition. These depend very much on where the emissions occur and what the meteorological conditions are.

The image below shows SO2 emissions from ships in EU sea areas. It was produced for the Commission by EMEP [15] this year using ship emissions data from the year 2000 quantification study. The dark areas are where the greatest emissions occur; unsurprisingly these correspond with the busiest shipping lanes. This pattern is similar for other pollutants.

[15] EMEP is the co-operative programme for monitoring and evaluation of the long range transmission of air pollutants in Europe.

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The maps below, produced by EMEP in 2000 [16], show the contribution of ships' emissions to the environmental problems of acidification, excess nutrient nitrogen (eutrophication), and ground level ozone (photochemical smog) in the EU. The modelling is done by applying meteorological factors to model the deposition of the ships' emissions in each 50km grid square, and calculating the contribution made by ships' emissions to the environmental problems in the various grid squares. This modelling will be developed further in the coming years, including for primary and secondary particles, in the context of the Clean Air for Europe programme and the review of the National Emissions Ceilings Directive.

[16] For more details see EMEP's 2000 report "Effects of international shipping on European pollution levels" at http://www.emep.int/reports/dnmi_note_5_2000.pdf. EMEP have reviewed the new ship emissions data from Entec against the data used for that report. They believe that the differences are not significant, and therefore that the report's findings remain valid.

For acidification and eutrophication the environmental impact is expressed in terms of exceedance of critical loads. The critical load of acidity is the maximum deposition of sulphur and nitrogen not causing harmful leaching of acidity. The critical load of nutrient nitrogen is the maximum deposition of nitrogen not causing eutrophication of ecosystems.

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Figure 2. This map shows the contribution of ship emissions of SO2 and NOx to accumulated exceedances of critical loads of acidity. Units: Acid equivalents/hectare/year. Source: EMEP, 2000. The modelling behind the map shows that there are a large number of grid cells in Northern Europe where ship emissions are responsible for more than 90% of the exceedance of critical loads for acidity. Ship traffic contributes to exceedances by more than 50% in most of the coastal areas along the English channel and North Sea, in the Baltic sea along the coast of Germany and Poland, and also in large parts of southern Sweden and Finland.

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Figure 3. The contribution of ship emissions of NOx and VOCs to ground-level ozone concentrations in Europe and surrounding sea areas. Units: parts per billion volume. Source: EMEP.This map shows the relationship between climate and ozone levels: with ship emissions causing an increase in ozone levels in warmer southern Europe and a slight decrease in ozone levels in colder Northern Europe.

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Figure 4. The contribution of ship NOx emissions to accumulated exceedances of critical loads of nutrient nitrogen. Units: equivalents/hectare/year. Source: EMEP. The situation here is similar to that for acidification, with a large number of grid cells in Northern Europe where atmospheric emissions from seagoing ships are responsible for more than 90% of the exceedance. In the Mediterranean, ship emissions are contributing more than 50% of exceedances in parts of Greece, Italy and Spain. This data will be shared with the Commission Working Group on eutrophication established under the Marine Environment Strategy, and further modelling conducted to assess the contribution of atmospheric NOx emissions from land-based sources as well as shipping.

4. Existing measures to reduce emissions

This chapter describes some of the measures which are already being taken in the EU and internationally to reduce ships' atmospheric emissions.

4.1 Action through the International Maritime Organization (IMO)

MARPOL Annex VI - the International Convention on air pollution from ships

MARPOL Annex VI on air pollution from ships was adopted by a Diplomatic Conference hosted by the International Maritime Organization in 1997. The Annex will only enter into force internationally one year after it has been ratified by at least 15 countries representing 50% of the gross tonnage of the world's merchant shipping.

Annex VI establishes a global sulphur cap of 4.5% for heavy fuel oil burned by ships, and designates two SOx Emission Control Areas (SOxECAs) where fuel burned by ships must be below 1.5% sulphur, or equivalent abatement technologies applied. The Baltic Sea was designated a SOxECA in the original protocol, and the North Sea & English Channel were added in 2000, after a negotiating effort by all EU Member States. [17]

[17] Agreed at the IMO's Marine Environment Protection Committee in December 2000 (MEPC 44)

Annex VI also prescribes the following nitrogen oxide emission standards for diesel engines with a power output greater than 130 kW installed on ships constructed (or undergoing a major conversion) on or after January 2000:

- 17.0g/kWh when the rated engine speed is less than 130 rpm

- 45*rpm(-0.2) g/kWh when the rated engine speed is 130 or more but less than 2000 rpm

- 9.8 g/KWh when the rated engine speed is 2000 rpm or more

Engine manufacturers and classification societies have confirmed that all new marine engines manufactured in the EU are already being built to comply with these NOx standards: evidence, perhaps, that the standards are not particularly demanding.

In addition Annex VI lays down (voluntary) provisions for the regulation of emissions of volatile organic compounds; prohibits the deliberate emissions of ozone-depleting substances from existing installations - essentially fire safety equipment; and prohibits new installations on board ships containing ozone-depleting substances.

While the SOxECAs, when in place, will significantly reduce acidifying sulphur emissions in EU waters, it is widely recognised that the other aspects of MARPOL Annex VI are not sufficiently stringent. This is particularly the case with respect to NOx standards and the global sulphur cap. What is more, it is not clear when Annex VI will enter into force. To date only six countries have ratified - Sweden, Norway, Singapore, the Bahamas, the Marshall Islands and Liberia, representing approximately 26% of world tonnage. The remaining EU 14 represent approximately 10% world tonnage and candidate countries a further 10% (notably Malta at 5% and Cyprus at 4%).

As long as the entry into force mechanism remains 15 countries and 50% world tonnage, entry into force will depend upon ratification by the major open registers such as Panama (with 21% world tonnage).

Liberia's recent ratification is encouraging in this respect, but even if, for example, Panama were to ratify, a further 8 states' ratifications would be required to meet the 15 country criterion.

The Commission is therefore heartened by the interventions made by EU Member States and others at the October 2002 meeting of the IMO's Marine Environment Protection Committee, stating their intention to ratify Annex VI. Denmark, Greece and Luxembourg, as well as Panama, cited the end of 2002 as their target date for ratification. The Netherlands, Germany, Spain, Finland, Belgium, as well as Cyprus, said they aimed to ratify in the first half of 2003. The UK affirmed their commitment to ratification as soon as administrative and legal procedures allow.

Under resolution 1 of the 1997 MARPOL Conference, the IMO Secretary General is required to review the progress of Member States in ratifying Annex VI. If the conditions for entry into force are not met by 31 December 2002, the Marine Environment Protection Committee is invited to initiate an urgent review at its first meeting in 2003 to identify the impediments to entry into force, and any necessary measures to alleviate those impediments. It appears likely that the conditions for entry into force will not have been met by 31 December this year, so a review of Annex VI may take place at MEPC 49 in 2003.

IMO action on Greenhouse Gases

Article 2.2 of the Kyoto Protocol adopted by the Conference of Parties to the United Nations Framework Convention on Climate Change (UNFCCC) in December 1997, and ratified by all EU Member States on 31 May 2002, calls for parties to pursue the limitation or reduction of greenhouse gas emissions from ships bunker fuels, working through the IMO. At the same Conference of Parties, a decision was adopted urging the inclusion of emissions from international bunker fuels in the overall greenhouse gas inventories of Parties to the UNFCCC.

The IMO has therefore taken the responsibility of controlling emissions from international shipping. An IMO Greenhouse Gas Emissions study was published in 2000 which identified a number of proposals for limiting or reducing greenhouse gas (GHG) emissions from ships. These included voluntary agreements, environmental indexing, emission standards for new and existing vessels and emissions trading.

The IMO's Marine Environment Protection Committee established an ad-hoc working group to discuss the matter at its 47th and 48th meetings in March and October 2002. This working group considered a voluntary environmental indexing scheme to be the most appropriate mechanism at this stage for reducing ships' emissions. The MEPC Working Group and an inter-sessional correspondence group are now charged with finalising a resolution on an IMO Greenhouse Gas strategy, for adoption by the IMO Assembly in 2003. The Commission and a number of Member States are participating in the working group and correspondence group.

The EU Council of Ministers has urged the IMO to adopt a concrete, ambitious strategy on greenhouse gases. Furthermore the 6th Environment Action Programme requests the Commission to identify and undertake specific actions to reduce greenhouse gas emissions from marine shipping if no such action is agreed within the International Maritime Organization by 2003.

4.2 EU regulation

The main existing EU regulation currently affecting emissions from seagoing ships is Council Directive 1999/32/EC on the sulphur content of certain liquid fuels. This directive required Member States to ensure that marine gas oils used within their territory from 1 July 2000 do not exceed 0.2% sulphur (0.1% from 1 January 2008).

In other words, ships must ensure that if they are using marine gas oils in EU territory (territorial waters including seas 12 nautical miles from shore, and inland waterways), their sulphur content is below 0.2%.

There are no provisions in the directive on the sulphur content of marine heavy fuel oil. It has been suggested that this omission has accelerated the pre-existing trend towards "unifuel" operation on heavy fuel oil at all times in the interests of economy. However, the directive did require the Commission to consider which measures could be taken to reduce the contribution to acidification of the combustion of marine fuels other than gas oils and if appropriate, make a proposal. The Commission has considered the matter and as part of this strategy, a proposal is now being published to amend the marine fuels elements of directive 1999/32. This is explained in more detail in Section 6 of this Communication and in the proposal itself.

With regard to halon, Regulation 2037/00 on "Substances that Deplete the Ozone Layer" bans the marketing and use of ozone depleting substances in the EU, including their use as fire protection systems on board ships. However, Annex VII of that Regulation offers a limited number of exemptions for "critical uses" of halon where technically and economically feasible alternatives are not yet available. This includes an exemption to allow the continued use of halon on existing cargo ships. Since all ships constructed since 1 July 1994 must not have halon on board, in practice it is only vessels older than this date that have halon fire protection systems. The Commission is required to review the critical uses listed in Annex VII each year in the light of alternatives available and, when necessary, adopt modifications to EC2037/00 following Management Committee procedures operating under Article 18.

With regard to recreational craft (defined as boats intended for sports and leisure purposes of between 2.5m and 24m in length), some of which are seagoing vessels, the Commission has proposed an amending directive COM(2000)639 which provides inter alia for the limitation of exhaust emissions. This proposal is now at the final stages of negotiation, and when in force will introduce new emission limits for carbon monoxide, hydrocarbons, nitrogen oxides and particulate matter for propulsion engines installed on recreational craft.

4.3 Other regulations

In light of the international nature of shipping, regulations in other countries merit consideration. Recent legislative proposals from the United States on marine vessel emissions are particularly relevant to this strategy.

On 30 April this year, the United States' Environment Protection Agency (EPA) published a draft rulemaking on NOx emissions from "Category 3" marine engines - i.e. those engines at or above 30 liters per cylinder on US-flagged vessels [18].

[18] For more details see http://www.epa.gov/fedrgstr/EPA-AIR/2002/May/Day-29/a11736.pdf

A first tier is proposed that is equivalent to the Annex VI NOx standards, which would be enforceable under U.S. law for new engines built in 2004 and later. A second tier of standards is also being considered, which would reflect additional reductions that can be achieved through engine-based controls, and would apply to new engines built after 2006 or later. If taken forward, the proposed second tier standards would be reviewed prior to their effective date to take into consideration continued development of NOx reduction technologies and international activity such as IMO action to set more stringent international standards.

The EPA are now consulting stakeholders on whether and at what level sulphur content standards should be adopted for the fuels used by these engines, and seeking comment on whether the proposed emission standards should apply to ships flagged outside the US.

4.4 Economic instruments

In recent years, economic instruments have been introduced in some countries and ports around the world to encourage ships to reduce their atmospheric emissions. These include differential taxes on marine fuels, differentiated port and fairway dues, and differentiated tonnage taxes. Elsewhere in the world, seagoing ships are largely untouched by taxation, and pay only the costs of the services provided in ports.

The most prominent economic instrument in the EU is the system of environmentally differentiated fairway dues introduced in Sweden in 1998 [19]. Fairway dues are a national levy collected by the Swedish Government via the Maritime Authority. They are payable by ships of all flags visiting Swedish ports, on the basis of their gross tonnage and the volume of cargo transported. In 1998 a differential element was added to reflect ships' emissions of NOx and SO2, whereby ships which install NOx reduction technology and/or use low sulphur fuel benefit from reduced dues. Complementary reductions in port dues are offered by many Swedish ports, and also by the port of Mariehamm in the Finnish autonomous region of Åland.

[19] For more details see http://www.sjofartsverket.se/tabla-b-eng/pdf/b142.pdf

Other market-based measures in the EU and elsewhere which reward low-emission ships include:

* The Green Award [20] scheme offers varying incentives in 35 ports around the world depending on performance against a number of environmental criteria.

[20] For more details see http://www.greenaward.org/

* The Green Shipping bonus introduced by the Port of Hamburg [21] in 2001 offers a rebate of port dues to ships depending on environmental performance, including emissions.

[21] For more details see http://www.green-shipping.de/pdf/gs_engl.pdf

* Environmental differentiation of tonnage tax in Norway [22] applies to Norwegian flagged vessels' depending on their environmental rating against several criteria.

[22] For more details see http://www.sjofartsdir.no/

Other instruments, including emissions trading regimes, have been introduced to reduce air pollution in land-based sectors.

4.5 Voluntary / operational measures

It is always open to organisations to aim for emissions reductions beyond regulatory requirements. The following are some of the initiatives which have been taken in the EU:

* Göteborg-Kiel ferry line's policy to connect vessels to shore-side electricity in port;

* Wallenius Lines' low-sulphur fuel project [23];

[23] For more details see http://www.walleniuslines.com/extranet/5_1_info.html?eid=20.

* Intertanko's VOCON procedure to reduce oil tankers' release of VOCs during transit.

In the US, the Port of Los Angeles has introduced a voluntary speed reduction program for commercial cargo ships, applying a 12-knot speed restriction within a 20 nautical mile radius of the port. The rationale for the scheme is to reduce ships' air pollutant emissions, with air quality benefits estimated at up to 3.4 tonnes NOx reductions per day. There has been a good level of compliance with this voluntary scheme.

Finally, it is worth mentioning that six EU shipping companies have registered for the European Commission's Eco-Management and Audit Scheme (EMAS). This means they have committed themselves to achieve continuous improvements in their environmental performance, including the reduction of atmospheric emissions beyond regulatory requirements.

5. Implications of Enlargement

The implications of EU enlargement are significant with respect to atmospheric emissions from seagoing ships. Ten of the thirteen EU candidate countries have sea borders, four in the Baltic, four in the Mediterranean and three in the Black Sea, and ship movements to and/or from candidate country ports represent a significant proportion of all ship movements in EU sea areas.

There are known to be serious problems of acidification and marine eutrophication in the Baltic Sea area, and NGOs in the region recently called for EU action on ship emissions. Candidate countries in the Mediterranean share the problems of air quality experienced by EU Mediterranean states - particularly with respect to ground-level ozone (photochemical smog). And throughout the enlarged EU, port cities face problems of local air quality as a result of SO2, NOx and PM emissions from ships.

Two candidate countries - Malta and Cyprus - have a large share of the world fleet under their flag (representing 9% of world shipping tonnage between them), so their accession to the EU should lend weight to the EU during negotiations at the IMO.

The Commission has therefore been keen to involve candidate country representatives in consultations on this strategy, including on the parallel proposal to amend directive 1999/32 on the sulphur content of marine fuels.

6. The Way Forward

6.1 Objectives

The overall objective of this strategy is to reduce the contribution of ships' atmospheric emissions towards environmental and human health problems in the EU. Prescriptive targets have not been included; but the Commission does propose a number of objectives to guide EU and national policies in the longer term. These objectives are:

* To reduce ships' emissions of SO2 where they contribute to exceedances of critical loads for acidification, and where they affect local air quality

* To reduce ships' emissions of NOx where they contribute to exceedances of critical loads for acidification and eutrophication, and to levels of ground-level ozone which affect human health and vegetation

* To reduce ships' emissions of primary particles where they affect local air quality

* To reduce ships' emissions of VOCs where these contribute to levels of ground-level ozone which affect human health and vegetation

* To reduce ships' unitary emissions of CO2

* To eliminate emissions of ozone-depleting substances on all ships operating in EU waters

This chapter sets out a number of ways in which the Commission intends to work towards the objectives, including the actions the Commission itself intends to take, and actions it recommends to other parties.

6.2 International action through the IMO

International action through the IMO is the best way to regulate the environmental performance of ships of all flags, wherever they travel on the world's seas. It is also the most effective way to reduce emissions from vessels flagged outside the EU which travel in EU seas but which do not stop at EU ports. The Commission's study of year 2000 ship movements suggests that transit traffic represents around 50% of the ship movements in EU waters, and that ships flagged outside the EU are responsible for 50% of emissions.

Action:

* The Commission will continue to develop coordinated EU positions at IMO to press for tougher measures to reduce ships' emissions of air pollutants, greenhouse gases and ozone depleting substances

Recommendations:

* Member States should ratify MARPOL Annex VI as soon as possible, prior to the meeting of the IMO's Marine Environment Protection Committee in March 2003 (MEPC 49).

* At MEPC 49, Member States should support a coordinated EU position to press for tighter international standards under MARPOL Annex VI (global sulphur cap lower than 4.5%, NOx engine emission standards tougher than 9.8 - 17 g/kWh).

* Member States should support IMO work developing a strategy to limit greenhouse gas emissions from shipping, initially establishing a system of voluntary environmental indexing for ships' greenhouse gas emissions, but ensuring that further mandatory measures are not ruled out in the longer term if necessary. If the IMO has not adopted a concrete, ambitious strategy by 2003, the Commission will consider taking action at EU level to reduce ships' unitary emissions of greenhouse gases.

* Member States should support the IMO's consideration of methodologies related to the reporting of greenhouse gas emissions based upon fuel sold to ships engaged in international transport, with a view to allocating ship emissions to national inventories of parties to the United Nations Framework Convention on Climate Change (UNFCCC).

* Member States should continue to develop and support coordinated EU positions at IMO pre-meetings, and should also support new transitional measures allowing the Presidency or the Commission to formulate the European position at the IMO.

6.3 EU regulation on emissions standards

This is the best way to reduce emissions from ships in EU ports, territorial waters and exclusive economic zones. However, international law imposes some limits on the jurisdiction of coastal states (and the EU) to regulate on international shipping in its coastal waters, particularly in relation to rules concerning the construction, design, equipment and manning of ships.

Actions:

* To accompany this strategy, a proposal for a directive is being published, amending the marine fuels aspects of Directive 1999/32/EC to limit the sulphur content of marine fuels used and marketed in the EU. The aim of this proposal is to deliver significant reductions in ship emissions' contribution to acidification and problems of local air quality. The proposal foresees 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 International Maritime Organization's (IMO) MARPOL Annex VI sulphur limits, in order to reduce the effect of ship emissions on acidification in Northern Europe and on air quality. The same 1.5% sulphur limit would be applied to marine fuels used by passenger vessels on regular services to or from any Community port, in order to improve air quality around ports and coasts, and create sufficient demand to ensure an EU-wide supply of low sulphur fuel. However, a transition period until July 2007 is proposed for this measure, to ease the impact on operators. Finally, a 0.2% sulphur limit on fuel used by ships while they are at berth in Community ports is proposed to reduce local emissions of sulphur dioxide and particulate matter, and improve local air quality.

* Within the next few months, the Commission will bring forward a proposal to amend directive 1997/68 on NOx, PM and CO emissions standards for non-road engines marketed in the EU. The aim is to extend the scope of the directive to include engines marketed and intended for use on board vessels operating on inland waterways. The proposal is now being finalised in consultation with Member States, engine manufacturers and other stakeholders. Consideration is being given to the types and sizes of engines to which the new emissions standards should apply, and whether the same standards should also apply to smaller (mostly auxiliary) engines marketed and intended for use in seagoing vessels.

* If by the end of 2006, the IMO has not proposed tighter international NOx standards for all marine propulsion engines through an amendment to MARPOL Annex VI, the Commission will consider bringing forward a proposal to reduce NOx emissions from seagoing vessels, in line with the proposed Tier 2 standards put forward by the United States Environment Protection Agency.

* By 2010, the Commission aims to remove the exemption under Regulation EC2037/00 on substances that deplete the ozone layer which permits the use of halon on board existing cargo ships operating in EU waters. The Commission would like to see the change in requirements reflected in revised IMO SOLAS regulations for vessels older than 1 July 1994, as a change in these international regulations would be the most efficient and equitable way to give effect to this ban.

* In future, the Commission will look again at the possibility of regulating to require the abatement of VOCs from ship-loading. A 2001 report for the Commission [24] found that it is currently more cost-effective to regulate VOC emissions in other sectors. For this reason, the Commission is developing a proposal to regulate VOC emissions from paints and solvents. In the meantime it is open to Member States to introduce national measures to abate VOC emissions from ship-loading, provided these are notified to the IMO in line with the provisions of Regulation 15 of MARPOL Annex VI. Furthermore it should be noted that the Bergen Declaration of the 2002 North Sea Conference invited OSPAR to promote the use of vapour recovery equipment during offshore ship-loading of crude oil.

[24] Study by AEA Technology Environment on Measures to Reduce Emissions of VOCs during Loading and Unloading of Ships in the EU. http://europa.eu.int/comm/environment/air/vocloading.pdf

6.4 EU regulation on economic instruments

Economic instruments are one of the best means of promoting good environmental performance, providing incentives for industry to go beyond regulatory requirements towards the use of best available technology.

Actions:

* Early in 2003, in the context of an EU framework on transport infrastructure charging, the Commission will propose the development of an EU-system of differentiated charges for all transport modes, to take into account marginal social costs including the external costs of air pollution and climate change. A charging regime for maritime transport will be part of that framework. The maritime charging regime will be developed on the basis of ships' environmental performance, including atmospheric emissions of SO2, NOx, PM and CO2. A detailed study is being undertaken to inform this proposal. Shipping and port industry representatives will be consulted.

* In future, the Commission will consider the possibility of developing emissions trading regime(s) to deliver incremental reductions in ships' emissions in EU sea areas, particularly for NOx. The feasibility of ship emissions trading first needs to be demonstrated.

6.5 Voluntary / operational measures

It is of course open to shipowners, charterers and port authorities to take voluntary measures going beyond EU regulatory requirements to deliver incremental emissions reductions. Positive publicity about a company's green image can be a good means of increasing awareness about best available technology and encouraging its take-up on a voluntary basis.

Action

* Later in 2002 the Commission will launch a new Clean Marine Award Scheme to give positive publicity to EU companies and authorities which demonstrate best practice in low-emission shipping. The scheme will be organised by the Commission in association with industry representatives including the European Community Shipowners Associations, the European Shippers' Council, and the European Sea Ports Organisation.

* Entries will be judged by an independent jury, and awards presented for best practice in any or all of the following categories:

- EU shipping companies and/or EU flagged ships which demonstrate continuous low-emission operation beyond regulatory requirements

- EU shippers which consistently charter low-emission vessels instead of more polluting modes of transport

- EU authorities, including port authorities, which facilitate low-emission shipping and shore-side activity in ports.

* Awards will be presented at a high-profile event in Brussels, held in conjunction with a workshop on best practice in low-emission ship technologies.

The Commission also believes that if properly designed, voluntary environmental commitments from industry can deliver environmental improvements in a cost effective and rapid way. The Commission therefore welcomes the International Chamber of Shipping's initiative to publish a Code of Practice on the selection of bunker fuel compliant with the standards in MARPOL Annex VI, including 1.5% sulphur fuel for Sulphur Emission Control Areas [25].

[25] For more details contact the International Chamber of Shipping - ics@marisec.org at

Recommendation

* The Commission urges the international bunker industry to work together to develop a parallel agreement or code of practice to make available significant quantities of 1.5% sulphur marine heavy fuel oil in states bordering SOx Emission Control Areas, and at least some 1.5% sulphur marine fuel of any grade available in all global bunkering ports, to supply ships whose destination is in a SOx Emission Control Area.

There are also many operational measures which can be taken to reduce atmospheric emissions of air pollutants and greenhouse gases.

Reducing fuel consumption is the most obvious one, applicable to all vessel categories. While in general, ships are already reasonably fuel-efficient in the interests of economy, speed reduction during steaming and running from shore-side electricity while in port are two means of reducing fuel consumption, and consequently emissions.

Recommendation

* The Commission urges port authorities to consider introducing voluntary speed reductions, and to require, incentivise or facilitate ships' use of land-based electricity or clean on-board power while hotelling in port.

Another means of improving efficiency is the use of anti-fouling paints, which prevent biological organisms, such as slime, weed and shell adhering to ships' hulls and leading to increased water resistance, thus requiring additional power and fuel to maintain the same vessel speed. In light of international concerns about the slow release into the sea of dangerous substances contained in some anti-fouling paints, the Commission is now promoting the development and use of environmentally sustainable anti-fouling paints.

More specific operational measures have been developed recently to reduce oil tankers' emissions of volatile organic compounds. Intertanko have developed a procedure called VOCON which allows tanker owners to reduce cargo loss and achieve up to 80% reductions in emissions of volatile organic compounds during crude transportation, simply by changing the procedures for operational pressure releases. To facilitate this procedure, tanker owners should ensure they have installed pressure valves with optimised settings in compliance with IMO Circular 1009.

Recommendation

* The Commission calls upon Member States to promote the VOCON procedure, and increase awareness among tanker-owners of the need to install pressure valves with optimised settings.

6.6 Research

It is clear that ongoing research is required to develop low-emission ship technologies and bring to the market. The Commission's main funding stream for research is currently the Fifth Framework Programme, managed by the Directorate General for Research, which covers the period 1998 - 2002 and has a total budget close to EUR15 billion. Research into marine technologies is benefiting from a share of this funding, including the MARTOB project considering low sulphur marine fuels.

A Sixth Framework Programme for research funding has been prepared, to cover the period 2002 - 2006, with a total budget of EUR17.5 billion. This was formally adopted by the Council of Ministers on 30 September 2002, prior to an official launch in November. Research into surface transport, including marine technologies, will share EUR610 million funding.

A further source of research funding is the LIFE-Environment programme managed by the Commission's Directorate General for Environment. LIFE provides part-funding (50%) for demonstration projects which present innovative solutions to an environmental problem and lead to concrete, practical results. The projects must be implemented at a scale that allows evaluation of the technical and economic viability of large-scale introduction of this solution.

Actions:

* Under the proposed 6th Framework Programme, the Commission will continue to fund research into low-emission ship technologies such as selective catalytic reduction, humid air motors, flue gas desulphurisation and alternative fuels.

* Under the LIFE environment programme, the Commission hopes to fund a pilot project to examine the practicalities of ship emissions trading.

* The Commission will hold an annual workshop on best practice in low-emission ship technologies to bring researchers together and to disseminate the latest research findings, to be held in conjunction with the Clean Marine Awards.

Recommendation

The Commission invites experts and academics in the maritime field to work together to develop project bids to demonstrate low-emission ship technologies and mechanisms, and apply for part-funding under the 6th Framework Programme and the LIFE-Environment programme.

7. Conclusion

In this Communication, the Commission has set out to demonstrate the contribution made by atmospheric emissions from seagoing ships to environmental and human health problems in the EU. It is clear that ships are a high source of emissions, particularly in terms of sulphur dioxide where ship emissions are higher than all other transport modes per tonne kilometre, and by 2010 are likely to equate to over 75% of emissions from all land-based sources in EU.

The Commission has also begun to examine the impact of ships' emissions, by assessing where their deposition contributes to exceedances of critical loads for the environment and human health. This work will continue, with the new ship emissions data being incorporated into modelling of impacts on air pollution and the marine environment in the EU.

The Commission has set out some objectives for the future, and preliminary actions to move towards those objectives. Our priority is to reduce sulphur dioxide emissions from shipping in EU sea areas, and in parallel with this Communication a proposal for a directive is being published introducing new sulphur limits for marine fuels. Other Commission actions will follow.

This strategy also includes recommendations for action from other stakeholders. It is particularly important that EU Member States work together through the International Maritime Organization to bring about tougher international standards through MARPOL Annex VI. Shipping, oil and port industries also have a central role to play.

A constructive dialogue has begun in preparing this strategy, built on genuine consensus - that if shipping is to maintain its green image, doing nothing is not an option, and atmospheric emissions must be reduced. The Commission looks forward to continuing that dialogue in coming years, on the basis of the objectives, actions and recommendations set out in this strategy.

Summary table of Commission objectives and actions

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