COMMISSION STAFF WORKING PAPER IMPACT ASSESSMENT
Date: 2011-07-15
Institutions: European Commission
Subjects: anhydride, environmental impact, environmental protection, fuel, pollution from ships, reduction of gas emissions, vessel

EUROPEAN COMMISSION 

Brussels, 15.7.2011 
SEC(2011) 918 final 

COMMISSION STAFF WORKING PAPER 

IMPACT ASSESSMENT 

Accompanying the document 

Proposal for a Directive of the European Parliament and of the Council 

amending Directive 1999/32/EC as regards the sulphur content of marine fuels 

{COM(2011) 439 final} 
{SEC(2011) 919 final} 

 
 
 
 
  
 
Abbreviations  

CEN 

ECA 

EMSA 

ETS 

EU 

GHG 

HFO 

IMO 

ISO 

LNG 

LoLo 

European Committee for Standardisation 

Emission Control Area 

European Maritime Safety Agency 

Emissions Trading Scheme 

European Union 

greenhouse gas 

heavy fuel oil 

International Maritime Organisation 

International Organisation for Standardisation 

liquefied natural gas 

lift on, lift off freight ship 

MARPOL 

International Convention for the Prevention of Pollution from Ships 

MEPC 

MFO 

MGO 

NECA 

NOx 

PM 

PrEN 

RoPax 

SECA 

SO2 

SSS 

Marine Environment Programme Committee (IMO) 

marine fuel oil 

marine gas oil 

NOx Emission Control Area 

nitrogen oxides 

particulate matter 

Preliminary European Standard 

roll on, roll off passenger ship 

Sulphur Emission Control Area 

sulphur dioxide 

short sea shipping 

UNCLOS 

United Nations Convention on the Law of the Sea 

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Table of Contents 

Introduction...........................................................................................................................................4 
1. 
Procedural issues and consultation of interested parties ...................................................................4 
2. 
Organisation, timing, and consultation of interested parties ...................................................................4 
2.1. 
Impact Assessment Steering Group ........................................................................................................4 
2.1.1. 
External expertise and public information ..............................................................................................4 
2.1.2. 
Public consultation ..................................................................................................................................4 
2.1.3. 
Impact Assessment Board .......................................................................................................................5 
2.2. 
Problem Characterization and Baseline..............................................................................................5 
3. 
Air quality and pollutant emissions from maritime shipping ..................................................................5 
3.1. 
Progress at the IMO – the 2008 amendment of MARPOL Annex VI.....................................................7 
3.2. 
Differences between the EU and IMO provisions regulating shipping emissions ..................................8 
3.3. 
Differences related to the maximum sulphur content of marine fuels.....................................................8 
3.3.1. 
Differences related to the use of "equivalent abatement methods" .........................................................9 
3.3.2. 
Environmental standards for passenger ships........................................................................................10 
3.3.3. 
3.4. 
Other issues arising from the review of the implementation of the Directive .......................................10 
3.4.1.  Member State reporting.........................................................................................................................10 
Sampling frequency and methods .........................................................................................................11 
3.4.2. 
Adapting the Directive to recent technical progress and standards .......................................................11 
3.4.3. 
Legal clarity ..........................................................................................................................................11 
3.4.4. 
Additional Emission Control Areas and complementary measures ......................................................11 
3.5. 
The baseline ..........................................................................................................................................12 
3.6. 
The policy baseline ...............................................................................................................................12 
3.6.1. 
The post-2008 environmental and socio-economic baseline.................................................................12 
3.6.2. 
Competiveness issues and issues related to possible modal shifts ........................................................14 
3.6.3. 
Objectives.............................................................................................................................................16 
4. 
General objectives.................................................................................................................................16 
4.1. 
Specific objectives ................................................................................................................................16 
4.2. 
Consistency with the other European Union policies............................................................................17 
4.3. 
Treaty base and the subsidiarity principle .............................................................................................17 
4.4. 
Policy options and their assessment...................................................................................................18 
5. 
Method and criteria for assessing impacts.............................................................................................18 
5.1. 
Options for aligning EU law with the latest international maritime fuel rules......................................18 
5.2. 
Options for aligning the maximum sulphur content of marine fuels.....................................................18 
5.2.1. 
Options for aligning the provisions allowing the use of "equivalent methods".....................................20 
5.2.2. 
Options for adapting the Directive to technical standards.....................................................................22 
5.2.3. 
Fuel verification procedure ...................................................................................................................22 
5.2.4. 
Options for additional and alternative measures to improve the environmental performance of the 
5.3. 
shipping sector ......................................................................................................................................23 
Additional Emissions Control Areas and emission limit values ...........................................................23 
Options for reducing emissions from passenger ships on regular service.............................................23 
Emission Trading Options.....................................................................................................................25 
Options for strengthening the monitoring and enforcement provisions to enhance the implementation 
of the Directive......................................................................................................................................25 
Options for strengthening the provisions on sampling and analysis of fuels ........................................25 
Options for improving legal clarity and certainty .................................................................................26 
Supplementary measures to address impacts on short sea shipping......................................................27 
Summary of the impacts associated with the preferred options .....................................................28 
Summary of baseline, retained options, benefits and costs (€ billion,
 2020) ........................................28 
Environmental Impacts .........................................................................................................................29 
Economic Impacts.................................................................................................................................29 
Social Impacts .......................................................................................................................................30 
Administrative burden...........................................................................................................................30 
Monitoring and Evaluation ................................................................................................................31 
Indicators of progress towards meeting the objectives..........................................................................31 
Outline for monitoring and evaluation planning ...................................................................................31 
Conclusion and Preferred Policy Mix ...............................................................................................31 

5.4.1. 
5.4.2. 
5.5. 
6. 
6.1. 
6.2. 
6.3. 
6.4. 
6.5. 
7. 
7.1. 
7.2. 
8. 

5.3.1. 
5.3.2. 
5.3.3. 
5.4. 

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Annex I  
Annex II 
Annex III  
Annex IV  
Annex V  
Annex VI  

External Studies Conducted In Support Of This Impact Assessment ............................................34 
Internet Questionaire ......................................................................................................................36 
Trends In Emissions From International Shipping And Related Impacts ......................................39 
Issues Arising From The Review Of The Directive .......................................................................48 
Criteria For New Emission Control Areas .....................................................................................60 
Benefits And Costs Related To The New Rules On Sulphur Content Of Marine Fuels Adopted By 
Imo Parties In 2008 ........................................................................................................................62 
Trends In Activity, Fuel Quality And Prices, And Modal Split .....................................................72 

Annex VII 
Annex VIII  Current and potential future support Measures That Could Be USED for The Implementation of 

Marpol Annex VI. ..........................................................................................................................77 
Annex IX        Administrative Burdens..................................................................................................................82 

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1. 

INTRODUCTION 

This  impact  assessment  brings  together  the  results  of  two  principal  and  closely 
related work streams, i.e. an in-depth assessment of the amended international rules 
governing  emissions  from  maritime  shipping  as  adopted  by  the  International 
Maritime Organisation (IMO) in October 2008 (a.k.a. the MARPOL Annex VI), and 
the review of the Directive 1999/32/EC (The Directive) as called for in article 7 of 
the amending Directive 2005/33/EC. It accompanies a legislative proposal to further 
amend  the  Directive,  for  the  purpose  of  aligning  it  with  the  latest  rules  adopted  by 
the IMO, notably those on the maximum permitted sulphur content of marine fuels.1 
The  impact  assessment  has  also  supported  the  identification  on  non-regulatory 
measures  meant  to  support  relevant  stakeholders  in  the  timely  adoption  of  the  new 
IMO standards. Importantly, this impact assessment is not meant to justify the latest 
international  rules  but  rather  to  assess,  amongst  other  issues,  whether  and  how  the 
latest international rules should be incorporated into EU law.  

2. 

PROCEDURAL ISSUES AND CONSULTATION OF INTERESTED PARTIES 

2.1. 

Organisation, timing, and consultation of interested parties 

2.1.1. 

Impact Assessment Steering Group 

This impact assessment report was developed by DG ENV in close co-operation with 
relevant  Commission  services.  The  following  services  were  invited  to  the  Inter-
service Steering Group meetings: CLIMA, COMP, ENER, ENTR, MARE, MOVE, 
RTD,  SANCO,  SG,  SJ,  TAXUD,  JRC,  DEV  and  EEAS  (formerly  RELEX).  In 
addition,  EMSA  representatives  attended  the  meetings  and  contributed  to  the 
assessment.  

2.1.2. 

External expertise and public information 

Several studies were conducted in the run-up to this impact assessment report. These 
are listed in Annex 1.A and were made available at the Commission's webpage.2   

2.1.3. 

Public consultation 

The  Commission  met  stakeholders  regularly  and  also  undertook  an  online 
consultation open to all interested parties (including business organisations, Member 
States,  NGOs  and  the  general  public)  from  29  October  2010  to  5  January  2011. 
Stakeholders  were  invited  to  respond  to  a  series  of  questions  about  the  possible 
incorporation of the latest relevant IMO  rules into EU legislation. The consultation 
was  advertised  through  Commission  news  alerts  and  participation  was  further 
promoted at stakeholder meetings.  

1 

The International Maritime Organization (IMO) is a specialized agency of the United Nations with 169 
Parties (including all EU Member States) and 3 Associate Members. The Convention establishing the 
IMO was adopted in Geneva in 1948 and the IMO first met in 1959. The IMO's main task has been to 
develop and maintain a comprehensive regulatory framework for shipping and its remit today includes 
safety,  environmental  concerns,  legal  matters,  technical  co-operation,  maritime  security  and  the 
efficiency of shipping. 
2 http://ec.europa.eu/environment/air/transport/ships.htm. 

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The  public  consultation  yielded  244  responses  from  various  organisations.  In 
general, stakeholders hailed the 2008 amendments to IMO MARPOL Annex VI as a 
major step forward in addressing air pollution from maritime shipping and necessary 
to improve air quality in the EU. There was also broad support for further aligning 
EU law with those (new) rules for the purpose of complementing and strengthening 
the  international  monitoring  and  enforcement  regime.  A  number  of  industry 
organisations,  however,  claimed  that  the  implementation  costs  associated  with  the 
new IMO regulations, notably the rules applying in the so called Sulphur Emission 
Control  Areas  (SECAs)  would  adversely  affect  their  competitive  position.  Those 
respondents further claimed that the time available to comply with the new IMO fuel 
quality-equivalent standards (irrespective of their inclusion in EU law) was too short. 
The same respondents suggested important modal shifts (from short sea shipping to 
trucks)  could  occur  whilst  referring  to  associated  greenhouse  gas  impacts.  Other 
respondents  downplayed  this  concern  and  pointed  at  the  shipping  sector's  slow 
response to the 2008 agreement, hence calling for prompt EU action to safeguard the 
environmental and health benefits associated with the new IMO rules. A summary of 
the  responses  is  available  in  Annex  II.  Comments  are  accounted  for  in  relevant 
sections of the report. 

2.2. 

Impact Assessment Board 

On 25 February 2011 the Impact Assessment Board issued a positive opinion on the 
draft  impact  assessment  subject  to  a  number  of  recommendations.  These  were 
incorporated in the present report and comprise, inter alia, a clear prioritizing of the 
present problems related to the implementation and enforcement of the Directive; a 
clear  identification  of  the  areas  for  which  proposals  would  go  beyond  the  IMO 
requirements, and an overview of costs and benefits of the retained policy package.  

3. 

PROBLEM CHARACTERIZATION AND BASELINE 

3.1. 

Air quality and pollutant emissions from maritime shipping 
Clean air matters to all EU citizens3. Air pollution seriously impacts people's health 
and  the  environment.  Hence,  the  objectives  to  reduce  air  pollution  have  been  an 
important element of the EU's environment policy over the past decades.  

Significant  progress  has  been  made  in  reducing  air  pollution,  notably  from  land-
based  sources,  albeit  sustained  health  and  environmental  damage  will  continue  to 
occur  for  the  foreseeable  future.  Whilst  the  EU  is  well  on  track  to  resolve  the 
problem  of  ecosystems  damage  due  to  acid  deposition  of  air  pollution,  ecosystem 
biodiversity  remains  under  serious  threat  due  to  excess  nutrient  deposition 
(eutrophication).  Likewise,  there  remain  widespread  problems  with  high  levels  of 
ground-level  ozone  damaging  both  vegetation  and  human  health.  In  summary, 
several  of  our  air  quality  standards  such  as  those  for  ground-level  ozone  (O3), 
particulate matter (PM) and nitrogen dioxide (NO2) are widely exceeded in the EU, 
especially in urban areas4.   

3  
4  

http://ec.europa.eu/environment/archives/barometer/pdf/summary2008_environment_en.pdf 
Data from EEA website suggest that for 2005 35 % of EU's urban population lived in cities where the 
EU PM10 standard is exceeded and 25% where the EU NO2 standard (for 2010) is exceeded.  

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The  setting  of  environmental  standards  for  international  shipping  has  so  far  lagged 
behind those of land-based resources given the latter's closer proximity to populated 
areas.  The  growth  of  the  international  shipping  sector  and  improved  insights  in  the 
contribution  of  their  emissions  to  inland  air  pollution  levels  directed  attention  to 
maritime emissions as a major source of air pollution. Emissions of SO2 and PM are 
primarily  linked  to  the  type  (quality)  of  fuel  being  used:  liquid  fuels  used  for 
maritime  transport  (like  for  other  modes  of  motorised  transport,  industrial, 
commercial  combustion,  and  domestic  heating)  contain  sulphur  which  is  released 
upon combustion in gaseous form, predominantly as SO2. Following its release into 
the atmosphere, SO2 reacts with other pollutants and forms PM which is referred to 
as secondary PM (SO2 is a precursor of PM). Other pollutant emissions arising from 
the  combustion  of  liquid  fuels  include  primary  PM  and  NOx.5    More  recently, 
attention  has  also  turned  to  emissions  of  "black  carbon"  from  shipping  due  to  its 
radiative  forcing  properties  which  significantly  contribute  to  the  arctic  climate 
impacts.   

Air  pollution  from  international  shipping  (sailing  also  outside  12  miles  zones  or 
territorial waters) is regulated by MARPOL Annex VI and by the Directive.   
MARPOL Annex VI covers issues such as sulphur oxides (SOx) and nitrogen oxides 
(NOx)  and  recognizes  the  need  for  additional  protection  in  sea  areas  particularly 
sensitive  or  relevant  to  pollution,  the  so  called  Emission  Control  Areas  (ECAs).6  
Considering  that  northern  Europe  is  particularly  affected  by  acidification,  and  that 
SO2  emissions  from  shipping  are  a  major  contributor  to  the  problem,  the  IMO 
defined three sea areas as SECAs following proposals from Member States, i.e. the 
Baltic and North Sea and the English Channel.7   
The  Directive  has  been  the  main  instrument  for  transposing  IMO  MARPOL 
agreements  into  EU  law.  The  incorporation  of  IMO  standards  into  EU  law  aimed, 
inter alia, at reinforcing the (weak) international monitoring and enforcement regime. 
The  latest  significant  revision  of  the  Directive  was  reflected  in  Directive 
2005/33/EC,  which  introduced,  inter  alia,  the  IMO  concept  of  SECAs  and  the 
associated stricter fuel standards, i.e. capping the maximum sulphur content of fuels 
allowed  in  those  areas  at  1.5%  from  2006  and  2007  onwards.8    In  addition,  and  in 
recognition  of  the  need  to  further  improve  air  quality  for  the  protection  of  human 
health beyond the SECAs, some requirements that went beyond the IMO rules were 
introduced of which the most important are: 
•  The obligation for ships at berth or anchorage in EU ports to use fuels containing 

max. 0.1% sulphur; 

•  The  obligation  for  passenger  ships  on  regular  service  to  EU  ports  to  use  fuels 

containing a maximum sulphur content of 1.5%; 

•  The  introduction  of  a  possibility  to  test  and  use  the  emission  abatement 

technologies.  

5  
6  

7  

8  

In the case of ship engines, the levels of secondary PM typically exceed the levels of primary PM. 
To have a sea area designated as an ECA, the IMO Member States bordering that sea area have to send 
an application to the IMO. If the proposal meets the criteria set out in Annex VI, the IMO can accept 
the application and adopt the necessary amendment that enters into effect 16 months later. 
Outside  Europe,  the  200  nautical  miles  zone  around  US  and  Canada  has  been  designated  recently  as 
both SOx and NOx ECA. 
Directive 2005/33/EC of 6 July 2005; OJ L 191, 22.7.2005, p. 59. The SECA provisions for the Baltic 
Sea applied from 11.8.2006 onwards whilst those for the North Sea and English Channel applied from 
11.8.2007 onwards.  

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The  conclusion  of  the  2005  amendment  coincided  with  the  finalization  of  the  EU 
Thematic Strategy on Air Pollution which focused particularly on the acidification, 
eutrophication,  and  health-related  impacts  caused  by  fine  particles  (PM,  of  which 
SO2  is  a  precursor)  and  ground-level  ozone  (formed  by  the  interaction  of  NOx  and 
volatile organic compounds or VOCs).9,10 It concluded, inter alia, that unless further 
action was taken at the international level emissions from maritime shipping (notably 
related  to  SO2  and  NOx)  would  exceed  the  sum  of  all  emissions  from  land-based 
sources in the EU by 2020 despite the fact that the maritime transport sector accounts 
for less than 5% of the EU GDP (see Table 1).11,12, 13  

Table 1: Projected emissions from land-based and maritime sources for 2020 

SO2 

NOx 

2000 

2020 

2000 

Land-based sources (kt) 

8,735 

2,805 

11,581 

International sea transport (kt) 

2,430 

3,526 

3,557 

Share of land-based sources (%) 

27.8 

125.7 

30.7 

2020 

5,888 

5,951 

101.1 

Source: Commissions Staff Working Paper accompanying the Communication on Thematic Strategy 
on Air Pollution , based on work from IIASA, RAINS(SEC (2005) 1133) 

Therefore, both the Commission and the co-legislators advocated further reductions 
in marine-based emissions for the purpose of meeting EU environmental and health 
objectives, notably through the International Maritime Organization (IMO). For that 
reason the co-legislators also introduced a clause in article 7 of the 2005 amending 
Directive  to  review  the  Directive  taking  into  account,  amongst  other  elements, 
progress made at the IMO with respect to fuel standards. The latter is described the 
in sections 3.2, 3.3, and 3.6. Other issues arising from reviewing the implementation 
of  the  Directive  and  specific  questions  from  the  co-legislators  are  addressed  in 
sections 3.4, and 3.5, respectively.    

3.2. 

Progress at the IMO – the 2008 amendment of MARPOL Annex VI  

Following  the  above  mentioned  calls  for  further  action,  the  IMO's  Marine 
Environment  Programme  Committee  (MEPC)  unanimously  adopted  an  amendment 
to MARPOL Annex VI in October 2008.14 The amendment introduced, inter alia, a 
step-wise reduction of the maximum sulphur content allowed in marine fuels. These 
changes are summarized below and in Figure 1:   

9  
10  
11  

12  
13  

14  

Decision No 1600/2002/EC on the Environment Action Programme. 
The EU Thematic Strategy on Air Pollution (COM (2005) 446).  
SEC (2005) 1133: Commissions Staff Working Paper accompanying the Communication on Thematic 
Strategy on Air Pollution (COM(2005)446 final) and the Directive on Ambient Air Quality and Cleaner 
Air for Europe(COM(2005)447 final).  
EU Energy and Transport in Figures 2010, Statistical Pocketbook, European Commission. 
These  problems  were  also  previously  acknowledged  in  the  Commission's  Communications  on  the 
Strategy to reduce atmospheric emissions from seagoing ships. See COM(2002) 595 final 
The  IMO  MEPC  October  2008  meeting  was  attended  by  about  1  000  representatives  from  95  IMO 
Parties  (including  22  EU  Member  States),  2  Associate  Member  States,  4  other  UN  Organizations,  8 
Inter-Governmental  Organizations  (including  the  European  Commission)  and  41  Non-Governmental 
Organizations. Of the 22 EU Member States present, Malta is not a Party to MARPOL Annex VI but 
supported the agreement. Austria, Bulgaria, Czech Republic, Hungary and Slovakia did not attend. 

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(1) A  reduction  from  4.50%  by  weight  of  the  sulphur  content  of  all  marine  fuels 
used globally (outside of SECAs) to 3.50% from 1 January 2012 and to 0.50% 
and from 1 January 2020 (the latter subject to a fuel availability review in 2018); 

(2) A  reduction  from  1.50%  by  weight  of  the  sulphur  content  of  all  marine  fuels 
used in SECAs to 1.00% from 1 July 2010 and to 0.10% from 1 January 2015. 

The  2008  amendment  furthermore  introduced  additional  provisions  for  reducing 
emissions of NOx. It also mentions particulate matter PM).15 

Figure 1: The new standards related to the sulphur content of marine fuels contained 
in MARPOL Annex VI as amended in 2008 

5

4,5

4

3,5

3

2,5

2

1,5

1

0,5

Global standard

SECA standard

(

%)
el
u
F
f
o
t
n
e
t
n
o
C
r
u
h
p
u
S

l

0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

All  IMO  provisions  are  technology  neutral,  hence,  ships  may  be  equipped  with 
alternative  emission  abatement  methods  such  as  scrubbers  or  alternative  fuels  (e.g. 
liquefied  natural  gas)  to  achieve  compliance.  This  aspect  is  addressed  in  section 
3.3.2. 

3.3. 

Differences between the EU and IMO provisions regulating shipping emissions 

Following  the  adoption  of  the  new  IMO  MARPOL  Annex  VI,  there  are  now 
significant discrepancies with the provisions of the Directive.    

3.3.1.  Differences related to the maximum sulphur content of marine fuels 

The  main  discrepancies  related  to  the  maximum  sulphur  content  of  marine  fuels 
resulting from the 2008 IMO amendment are summarised in Table 2. 

15  

Measures  adopted  at  the  IMO  related  to  NOx  and  primary  PM  emissions  are  mainly  linked  to  the 
performance  of  the  vessel  engine  and  that  of  exhaust  after-treatment  devices.  Considering  that  the 
Directive  focuses  on  fuel  quality,  including  other  than  marine  fuels,  regulatory  initiatives  to  advance 
emission  reductions  for  NOx  and  PM  are  not  addressed  in  detail  in  this  report.  Such  measures  are 
nevertheless  considered  important  to  be  pursued  in  due  course.  Further  options  will  therefore  be 
assessed as part of a comprehensive review of the Thematic Strategy on Air Pollution starting in 2011 
and due in 2013.  

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Table 2: The new provisions agreed at IMO against those contained in Dir. 1999/32/EC 
Maximum permitted sulphur content of marine fuels (a) 
(Limit Values in the Directive before 2008 Marpol Annex VI) 

SECAs 

Non-SECA areas (aka. Global standard) 

IMO Standard 

EU Standard 

1.0 % as of 2010 
0.1% as of 2015 

3.5% as of 2012 
0.5% as of 2020(b) 

1.5% 

Unregulated 

Notes: 

(a) All flags, including vessels whose journey began outside the Community;  
(b) Possibility to delay to 2025 subject to review in 2018.  

If  no  EU  action  is  taken,  different  rules  on  the  sulphur  content  of  marine  fuels  in 
SECAs  would  apply  in  parallel.  Those  required  by  the  Directive  (1.5%)  would  be 
less strict than the MARPOL Annex VI limits (1.0% as of 1 July 2010 and 0.10% as 
of 1 January 2015 in MARPOL Annex VI).  

Although  legally  undesirable  but  possible,  such  a  situation  would  cause  practical 
difficulties  and  legal  uncertainty  for  stakeholders,  including  Member  States' 
authorities,  ship  operators,  bunker  suppliers.  Maintaining  a  situation  whereby  EU 
environmental  standards  are  more  lenient  than  international  standards  would  also 
send wrong or at least mixed signals to stakeholders. It would for example indicate 
that  the  EU  no  longer  strives  to  uphold  internationally  agreed  standards  for  the 
purpose  of  protecting  its  citizens  and  the  environment.  In  addition,  the  EU 
enforcement mechanism would only apply to the less stringent sulphur limits set in 
the Directive, while compliance with MARPOL Annex VI sulphur limits could only 
be  ensured  by  the  IMO,  which  lacks  a  comprehensive  and  harmonised  compliance 
enforcement mechanism.  

Finally,  it  is  noted  that  the  Directive  currently  covers  only  the  fuel  sulphur 
requirements applying within SECAs. The decision not to include the IMO's "global" 
standard (applying outside SECAs) was justified at the time on the basis of the fact 
that  no  strong  compliance  mechanism  was  required.  That  is  because  the  "de  facto" 
average sulphur content of marine fuels used globally was at a level of around 2.7% 
and  well-below  the  level  allowed  by  MARPOL  (4.5%).  However,  since  IMO  also 
significantly revised the global standard (to 3.5% from 2012 and ultimately 0.5% in 
2020, or 2025 pending review) there is now an equally significant risk that ships may 
use non-compliant fuels comparable to the situation in SECAs. Considering that the 
global standards are forecasted to bring substantial benefits to human health and the 
environment  also  beyond  the  coastal  areas,  an  inclusion  of  the  global  standard  into 
EU law should be considered (see chapter 3). 

3.3.2.  Differences related to the use of "equivalent abatement methods" 

In addition to achieving compliance by using low sulphur fuels, the current Directive 
foresees the possibility to use equivalent emission abatement technologies. However, 
the  range  of  allowed  abatement  technologies  is  limited  in  comparison  to  the 
abatement methods authorised by MARPOL Annex VI.16 If no EU action is taken to 

16  

The  Directive  defines  the  emission  abatement  technology  as  'an  exhaust  gas  cleaning  system,  or  any 
other  technological  method  that  is  verifiable  and  enforceable’,  while  MARPOL  Annex  VI  defines 
'equivalents' as 'any fitting, material, appliance or apparatus to be fitted in a ship or other procedures, 
alternative fuel oils, or compliance methods used as an alternative (…)'. 

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broaden the scope of the Directive and to align it with MARPOL Annex VI, EU ship 
operators  would  have,  compared  to  operators  of  ships  of  non-EU  flags,  a  limited 
choice of options to achieve compliance using equivalent methods. The discrepancy 
could also pose difficulties for non-EU ships travelling in EU territorial waters that 
are equipped with abatement methods recognised outside of the EU, but not allowed 
by  EU  rules.  This  limitation  of  the  ship  operators'  compliance  options  needs  to  be 
revisited  also  in  view  promoting  the  development  of  new  or  innovative  greener 
technologies in the EU as advocated by the EU 2020 Strategy and to ensure a level 
playing field compared to the rest of the world.   

3.3.3.  Environmental standards for passenger ships 

The  present  Directive  requires  passenger  ships  operating  outside  SECAs  and  on  a 
regular service to or from EU ports to use marine fuels with a maximum permitted 
sulphur content of 1.5% (equal to the SECA standard applying until June 2010). As 
mentioned  in  section  3.1,  this  provision  went  beyond  the  requirements  of  IMO 
MARPOL Annex VI. It was introduced in the Directive as an additional health and 
environmental safeguard considering that passenger ships operate mostly in ports or 
close to coastal areas, hence having a greater adverse impact than other ships. At that 
time the 1.5% fuel grade was available on the market following demand from ships 
operating  in  SECAs.  However,  with  the  2008  amendment  to  MARPOL  Annex  VI, 
the  sulphur  content  of  marine  fuels  in  SECAs  is  limited  to  1.00%  from  July  2010 
onwards and it will be further reduced to 0.10% in 2015. This raises the question to 
what extent the provisions on passenger ships should continue to be aligned with the 
new standards for SECAs also considering the state of play of air quality in the EU. 

3.4. 

Other issues arising from the review of the implementation of the Directive 

The review of the implementation of the Directive yielded a number of issues which 
could  undermine  the  enforcement  of  key  provisions  of  the  Directive,  in  particular 
now that the standards have been tightened at the international level. The key issues 
to  be  addressed  in  the  new  post-2008  context  are  summarized  below.  A  detailed 
report is provided in Annex IV of this report.17     

3.4.1.  Member State reporting 

Member State reports on the sampling of fuels submitted pursuant to article 7 of the 
Directive were found to vary significantly in structure and content, with many reports 
exhibiting  significant  information  gaps.  Few  reports  distinguished  between  fuels 
used  for  marine  or  similar  land-based  uses,  making  the  assessment  of  compliance 
levels  with  marine  fuels  difficult  if  not  impossible.  Furthermore,  although  EMSA 
concluded that the information contained in the log books and bunker delivery notes 
is  quite  reliable,  it  was  not  used  as  a  source  of  information  for  the  reporting.  The 
present  situation  thus  rendered  the  assessment  of  the  level  of  compliance  with  the 

17  

Whilst the review was due in 2008, it was postponed to account for the outcome of the negotiations at 
the International Maritime Organisation (IMO) which were concluded at the end of the same year. This 
allowed a more comprehensive assessment of the impacts the IMO provisions on the European shipping 
sector and of a possible transposition into EU legislation. It is furthermore noted that the Directive and 
the review cover in principle also other than fuels used for marine shipping. The use of such other fuels 
has either been removed from the scope of Directive 1999/32/EC (e.g. road transport fuels or fuels used 
by inland water vessels) or use has gone down significantly over time.  Hence, these were not further 
covered by the present analysis. 

EN 

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Directive  very  difficult  also  because  the  Directive  currently  lacks  clarity  on 
minimum sampling standards (see also below).    

3.4.2. 

Sampling frequency and methods 

Reports  by  Member  States  furthermore  showed  that  the  number  and  frequency  of 
fuel samples taken in the EU are very low (typical 1 sample per 1000 ships), hence 
insufficient  to  ensure  a  representative  view  about  the  fuel  quality  used  and  sold  as 
required  by  the  Directive.  Samples  were  furthermore  almost  exclusively  used  to 
monitor  the  sulphur  content  of  fuels  covered  by  the  Directive  whereas  Article  7.1 
specifically requests monitoring of other maritime fuels not directly covered by the 
Directive,  i.e.  fuels  having  to  comply  with  the  existing  global  limit  for  sulphur  of 
4.5%.  Whilst  the  level  and  quality  of  sampling  and  analysis  has  often  not  met  the 
requirements  of  the  Directive,  problems  seem  to  stem  also  from  a  lack  of  clear 
provisions on the frequency and analytical methods to be used. Fuel sampling-based 
studies  conducted  by  EMSA  found  evidence  of  non-compliance  with  several 
provisions of the Directive thus adding to the concerns. 

3.4.3.  Adapting the Directive to recent technical progress and standards 

Several of the internationally recognised technical standards and definitions set out in 
the Directive have been revised since their inclusion in the text of the Directive and 
would therefore require updating. These include: 

• 

• 

test  methods  of  the  International  Standards  Organization  used  to  determine  the 
sulphur  content  of  fuels  and  referred  to  in  the  Directive,  i.e.  ISO  8754:1992, 
PrEN ISO 14596 and EN 24260:1987. These standards were updated by ISO to 
8754:2003, EN ISO 14596:2007 and EN 24260:1994 respectively; 

international standards for defining and specifying marine fuels which underwent 
a  revision  in  2010  (ISO  8217:2010)  thus  making  changes  necessary  to  the 
definitions of marine fuel, marine diesel oil and marine gas oil in the Directive. 

If  the  Directive's  rules  on  fuel  specifications,  the  verification  of  samples,  or 
arbitration  methods  remain  unchanged,  the  discrepancies  would  continue  to  exist 
whilst  ultimately  causing  problems  for  ship  operators,  in  particular  for  ships 
operating internationally (as different standards would apply inside and outside of the 
EU).  

3.4.4.  Legal clarity 

Finally, and based on recurrent queries to the Commission, additional clarifications 
in  the  Directive  might  serve  stakeholders'  efforts  in  applying  the  rules  of  the 
Directive correctly. Specific provisions are, for example, related to the definitions for 
"passenger  ships  on  regular  service",  "port  area",  and  the  provisions  related  to  the 
verification procedure for fuel oil samples.   

3.5. 

Additional Emission Control Areas and complementary measures 

In  addition  to  the  elements  outlined  above,  the  co-legislators  called  on  the 
Commission  to  consider  the  benefits  and  costs  associated  with  the  creation  of 
additional ECAs and other alternative and complementary measures. The EU is not a 
signatory of MARPOL Annex VI and has no mandate to make proposals to the IMO. 

EN 

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However,  the  Commission  can  support  Member  States  to  propose  new  ECAs.  The 
2008 amendment to MARPOL Annex VI introduced the possibility to designate NOx 
Emission  Control  Areas  (NECAs)  setting  limit  values  for  emissions  of  NOx  and 
mentioned particulate matter. Following the adoption of the 2008 MARPOL Annex 
VI amendment, several (mainly Nordic) industry groups  called for an expansion of 
the SECAs along the entire EU coastline on the grounds that such an EU-wide SECA 
would  address  intra-sectoral  competition  issues.  So  far,  no  new  ECAs  have  been 
proposed  for  approval  at  IMO.  Meanwhile,  the  parties  to  the  Helsinki Commission 
(HELCOM), are considering to propose the designation of the Baltic Sea as the first 
European NECA to the IMO.18 Such introduction of NECAs in the EU would make 
EU-level enforcement of NOx standards a relevant issue albeit that it would require a 
significant  extension  of  the  scope  of  the  present  Directive,  as  it  focuses  on  fuel 
quality  rather  than  emission  limit  values,  or  adoption  of  a  new  instrument.  Similar 
remarks apply to transposing PM provisions into EU law once they are developed at 
the IMO19.  

3.6. 

The baseline 

3.6.1. 

The policy baseline 

For  the  purpose  of  this  impact  assessment  the  "policy"  baseline  includes  the 
provisions agreed at the international level as reflected in the 2008 amendment of the 
IMO MARPOL Annex VI which are binding for most EU Member States as already 
explained in section 2.2.3. It furthermore includes the current provisions of Directive 
1999/32/EC as amended (2005/33/EC), including the shortcomings identified above.    

3.6.2. 

The post-2008 environmental and socio-economic baseline   

Compared  to  the  business-as-usual  scenario  defined  in  2005  (see  section  3.1),  the 
2008 agreement is expected to deliver significant pollutant emission reductions from 
the  shipping  sector  as  part  of  the  baseline.  Table  3  shows  the  emission  reduction 
effects in the Baltic and North Sea SECA which are expected to exceed 90 per cent 
for  SO2,  and  up  to  80%  for  PM.  Outside  SECAs,  reductions  are  less  or  even 
cancelled  out  due  to  growing  transport  volumes.  Theoretically,  additional  demand 
for distilled fuels may result in increased emission of CO2 emissions up to 5% from 
EU  refineries  in  the  2010-2015  period.  Since  refineries  are  covered  by  the  EU 
Emission  Trading  Scheme,  no  net  increases  in  greenhouse  gases  are  expected  to 
occur. 20  

Table 3: Impact of MARPOL Annex VI on emissions from international shipping 

Projected ship emissions for 
2020 without MARPOL 
agreement 
NOx 
404 

PM 2.5 
29 

SO2 
171 

(kt) 
Baltic Sea 

Projected ship emissions for 
2020 with 2008 MARPOL 
agreement 
NOx 
349 

PM 2.5 
4 

SO2 
14 

18  

19  

20  

HELCOM is an intergovernmental organisation for the protection of the environment in the Baltic Sea 
area. See also: http://www.helcom.fi/press_office/news_helcom/en_GB/Maritime_9/ 
At the moment, the revised MARPOL Annex VI only mentions the particulate matter (PM) in the title 
of Regulation 14 with no specific limit values. 
Rather  an  overall  reduction  of  GHG  emissions  is  expected  since  emissions  from  engines  using  low 
sulphur distillate fuels are lower compared to HFO and because of other operational benefits such as the 
reduced need for pre-heating of heavy fuels at the bunkering sites. 

EN 

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North Sea 
Mediterranean

406 
1714 

946 
2311 

68 
198 

32 
1714 

816 
2220 

13 
97 

Source: http://ec.europa.eu/environment/air/pollutants/pdf/nec6.pdf 

Monetised  benefits  associated  with  the  post-2008  emission  reductions  and  the  cost 
ranges for complying with the new IMO standards are summarized in Table 4. The 
benefit/cost  ratios  associated  with  the  IMO  decision  taken  in  2008  are  highly 
favourable. Benefits associated with full IMO compliance are at least between €3 and 
€13 for every €1 spent whilst for the EU SECA s the benefits are at least between €5 
and €25 for every €1 spent. 

Table  4:  Benefits  and  Costs  associated  with  the  IMO  rules  adopted  in  2008  (AEAt, 
2009) 

2020
(€billion)

Benefits

Costs

Benefit/Cost ratio

High
Low

High
Low

High
Low

Use of 0.1% sulphur 
marine fuel in SECAs 
(Baltic Sea, North Sea, and 
the English Channel) 

Use of 0.5% 
sulphur marine 
fuel in non-
SECAs 

Full IMO 
compliance 
(SECAs and non-
SECAs)

23
10

4,6
0,9

5,0
25,6

11
5

6,4
1,7

1,7
6,5

34
15

11
2,6

3,1
13,1

Benefits  relate  to  human  health  benefits  only  (reduced  mortality  and  morbidity). 
They  do  not  include  monetized  environmental  benefits  (e.g.,  from  reduced 
acidification  and  eutrophication)  nor  economic  benefits  linked  to  reduced  crop 
losses.  The  higher  amounts  follow  the  established  monetisation  of  benefits  of  the 
CAFE21 programme. The lower amounts flow from the experimental NEEDS project 
figures and are included only for sensitivity analysis purposes.22  

The high-end cost estimates reflect a compliance strategy based primarily on the use 
of low sulphur marine fuels. Such strategies require the supply and use of distillate 
instead of the currently used residual fuels. Refineries will have to adjust or expand 
capacity to meet the new demand.  

The  low-end  cost  estimates  assume  a  compliance  strategy  based  primarily  on 
equivalent  emission  abatement  methods.  Examples  include  vessels  fitted  with 
scrubber technology that remove SO2 from the exhaust gas, or vessels propelled with 
alternative  fuels  such  as  liquefied  natural  gas  (LNG).  Options  for  lowering  the 
average compliance costs are further elaborated in chapter 5.2.2.  

21  
22  

Clean Air for Europe Programme. 
The range of benefits results from the use of different assumptions to monetise premature death. The 
monetised  benefits  presented  are  nevertheless  considered  to  underestimate  the  full  benefits.  That  is 
because the benefits arising from positive effects on other receptors including ecosystems, agriculture 
and buildings, including cultural heritage, are not included. 

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3.6.3.  Competiveness issues and issues related to possible modal shifts 

the  monetized  benefits  yielding  from 

Although 
the  2008  IMO  agreement 
significantly exceed the estimated compliance costs, concerns about the incidence of 
those  costs  on  specific  industry  sectors  were  raised  by  several  stakeholders.  Most 
concerns focused on the new 0.1% standard applying in SECAs from 2015 onwards. 
The  short-sea  shipping  sector,  for  example,  feared  that  the  introduction  of  this 
standard would negatively impact on their competitiveness vis-à-vis road transport.   

Eight  studies  were  commissioned  by  the  European  Commission  to  support  the 
revision  of  the  Directive.  One  of  them  assesses  the  possible  impacts  of  the  0.1% 
sulphur  limit  in  SECAs,  notably  on  short-sea  shipping  due  to  its  role  in  the  EU 
sustainable  transport  policies.  A  series  of  studies  on  the  impact  of  the  MARPOL 
Annex VI fuel requirements on SSS in SECAs were conducted by stakeholders. The 
European Maritime Safety Agency (EMSA) conducted a follow-up assessment also 
summarising  the  findings  of  studies  commissioned  by  other  stakeholders.23  These 
studies  are  listed  in  Annex.  I.24  Further  details  on  fuel  consumption  and  fuel  price 
developments are provided in Annex VII.  

Table  5  summarizes  our  key  findings  even  though  it  is  noted  again  that  certain 
studies, notably those commissioned by industry associations, yield more significant 
impacts  associated  with  the  implementation  of  the  new  IMO  rules.  Findings  on 
modal shift are discussed separately below.   

23  
24  

The 0.1% sulphur in fuel requirement as from January 2015 in SECAs, EMSA, 13 December 2010 
All studies develop a scenario (besides others) that assumes the 0.1% sulphur limit will be met in 2015 
exclusively by means of using distillate fuels in the form of MGO. Since the price of MGO is higher 
than the price of the currently used HFO, all studies conclude that fuel costs will increase. The studies 
differ in their assumptions on the baseline price to be expected in 2015 and the subsequent development 
of  the  fuel  price.  The  estimates  for  the  price  of  1  ton  of  MGO  in  the  year  2015  range  from  €379  to 
€1250. With  regard  to  price  development,  some  st udies  argue  that  the  price  of  MGO will  rise  due  to 
increased  demand  whereas  one  study  suggests  a  decrease  due  to  economies  of  scale  in  refining.  The 
EMSA analysis concludes that under normal circumstances the price for MGO will be in the range of 
€450  to  €680.  Compared  to  HFO  with  a  sulphur  content  of  1.5%  (SECA  standard  before  MARPOL 
Annex VI was revised) it is predicted that MGO with a maximum sulphur content of 0.1% would on 
average  become  65%  more  expensive  under  a  fuel-based-only  compliance  scenario  (i.e.  whereby  the 
less costly technology-based compliance is not used).  

EN 

14 

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Table 5: Summary of costs and similar impacts arising from implementing the 2008 
IMO agreement 

Refineries 

Cost of fuels 

Consumer prices 

Ship operators' costs 

Trade 

Third countries 

Maximum  additional  investment  in  refining  capacity  of  €10 
billion,  (beyond  €15  billion  already  foreseen)  over  the  six-year 
period  2010-2015.25  Increase  in  unit  operating  costs  due  to 
increased GHG emissions in the range of $0.04 to $0.13 per barrel 
equivalent or between 1% and 4% of operating costs.26   

Fuel  price  increase  of  65%  (middle  estimate  of  Purvin  and 
Gertz).27   

Negligible cost increase as 1) fuel prices are a fraction of transport 
costs and 2) transport costs are a fraction of end-user prices (TML, 
2010).28 

TML's worst case scenario estimates total cost increases between 
6% (RoPax) and 29% (LoLo) (fuel-based compliance only;  more 
details are provided in annex VI) 

According  to  Purvin  and  Gertz  (2009)  operational  costs  are 
estimated  to  increase  by  between  6.5%  and  24%  for  SSS  and  by 
40% for certain container lines (fuel-based compliance only). 

Industries most likely to be affected are paper pulp and iron ore in 
the Nordic region (low value goods transported by bulk carriers). 
The effect on trade is not expected to be significant (TML,2010).  

In  the  Mediterranean  region  the  global  standard  will  apply  from 
2020  (pending  review).  Syria  is  the  only  non-EU  coastal  state  in 
the region that has ratified MARPOL Annex VI. In the Baltic Sea 
the Russian Federation now ratified Annex VI. Since the Russian 
Federation has land borders with the EU there may be impacts on 
cross-border  trade  under  the  baseline  should  enforcement  of  the 
rules  be  not  stringent  enough.  Specific    impacts  need  to  be 
assessed  on  a 
route-by-route  basis.  There  will  also  be 
environmental and health benefits in third countries due to reduced 
trans-boundary  air  pollution  from  EU  ships  meeting  IMO 
obligations. 

Several studies assessed the effect of the increased fuel price with regard to the total 
transport costs and the consequence for export oriented industry and/or with regard 
to potential shifts in transport modes. Whilst it is undisputed that the transport pattern 

25  

26  

27  

28  

Purvin  and  Gertz  (2009),  Impacts  on  the  EU  Refining  Industry  and  Markets  of  IMO  Specification 
Changes and Other Measures to Reduce the Sulphur Content of Certain Fuels.  
Assuming a worst-case scenario where only a low sulphur fuel compliance option is available but no 
technological equivalents, are used to meet compliance. Hence these estimates are considered to reflect 
an upper range. 
Purvin and Gertz (2009). Estimates are considered to reflect an upper range for the same reason referred 
to in the footnote above.  
TM Leuven (2010), The COMPetitiveness of EuropeAn Short-sea freight Shipping compared with road 
and rail transport 

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15 

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in  SECAs  will  change,  no  coherent  scheme  emerged  as  to  the  pattern  of  those 
changes. The EMSA summary report draws the following conclusions:29 

• 

Increased  fuel  costs  will  affect  profit  margins  for  the  shipping  sector  and  have 
some  effects  on  the  short-sea  shipping  patterns  in  SECAs,  albeit  the  risk  for 
modal (back) shifts to road transport applies mainly to certain routes to and from 
the Baltic States and English Channel under the high-cost fuel-only compliance 
scenario; 

•  Medium distance routes would be more affected than shorter or longer routes as 
transport  operators  favour  shorter  sea  segments  as  opposed  to  a  truck  only 
option;  

•  Routes that have a low degree of utilisation are more prone to receive additional 

traffic.  

•  Cargo  and  container  ships  are  more  affected  than  ferries  whereby  low  value 

cargoes are more vulnerable; 

•  Existing  shipping  routes  that  were  competitive  already  when  using  1.5%  HFO 

will remain so after 2015 when the 0.1% limit applies.  

In sum, the ultimate impact of the new IMO rules will vary depending on the specific 
route taken, the ship and commodity type (cargo), length of sea segment and whether 
a  ship  operator  can  pass  on  increased  fuel  prices  to  its  customers.  Some  studies 
conclude  that  certain  industries  competing  with  businesses  located  in  countries 
outside SECA zones would have a competitive disadvantage. Examples of products 
concerned  include  forest  products/paper,  metals/ore  and  to  a  smaller  extent 
foodstuffs, building materials and chemicals.  

4. 

OBJECTIVES 

4.1. 

General objectives 

Considering the progress made at the IMO and the issues that arose from reviewing 
the implementation of the Directive, the general objectives being pursued during the 
present review are: 

a)   To ensure the delivery of the health and environmental benefits by reducing the 

negative impacts of air pollutant emissions from shipping; 

b)   To ensure the functioning of the internal market for maritime shipping, EU ports, 

and fuels and emission abatement technologies used in shipping. 

4.2. 

Specific objectives 

In  addition,  a  number  of  specific  objectives  have  been  pursued  in  line  with  the 
problem characterization and baseline issues described in chapter 3. These are:   

(1) 

To ensure alignment of EU law with the latest international rules on maritime 
fuels and pollution, including the adaptation to advanced technical standards 
and technologies; 

29  

Based on a price for MGO in the range of €450 to €680 

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16 

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(2) 

(3) 

To  identify  additional  and/or  alternative  measures  for  reducing  the  negative 
environmental impact of emissions from maritime shipping on human health 
and the environment;    

To  strengthen  and  enhance  the  implementation  of  the  EU  monitoring  and 
enforcement regime ensuring compliance with the Directive.  

4.3. 

Consistency with the other European Union policies 

Consistency  with  other  EU  policies  and  stated  priorities  has  been  sought  in  the 
development of the policy options. Policies particularly considered include "Europe 
2020",  notably  in  relation  to  its  smart  and  sustainable  growth  priorities  and 
associated flagship initiatives such as the 'Resource Efficient Europe' and 'Innovation 
Union'  30,  and  more  specifically  EU  policy  promoting  of  environmental  friendly 
transport  modes.  Where  appropriate,  guidance  from  relevant  Council  meetings  has 
been  accounted  for.  Examples  include  the  2  December  2010  Transport  Council 
conclusions  that  emphasised  the  need  for  a  comprehensive  approach  to  address  the 
intra EU waterborne transport environmental issues whilst inviting the Commission 
to  "closely  monitor  Short  Sea  Shipping  cost  developments  and  to  propose  and 
evaluate  possible  responses  aiming  at  avoiding  possible  distortions  in  the  logistics 
chain  and  modal  backshift  from  sea  to  land  […].  The  White  Paper  on  competitive 
and sustainable transport calls for a reduction of GHG emissions from the transport 
sector,  inter  alia,  through  a  decarbonisation  by  improving  energy  efficiency  and 
developing new sustainable fuels.  

4.4. 

Treaty base and the subsidiarity principle 

The  right  for  the  EU  to  act  on  the  regulation  of  the  sulphur  content  of  liquid  fuels 
with significant impact on the internal market and the environment is established in 
Article 3 of the Treaty.  

Given  that  the  IMO's  new  requirements  on  marine  fuels  will  de  facto  bind  ship 
operators, there is a question of whether there is sufficient added value in transposing 
these  new  regulations  from  the  IMO  into  EU  law  and  whether  such  a  course  is 
proportionate and consistent with the subsidiarity principle. 

Compliance  with  the  subsidiarity  principle  depends  on  two  tests.  Firstly,  the 
necessity  test  assesses  whether  the  objectives  can  be  sufficiently  achieved  by 
Member  States.  Incoherent  transposition  of  the  2008  IMO  MARPOL  Annex  VI 
amendments  by  Member  States  could  potentially  lead  to  distortions  of  the  internal 
market  for  the  shipping  industry,  port  operators  and  suppliers  of  marine  fuels.  The 
lack of EU action would lead to two coexisting but inconsistent legal systems (2008 
MARPOL  Annex  VI  and  Directive)  resulting  in  an  unequal  implementation  of 
international rules.  

Secondly,  the  EU  value-added  test  considers  whether  objectives  can  be  better 
achieved  by  action  at  EU  level.  The  legal  framework  of  international  agreements 
such as MARPOL lacks the mechanisms that would ensure an even enforcement of 
the rules on the sulphur content of liquid fuels across the EU. Unequal enforcement 

30  

COM(2010)  2020,  Communication  from  the  Commission  on  “EUROPE  2020  -  A  strategy  for  smart, 
sustainable and inclusive growth” 

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17 

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practices would undermine compliance with the environmental standards set at IMO, 
with  associated  negative  health  and  environmental  impacts,  and  would  introduce 
distortions to the internal market. 

In  conclusion,  action  at  EU  level  is  necessary  to  deliver  a  harmonized  legal 
framework  to  meet  the  objectives  associated  with  the  transposition  of  the  2008 
MARPOL Annex VI amendments.  

5. 

POLICY OPTIONS AND THEIR ASSESSMENT 

The sections below list and assess the policy options that were identified to address 
the general and specific objectives defined during the review process.  

5.1.  Method and criteria for assessing impacts 

The  methodology  recommended  by  the  impact  assessment  guidelines  was  adopted 
for the purpose of comparing the policy options. The impacts of the different policy 
options were considered according to their effectiveness, efficiency, as well as legal 
certainty and coherence with standing EU objectives and priorities. For each of the 
respective policy options, a 'do nothing' or 'option 0' has been considered.   

5.2. 

Options for aligning EU law with the latest international maritime fuel rules 

5.2.1.  Options for aligning the maximum sulphur content of marine fuels  

The sulphur content of marine fuels in the EU is to a large extent regulated through 
the Directive. The latest international agreement on this issue makes it necessary to 
consider updating several provisions in the Directive. The options here are: 

Option 0 

Do not incorporate the 2008 IMO amendment of MARPOL Annex 
VI relating to the sulphur content of marine fuels into the Directive 

Option 0- 

Repeal Directive 1999/32/EC  

Option 1 

Option 2 

Incorporate  the  2008  IMO  amendment  of  MARPOL  Annex  VI 
relating to the sulphur content of marine fuels into the Directive 

Incorporate  the  amendment  with  (a)  earlier;  (b)  later  dates  for  the 
entry into force of the obligations to move to lower sulphur fuels. 

Option  0  was  discarded  at  the  early  stages  of  the  analysis  as  it  would  result  in 
parallel  and  inconsistent  regulations  that  would  lead  to  mixed  signals  to  operators 
and  public  authorities  and  create  distortions.  The  main  motivation  to  transpose 
MARPOL Annex VI provisions into EU law is to ensure its application by the EU's 
monitoring and enforcement infrastructure and experience. This is deemed necessary 
because  IMO  does  not  systematically  verify  the  transposition  and  enforcement  of 
these  provisions  by  its  parties.  The  implementation  of  the  2008  provisions  on  the 
sulphur content of fuels may result in significant marine fuel price increases creating 
an incentive for circumvention strategies: 

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•  Not  complying  with  IMO  standards  would  yield  lower  operating  costs  for  ship 
owners  thus  allowing  to  gain  illegitimate  operating  margins  (higher  profits)  or 
lower transport fees (higher volumes).  

•  By not monitoring or enforcing IMO standards, ports could attract higher traffic 

volumes.  

Moreover,  harmonised  transposition  and  enforcement  of  the  MARPOL  Annex  VI 
provisions would ensure a level playing field across MS, including those who have 
not yet signed and ratified this Annex.  

Option  0  minus  was  discarded  for  similar  reasons.  This  option  would  not  only 
abolish the EU's system of enforcement. Provisions that go beyond IMO rules would 
also  be  lost  (e.g.  on  fuels  used  at  berth  or  for  passenger  transport).  Furthermore, 
options 0 and 0-minus would not be in line with the overall EU objective to improve 
human health and environment.  

Option 1 was retained. This option aligns EU rules on the sulphur content of liquid 
fuels  used  in  maritime  transport  with  international  law  (the  2008  IMO  MARPOL 
Annex  VI)  and  would  be  consistent  with  the  EU's  commitment  to  honour  and 
enforce international agreements. Equally, it would meet the rights and obligations 
of  Member  States  under  international  law,  while  making  the  EU's  compliance 
mechanisms  available  to  Member  State  authorities  as  well  as  stakeholders  covered 
by the IMO provisions. Option 1 would furthermore extend the scope of the current 
Directive to include the global standard (non-SECA standard). The inclusion of the 
global  standard  in  the  Directive  would  bring  together  all  applicable  marine  fuel 
sulphur  standards  in  one  legal  text,  which  would  provide  greater  legal  clarity  and 
ensure that the environmental and health benefits associated with the IMO sulphur 
standards applicable outside SECAs materialize. Further, EU law offers a framework 
for  monitoring  and  enforcement,  which  is  lacking  at  IMO,  allowing  the 
harmonization  of  rules  across  the  territorial  waters  of  Member  States.  The  global 
sulphur standard of 0.5% from 2020 (or 2025 pending review) will have economic 
implications  for  operators,  indicating  that  harmonized  and  robust  monitoring  and 
enforcement will be necessary. The impacts associated with keeping this option are 
therefore considered the same as those expected to occur for the baseline scenario, 
albeit  with  more  certainty  that  the  full  environmental  and  associated  monetized 
impacts on health would be reaped. Option 1 would contribute towards meeting the 
general objectives defined in Chapter 4 and specific objective 1 in a most effective 
way  as  it  would  align  EU  law  with  the  more  ambitious  international  sulphur  limit 
standards  while  ensuring  that  these  standards  are  properly  enforced  as  well  as 
ensuring the proper functioning of the internal market. This alignment would foresee 
the same date of entry into force for the new sulphur standards as MARPOL Annex 
VI, providing legal certainty for stakeholders.  

The  variants  developed  under  option  2  were  discarded.  Incorporating  the 
amendment at a later date (option 2.b) could leave Member States which are Parties 
to MARPOL Annex VI in breach of international law if they decided to implement 
its rules only when implementing the Directive. Incorporating the amendment at an 
earlier  date  (option  2.a)  would  advance  these  benefits.  However,  there  are 
transitioning  costs  associated  with  the  change  to  the  new  MARPOL  Annex  VI 

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provisions. As such it is recommended that the full amount of time until IMO rules 
come into force is given to operators.  

5.2.2.  Options for aligning the provisions allowing the use of "equivalent methods" 

Option 0 

Option 1 

Option 2 

Maintain the current Directive's approach to achieve the reduction of 
SO2  emissions,  i.e.  fuel-based  compliance  as  a  rule  and  limited 
possibilities for technology-based compliance 

Align  the  Directive  with  the  IMO  provisions  that  allow  a  broader 
range of equivalent emission abatement methods  

The  same  as  option  1  but  complemented  with  additional  safeguard 
measures  to  those  already  developed  by  IMO  to  ensure  that 
equivalent abatement methods do not cause environmental damage.  

Option 0 (no EU action) was discarded for the reasons described in section 3.3.2. 

Option  1  would  provide  the  most  effective  and  efficient  way  to  achieve  the 
objectives  defined  in  Chapter  4  as  it  would  allow  the  use  of  a  broader  range  of 
abatement methods to meet the sulphur emission limits, at the same providing more 
cost-effective means of compliance compared to petroleum fuel based compliance.  

Liquefied natural gas (LNG) is virtually sulphur free and its use for the propulsion of 
ships  is  an  attractive  alternative  to  reach  compliance  with  MARPOL  Annex  VI.  
LNG  propelled  ships  also  emit  less  PM,  NOx,  and  GHG  improving  their  overall 
environmental performance. The current price for LNG is more than 50% lower than 
the  price  of  heavy  fuel  oil,  resulting  in  pay  back  times  for  the  additional  costs  of 
LNG  engines  of  less  than  a  year.  The  current  lack  of  sufficient  LNG  supply 
infrastructure, however, remains a challenge but the use of LNG as fuel could be a 
suitable option in particular for short-sea shipping.   

Scrubber technologies use fresh or sea water in order to remove SO2 from exhaust 
gases  with  a  potential  efficiency  of  more  than  90%.  Following  successful  trials, 
classification  societies  have  already  certified  such  equipment  for  use.  According  to 
their manufacturers, scrubbers are currently available for use in ships.31 As outlined 
in the example below which assumes a yearly fuel consumption of 30 000 tonnes, the 
installation  of  scrubber  technology  can  be  significantly  cost-effective  when 
compared to fuel-based compliance. Pay-back times comparatively short suggesting 
to significantly increasing the cost-effectiveness of the IMO decision 2008.   

31  

EMSA, December 2010 

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Example 

Comparison of the costs of compliance of a cruise ferry, with a combined engine power of 
40MW, requiring 30K tonnes fuel per year, operating in a SECA requiring the use of 0.1% 
sulphur fuel or achievement of equivalent emissions of SO2 using a sea water scrubber.  
1) Yearly fuel costs for 0.1% sulphur fuel32:       
2) Yearly fuel costs HFO                                     
Estimated investment costs for the scrubber:   
Total:                                                               

13.5 – 20.4  
9.9  
3  
12.9  

M€ 
M€  33 
M€ 
M€ 

3) Scrubber pay-off time in relation to fuel:  

8 - 12   months  

The 2009 AEAt study estimated annual abatement costs resulting either from the use 
of  low-sulphur  fuel  or  from  the  use  of  equivalent  technology/scrubbers.  Table  6 
summarizes the result for the Baltic Sea and the North Sea.  

Table 6: Regional IMO compliance costs (Million Euros, 2020) 

Baltic Sea 

SO2 scrubber cost 

Low sulphur fuel cost 

North Sea 

SO2 scrubber cost 

Low sulphur fuel cost 

Low 
scenario 

price 

High  price 
scenario 

120 

977 

284 

2302 

540 

1180 

1271 

2778 

Depending on the price scenario, the cost of using scrubber technology reduces the 
overall compliance costs with the 0.1% SECA standard between 50% and 88%. The 
cost difference between the use of low sulphur fuel and the installation of scrubbers 
to  achieve  the  same  reduction  of  SO2  emissions  is  considerable  and  it  can  be 
anticipated that ultimately the use of scrubbers will prevail as a compliance option.  

It  should  be  noted,  however,  that  the  use  of  abatement  methods  incurs  operational 
costs  as  regards  monitoring  of  compliance.  On  the  other  hand,  safeguard  measures 
developed at international level for alternative methods might need to be reassessed 
with  regard  to  their  impact  on  vulnerable  European  ecosystems  such  as  brackish 
waters, enclosed ports and estuaries. For example, the impact on ocean acidification 
in  case  of  widespread  use  of  sea  water  scrubbers  and  releases  into  the  marine 
environment of substances other than SO2, such as polyaromatic hydrocarbons, may 
make it necessary to revise criteria for the discharge of wash water for the exhaust 
gas  cleaning  systems  when  more  data  becomes  available.  Moreover,  scrubbers 
generate sludge that requires proper processing following transfer to waste reception 
facilities.  Safety  guidelines  might  be  necessary  to  ensure  safe  treatment  of  the 
sludges. .  

Option 2 was retained. Like option 1, this option aligns EU rules with international 
rules  whilst  incorporating  a  mandate  for  the  Commission  to  develop,  if  deemed 
necessary, safeguard measures to ensure that equivalent abatement methods do not 
cause  damage  to  health,  safety  or  environment.  This  would  entail,  for  example,  a 

32  
33  

Based on a price for MGO in the range of €450 to €680 
Price for HFO with 2.97% sulphur content projeted by Purvin and Gertz study (2009): 420USD. It is 
assumed that operational costs including additional fuel consumption for exhaust gas cleaning add 4% 
to the fuel costs.   

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review  and  possible  strengthening  of  the  IMO  wash-water  criteria  applying  to 
scrubbers.  

The  overwhelming  majority  of  respondents  to  the  public  consultation  (72%) 
supported  this  option,  while  one  fifth  suggested  that  additional  safeguards  to  those 
already  developed  by  the  IMO  should  be  considered  to  ensure  that  abatement 
methods do not cause damage to health, safety or the environment. 

5.2.3.  Options for adapting the Directive to technical standards 

Option 0 

Do not align EU law with the most recent ISO and CEN standards 

Option 1 

Align  references  and  definitions  in  the  Directive  with  the  latest 
international standards. 

The most recent ISO and CEN standards reflect the most up-to-date knowledge. In 
view of maintaining the Directive in line with the most recent standards option 0 is 
discarded  and  option  1  kept  as  the  most  efficient  and  effective  in  meeting  the 
objectives  defined  in  Chapter  4.  The  application  of  the  internationally  recognised 
technical  standards  is  also  important  to  ensure  legal  certainty  for  stakeholders.  A 
clear majority of stakeholders supported option 1. 

5.2.4. 

Fuel verification procedure 

Two  concurrent  methods  for  the  statistical  interpretation  of  the  verification  of  the 
sulphur content of marine fuels are applied by different Member States, which results 
in lack of clarity for shipping operators: 

Option 0 

Do not change current provisions 

Option 1 

Introduce ISO method 4259 for fuel verification; 

Option 2 

Adopt IMO fuel verification procedure 

The  'do  nothing'  option  0  is  discarded  as  it  does  not  provide  an  effective  and 
efficient  solution  to  meeting  the  objectives  defined  in  Chapter  4.  To  ensure  legal 
certainty for ship operators the Directive should indicate more clearly which method 
is to be used for the purposes of assessing compliance. Further, the Directive should 
refer to only one method as such an approach is sufficient for sampling and analysis 
purposes  and  will  improve  clarity  (at  the  moment  there  is  a  reference  to  two  ISO 
methods). 

IMO  and  ISO  methods  differ  in  their  minimum  test  requirements  making  the  ISO 
methods less precise and less costly. However, the IMO method is statistically more 
reliable  and  thus  provides  a  higher  legal  certainty  compared  to  the  ISO  method. 
Option 1 is discarded and option 2 is retained. A majority of more than 60% of 
the respondents of the public consultation supported option 2.  

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5.3. 

Options for additional and alternative measures to improve the environmental 
performance of the shipping sector 

5.3.1. 

Additional Emissions Control Areas and emission limit values 

Option 0 

Option 1 

Do  not  introduce  new  ECAs  and  emission  limit  values  for  NOx  in 
the Directive 

Introduce new ECAs or new emission limit values as a requirement 
in the Directive 

An  initial  assessment34  of  the  costs  and  benefits  associated  with  the  designation  of 
the  Mediterranean  and  the  Black  Sea  as  additional  ECAs  for  both  SOx  and  NOx 
suggested  that  the  benefits  exceed  the  costs,  although  the  benefit-cost  ratio  would 
likely be smaller than for the existing European SECAs. However, option 1 cannot 
be fully assessed at this point of time. In order to allow for an improved analysis 
necessary to meet IMO's ECA criteria and for an assessment of emission limit values 
as an instrument to regulate ship emissions, option 0 is retained for the time being.  

The  Commission  intends  to  proceed  with  additional  analysis,  also  looking  at  the 
costs and benefits of additional ECAs. The overwhelming majority of respondents to 
the public consultation (close to 70%) were of the view that the EU Member States 
should endeavour to establish new SECAs in the EU. 

5.3.2.  Options for reducing emissions from passenger ships on regular service 

Option 0 

Maintain the 1.5% obligation for passenger ships 

Option 0 - 

Remove current obligation to comply with 1.5% sulphur content for 
passenger ships, implying the use of 3.5% fuel until 2020 and 0.5% 
fuel thereafter 

Option 1 

Option 2 

Restore  the  link  with  the  SECA  sulphur  content  in  fuel  provisions, 
introducing the new 0.1% limits for passenger ships as of 2015 

Restore  the  link  with  the  SECA  sulphur  content  in  fuel  provisions 
for passenger ships, introducing the new 0.1% limit in 2020 

The  cost-benefit  analysis  associated  with  the  present  options  under  review  is 
provided in Table 7 below. It uses the high price scenario of the AEA study in order 
to calculate the additional costs compared to the baseline of 0.5% fuel use.  

34  

AEAt  (2009),  Cost  Benefit  Analysis  to  support  the  impact  assessment  accompanying  the  revision  of 
Directive 1999/32/EC on the sulphur content of certain liquid fuels. 

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Table 7: Cost-benefit analysis assessing the introduction of the 0.1% fuel standards for 
passenger ships operating outside SECAs on a regular service 

Costs of compliance 
using low-sulphur 
fuel 

Costs of compliance 
using scrubbers 

€ million/year 

Benefits 

Benefits / costs 
ratio for scrubber 
use  

2015 

2020 

2025 

0 

304 

368 

0 

57 - 157 

45 - 168 

0 

- 

102 – 339 

1.5 – 6 

132 – 455 

0.8 – 10 

The  results  suggest  that  the  compliance  costs  for  using  low  sulphur  fuel  are  in  the 
same  order  as  the  expected  benefits.  A  cost  benefit  analysis  based  on  the  more 
realistic scenario of achieving compliance by  using scrubbers indicates net benefits 
of up to 10 euro for each euro spent (see table 6).  

Option 0 implies the use of 1.5% fuel until the global standard of 0.5% comes into 
force  in  2020.  This  corresponds  to  the  baseline  (do  nothing  option)  and  would 
therefore  bring  no  additional  environmental  benefits  in  the  non-SECA  areas.35 
Considering 
the 
Mediterranean sea, option 0 is discarded as it would be inconsistent with the general 
and specific objectives being pursued.  

the  persistent  air  quality  problems,  notably  also  around 

Option  0  minus  is  equally  discarded  as  it  would  allow  passenger  ships  operating 
outside  SECAs  to  use  fuel  with  a  sulphur  content  of  3.5%  at  least  until  2020  and 
would lead to a worsening of environmental and health impacts. This option would 
have negative effects on meeting the objectives defined in Chapter 4 and would not 
be coherent with the overall EU objective to improve the environment and citizens' 
health.  

Option  1  is  discarded.  This  option  would  have  positive  health  and  environmental 
impacts.  However,  it  would  not  be  the  most  efficient  option  from  the  economic 
perspective as it could further increase demand for 0.1% fuel and thus put additional 
pressure on a market that needs to adjust to new fuel requirements.   

Option 2 reflects the scenario whereby the maximum sulphur content for passenger 
ships  operating  outside  SECAs  in  a  regular  service  would  be  lowered  from  the 
present level of 1.5% to 0.1% in 2020. Option 2 would be slightly less effective in 
meeting  the  health  and  environmental  objectives  as  it  would  be  introduced  5  years 
later than option 1. It would be more efficient from an economic perspective while 
giving passenger ships more time to ensure compliance with the new sulphur limits 
and  thus  is  an  effective  and  pragmatic  approach  to  meet  specific  objective  2.  An 
assessment of a possible increase of an individual ferry passage is only feasible at the 

35  

Passenger ships operate mostly in ports or close to coastal areas and their impacts on human health and 
the  environment  are  typically  greater  per  tonne  of  emissions  than  other  types  of  ships.  In  particular, 
many passenger ships on regular service such as ferries operate on schedules that entail a residence time 
at ports of less than two hours. In such a case, ferries are not obliged to carry out a switch to 0.1% fuel 
and  may  continue  to  use  fuel  of  a  higher  sulphur  content  contributing  to  low  ambient  air  quality 
observed in port cities. To address this issue the obligation for all ships to meet 1.5% in SECAs was 
extended to passenger ships operating with regular service in non-SECAs.  

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level  of  individual  routes,  albeit  impact  on  end-consumer  prices  is  assumed  to  be 
negligible.  Considering  the  costs  of  fuel  based  compliance  and  the  costs  of 
compliance  applying  alternative  methods,  an  increase  of  the  operating  costs  in  the 
range of 2-13% may result. The Compass Study examined the cost structure of small 
and  large  passenger  ferries  (RoPax)  and,  according  to  this  study,  the  share  of  fuel 
costs for these ships is between 16 and 19% of the daily operating costs.   

5.3.3. 

Emission Trading Options 

The use of an emissions trading scheme to meet environmental goals, could be more 
efficient  (cost-effective)  in  meeting  the  objectives.  In  2005  the  Commission 
published  a  study  on  the  feasibility  of  using  economic  instruments  to  reduce  ship 
emissions in the EU36. This followed from an initial study published in 200437. The 
study focused on a selection of economic instruments, namely emissions trading and 
voluntary  differentiated  port  charges.  In  addition  the  study  also  considered  the 
possibility  of  using  public  subsidies  to  meet  environmental  objectives.  The  key 
recommendation of the study supported emissions trading as more cost-effective than 
'command-and-control'  legislation  (although  on  the  basis  of  a  set  of  assumptions, 
including  0.5%  minimum  sulphur  content  of  fuels  in  SECAs).  However,  a  more 
recent  study  specifically  focusing  on  the  issue  (for  both  SO2  and  NOx)  concluded 
that  it  is  not  legally  possible  to  deviate  from  or  offset  the  MARPOL  Annex  VI 
requirements  (applicable  to  individual  ships)  through  an  EU  Emissions  Trading 
System  (ETS)  unless  such  a  possibility  was  created  within  the  IMO  framework 
(VITO 201038). The study also concluded that, under the assumptions that individual 
ships  comply  with  MARPOL  Annex  VI  and  that  there  would  be  the  possibility  to 
trade with land-based emission sources, there was limited scope for SO2 trading. As 
no  IMO  agreement  currently  exists  allowing  for  environmental  objectives  set  at 
international  level  to  be  met  by  an  emissions  trading  scheme,  this  option  has  been 
discarded. 

5.4. 

Options  for  strengthening  the  monitoring  and  enforcement  provisions  to 
enhance the implementation of the Directive 

5.4.1.  Options for strengthening the provisions on sampling and analysis of fuels 

The  requirement  in  the  Directive  for  representative  sampling  and  analysis  allows  a 
wide  range  of  interpretation.  Also,  the  Directive  does  not  set  out  what  format 
Member  State  reporting  should  take.  Reports  from  Member  States  differ  widely  in 
format  and  content  and  do  not  allow  an  assessment  of  the  implementation  of  the 
Directive.  

Option 0 

Do not change current provisions 

Option 1 

Issue  non-binding  guidelines  at  EU  level,  developed  by  the 
Commission itself or with the support of stakeholders (e.g., EMSA, 

36  

37  

38  

Economic Instruments for Reducing Ship Emissions in the European Union (2005)  
http://ec.europa.eu/environment/air/pdf/task3_final.pdf 
Evaluation of the Feasibility of Alternative Market-Based Mechanisms To Promote Low-Emission 
Shipping In European Union Sea Areas (2004) 
http://ec.europa.eu/environment/air/pdf/04_nera_report.pdf 
Market-based instruments for reducing air pollution (VITO, June 2010)I 

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CEN, Member States) 

Option 2 

Produce harmonized binding rules 

Option 3 

Foresee  developing  a  non-binding  guidance  at  a  first  stage  and, 
should  this  approach  fail,  consider  adopting  binding  rules  (a 
combination of option 1 and 2) 

Option 0 is discarded as it would not provide an effective and efficient solution to 
meet the objectives defined in Chapter 4. Option 3 (a combination of options 1 and 
2) is the preferred option as it would provide a more efficient solution compared to 
option  1  or  2  alone.  0ption  3  is  in  line  with  the  general  approach  to  EU  policy 
making, i.e. to choose a lighter course of action, if possible, and only if that approach 
fails to introduce binding rules. The review showed that problems of non-compliance 
often  stem  from  a  lack  of  understanding  on  how  to  implement  the  rules  of  the 
Directive.  Therefore,  guidance  can  be  the  most  efficient  means  to  meet  specific 
objective 3, mentioned in section 4.2., as it also incurs lower transaction costs than 
option 2. However, the non-binding character of the measure is not optimal from a 
legal certainty and effectiveness point of view, so this option foresees the possibility 
to  adopt  binding  rules  if  the  lighter  approach  does  not  deliver  the  expected  results. 
Option  3  also  best  meets  the  divided  views of  stakeholders  expressed  in  the  public 
consultation.  The  public  consultation  showed  an  overwhelming  support  for 
strengthening the enforcement of rules on the sulphur limit for marine fuels.  

5.4.2.  Options for improving legal clarity and certainty 

The need to provide clarification on the definition of "port area" and "passenger ships 
on regular service" was set out above in section  3.4.4 and Annex IV.   

Option 0 

Do not change current provisions 

Option 1 

Option 2 

Same as option 0 but issuing guidance to assist stakeholders with the 
interpretation and implementation of the Directive 

Include  a  definition  for  "Passenger  ships  on  regular  service"  and 
"Port area"; 

Option 0 is discarded as it would not clarify the status of passenger ships on regular 
service and port area under the Directive.  

Option  1,  supported  by  a  substantial  number  of  stakeholders  that  expressed  their 
opinion in the public consultation, is kept as it is sufficient to keep the possibility for 
the Commission to issue guidance on the enforcement of the Directive with regard to 
port areas and passenger ships on regular service. This option seems more efficient 
than option 1 as provides competent authorities with flexibility necessary to take into 
consideration local circumstances. Even though option 1 seems to provide more legal 
certainty than option 2, the rigid definition could provide room for circumvention. 

Option 2 is equally discarded as too strict definitions may introduce undue loopholes 
or insufficiently address local circumstances.  

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5.5. 

Supplementary measures to address impacts on short sea shipping 

Option 0 

Option 1 

Option 2 

No measures specifically addressing possible modal shift from sea to 
land-based transport 

Adaptation  of  existing  measures  to  specifically  target  impact  on 
modal shift 

Develop  additional  approaches  for  a  sustainable  waterborne 
transport 

The  EMSA  summary  of  available  studies  on  the  impact  of  the  0.1%  sulphur 
requirement in SECAs on short sea shipping concludes that this provision will have 
some  effects  on  shipping  patterns.  This  may  justify  future  measures.  Option  0  is 
discarded because it would exclude potential measures.  

Option 1 would allow for measures to support SSS industry for a transitional period, 
with the objective of reducing undesirable modal shift from sea-based to land-based 
transport. Such a package might include the adaptation of existing measures (e.g. the 
Marco Polo programme or the TEN-T programme) in a way which addresses the new 
challenges. This would not incur additional costs to existing programmes. The vast 
majority of respondents to the public consultation supported this option. 

Option  2  would  imply  additional  measures.  Such  measures  may  require  new 
proposals and need further studies and stakeholder consultation to be further assessed 
to be integrated in a more comprehensive policy framework. An overview of existing 
and additional measures is provided in Annex VIII.  In line with the objectives of the 
future White Paper for Transport and the revised TEN-T policy, the Commission will 
present  a  multi-dimensional  action  approach  --'a  sustainable  waterborne  transport 
toolbox'--  which  could  assist  the  sector  to  improve  its  environmental  performance 
while maintaining its competitive position. 

The  main  policy  objectives  will  be  to  improve  the  environmental  performance  and 
energy efficiency of the Short Sea Shipping, while protecting the internal market for 
SSS.  It  will  also  endeavour  to  provide  for  the  right  infrastructure  which  would 
support clean technology, and encourage green shipbuilding. 

The  sustainable  waterborne  transport  toolbox  could  include  regulatory  measures, 
green 
funding 
instruments, research and innovation. Further details are elaborated in annex VIII.  

infrastructure,  economic  and 

technology,  alternative 

fuels, 

Option 2 requires further assessment. Under current evidence option 1 is kept as an 
efficient  and  effective  means  of  meeting 
the 
environmental  and  health  benefits  by  making  the  sulphur  limits  stricter,  while 
providing  support  to  the  affected  industry.  At  a  later  stage  option  2  may  be 
considered. 

the  objective  of  delivering 

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6. 

6.1. 

SUMMARY OF THE IMPACTS ASSOCIATED WITH THE PREFERRED OPTIONS 

Summary of baseline, retained options, benefits and costs (€ billion, 2020) 
Baseline ("no action") 

Retained options 

Benefits 
1. Alignment of EU law with revised MARPOL rules 
Alignment of maximum sulphur content of marine fuels 

Costs 

Do not incorporate the 2008 MARPOL Annex 
VI provisions relating to the sulphur content of 
marine fuels into the Directive 

Maintain limited possibilities for technology-
based compliance 

Incorporate 2008 MARPOL Annex VI 
provisions relating to the sulphur content of 
marine fuels into the Directive (option 1) 

Ensure full environmental and health benefits, 
harmonized and improved enforcement 

Risk of undue modal backshift to land based 
transport on some routes 

Alignment of the provisions related to the equivalent emission abatement methods 

Broadening of the allowed technology-based 
compliance complemented with additional 
environmental safeguards (option 2) 

A more cost-effective means of ensure full 
environmental and health benefits, harmonized 
and improved enforcement 

Adaptation to advanced technical standards 

Legal certainty 

Reduced compliance costs compared ranging 
between €3.7 and 8.4 billion  

Immaterial 

Do not align EU law with the most recent ISO 
standards and international definitions 

Align references and definitions in the 
Directive with the latest international standards 
(option 1) 

Do not change current provisions on the 
method of analysis 

Do not introduce new ECAs and ELVs in the 
Directive 

Maintain the 1.5% obligation for passenger 
ships 

Do not change current provisions 

Legal certainty 

Not significant when compared to fuel price 

Adopt IMO fuel verification procedure  
(option 2) 

Fuel verification procedure 

2. Designation of additional ECAs and/or emission controls 
Additional emission control areas and emission limit values 

Baseline is the retained option 

Allows refinement of cost benefit analysis 

Costs of inaction: unrealised env and health 
benefits 

Environmental standards for passenger ships on regular service 

Link with the SECA standard for passenger 
ships 0.1% limit in 2020 (option 2)  

Monetized health benefits ranging between € 
102 – 339 million 

3. Strengthening the implementation of the Directive 
Sampling ,and analysis of fuels, definitions of regular service and port area 

Develop non-binding guidance followed by 
binding rules if necessary 

Tiered and proportionate approach 

4. Supplementary measures to address impacts on short sea shipping 

Compliance costs ranging between € 57 – 304 
million 

Effectiveness uncertain 

No measures on possible modal shift (sea- to 
land-based transport) 

Adaptation of existing measures to specifically 
target impact on modal shift (option 1)  

Reduction of undesirable modal shifts; 
promotes innovation 

No additional costs, redirecting public funds 
from other uses 

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6.2. 

Environmental Impacts 

The  transposition  of  the  IMO  provisions  relating  to  the  sulphur  content  of  marine 
fuels  into  EU  legislation  has  a  priori  no  additional  major  environmental  impact  as 
IMO provisions cover 84.23% of world shipping tonnage and all but one costal state 
of  the  EU  are  parties  to  MARPOL  Annex  VI.  The  added-value  of  a  transposition 
results  from  the  strengthening  of  the  enforcement  of  the  IMO  requirements.  An 
estimate  of  the  environmental  impacts  is  a  function  of  the  extent  Member  States 
would enforce IMO provisions on fuel quality in the absence of EU legislation. The 
implementation  of  any  legislation  incurring  potentially  significant  costs  requires 
strong enforcement. Therefore only mandatory enforcement at EU level will ensure 
the delivery of the predicted environmental benefits of the IMO provisions.  

As  an  alternative  to  the  use  of  low  sulphur  fuel,  compliance  with  the  sulphur 
requirements can be achieved by using scrubber technology. Scrubbers do not only 
reduce  the  SO2  content  of  exhaust  gases  but  reduce  also  other  pollutants  such  as 
NOx and particulate matter to some degree. On the other hand, scrubbers increase the 
fuel  consumption  of  a  ship  by  1-3%  and  cause  an  increase  of  greenhouse  gas 
emissions if no further measures to increase the overall energy efficiency of a vessel 
are taken. A cost-effective measure is for example to marginally decrease the speed 
of  a  ship.  A  future  inclusion  of  the  maritime  sector  under  EU  ETS  would  cap  any 
increase  in  CO2  emissions  and  would  incentivise  reduced  fuel  use.  Additional 
safeguard  measures  may  become  necessary 
to  avoid  a  negative 
environmental  impact  from  the  use  of  emission  abatement  methods.  The  chosen 
option provides for the possibility to develop such measures.  

in  order 

The designation of new Emissions Control Areas for emissions of SO2 and NOx and 
the introduction of emission limit values for NOx would result in a reduction of the 
emissions  of  these  pollutants  and  the  formation  of  secondary  particulate  matter. 
However, since IMO has not yet agreed on such measures it would be premature to 
propose new ECAs or other emission limits at EU level at this point.  

The maximum sulphur content allowed for passenger ships on regular service outside 
SECAs  will  decrease  from  1.5%  to  0.5%  as  of  2020  (pending  review,  the 
introduction  of  this  provision  might  be  postponed  to  2025).  An  introduction  of  the 
0.1% standard to international passenger shipping instead of the 0.5% standard will 
have a significant environmental impact on emissions in the Mediterranean Sea, the 
North East Atlantic and the Black Sea.  

Measures  addressing  compliance  monitoring,  reporting,  adaptation  to  technical 
progress  and  legal  clarity  improve  implementation  of  legislation  and  thus  have  a 
positive environmental impact.  

6.3. 

Economic Impacts  

The IMO agreement is considered to be a cost-effective internalization of pollution 
damages,  thus  moving  the  economy  to  a  more  efficient  equilibrium.  This  effect  is 
part of the baseline. In addition to the baseline, the harmonization of the enforcement 
of  IMO  rules  at  EU  level  will  contribute  to  a  more  level  competitive  field  for 
economic operators across intra-EU borders. 

EN 

29 

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Costs  resulting  from  the  2008  IMO  requirements  on  the  sulphur  content  of  marine 
fuels are included in the baseline. Broadening the present provisions for "equivalent 
emission  abatement  methods,  will  help  achieving  the  benefits  associated  with  the 
new  IMO  at  significantly  reduced  costs  with  savings  ranging  between  €3  and  8 
billion  by  2020  or  between  50  and  80  percent  of  the  baseline  costs.  Demand  for 
alternatives  to  low  sulphur  fuels  will  stimulate  innovation  and  productivity  in  the 
abatement technology market.  

Direct  costs  resulting  from  the  transposition  of  the  IMO  provisions  on  the  sulphur 
content of fuels are limited to additional sampling and analyses necessary to further 
verify  the  global  fuel  standard.  Compared  to  baseline  compliance  costs,  these 
additional cost are negligible.  

The  0.1%  fuel  standard  for  passenger  ships  operating  on  regular  service  outside  of 
SECAs will result in additional yearly compliance costs of €57 million-€300 million 
(for  details  see  table  8).  Consumer  prices  (e.g.  for  the  use  of  a  ferry)  are  likely  to 
increase.  The  wider  monetized  impacts  on  health  of  this  measure  are  generally 
expected  to  exceed  these  costs.  This  provision  harmonizes  the  fuel  standards  for 
passenger ships operating within and outside of SECAs. Therefore, it contributes to a 
level  playing  field  for  the  passenger  ship  industry  in  the  EU.  The  provisions  on 
compliance monitoring, reporting, adaptation to technical progress and legal clarity 
will strengthen and harmonize implementation of the Directive and are expected to 
reduce  distortions  of  competition  in  the  internal  market  for  port  services  and 
maritime shipping.  

6.4. 

Social Impacts 

The  implementation  of  IMO  provisions  at  EU  level  will  deliver  significant  human 
health benefits. The IMO agreement may lead to some shifts in employment from the 
maritime  sector  to  the  land-based  transport  sector.  The  significant  relative  cost-
effectiveness  of  abatement  technologies  is  expected  to  increase  investment  in  this 
sector and to generate high-quality jobs. All of these effects are part of the baseline.  

For the purposes of the impact assessment most non-baseline provisions are expected 
to  have  limited  additional  health  and  employment  effects.  An  exception  is  the 
implementation  of  provisions  on  passenger  ships,  which  is  additional  to  the  IMO 
agreement. These provisions will deliver increased human health benefits. Measures 
improving  compliance  monitoring,  reporting,  adaptation  to  technical  progress  and 
legal clarity contribute to good governance and to public access to information. 

6.5. 

Administrative burden 

'Administrative  burden'  is  defined  as  information  obligations  that  are  placed  on 
citizens,  businesses  or  public  administration  (excluding  the  EU)  by  EU  legislation 
and  that  entail  financial  costs.  These  obligations  can  be  to  provide,  record  and/or 
keep information. Following the EU guidelines for the assessment of administrative 
burden, the obligations in the Directive were mapped and changes resulting from the 
proposed were assessed on their significance. The changes introduced, either in terms 
of  increases  or  decreases  in  administrative  burdens,  are  deemed  not  significant  in 
relation  to  the  existing  provisions  of  the  Directive  (the  'baseline').  Detailed 
information on this assessment can be found in Annex IX.  

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30 

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7. 

MONITORING AND EVALUATION 

7.1. 

Indicators of progress towards meeting the objectives 

The  core  indicators  for  measuring  progress  against  the  general  and  specific 
objectives set for this policy initiative are the following: 

(1)  Trends in the levels of emissions from international shipping and their associated 
contribution  to  air  quality  levels  measured  on-shore  pursuant  to  the  EU  air 
quality Directives;  

(2)  Application  of  the  latest  international  standards  by  the  shipping  sector,  their 

suppliers and public authorities;  

(3)  Effective programme of compliance verification based on reporting by Member 

States;  

(4)  Evolution of transport patterns in short sea shipping and land-based transport;  

7.2. 

Outline for monitoring and evaluation planning 

The monitoring and assessment exercises will be based on the reporting requirements 
of  the  Member  States  existing  (and  enhanced)  under  this  and  other  Directives.  In 
particular, the following issues will be addressed: 

•  Assessment of the reports provided by Member States on the sulphur content of 

fuel for comprehensiveness and statistical validity;   

•  Monitoring  of  emissions  and  ambient  air  quality  reported  by  Member  States 

pursuant to Ambient Air Quality Directive (2008/50/EC).  

•  Eurostat reports on transport volumes and modes;  

Member  States'  implementation  will  be  supported  throughout  the  introduction  and 
implementation  of  the  revised  legislation,  including  through  the  implementation 
committees and ad hoc expert groups where appropriate. 

8. 

CONCLUSION AND PREFERRED POLICY MIX 

The  new  international  limit  values  for  the  sulphur  content  of  marine  fuels  are 
expected to significantly reduce emissions of SO2 from the maritime sector. This will 
greatly  contribute  to  achieving  the  general  environmental  objectives  stated  in  the 
2005 Thematic Strategy on Air Pollution as well as the specific objectives stated in 
the  Directive.  It  will  furthermore  yield  ancillary  benefits  in  terms  of  reducing 
emissions  of  NOx  and  PM.  Also,  for  the  purpose  of  promoting  compliance  with 
existing ambient air quality limit values, a problem for several Member States facing 
infringement  procedures,  it  is  essential  to  ensure  that  these  projected  benefits 
materialise.  The  recommended  options  resulted  in  the  overall  policy  package 
summarised in Table 8.   

EN 

31 

  EN 

 
Table 8: Recommended options 

Quality of marine fuels: introduce IMO standard for the maximum sulphur content 
for  vessels  operating  in  and  outside  of  Emission  Control  Areas;  allow  technology-
based  compliance;  in  addition  to  IMO  provisions,  introduce  0.1%  sulphur  limit 
applicable for passenger ships on a regular service.  

Compliance costs and impacts on short sea shipping: clarify the use of mitigating 
measures.  

Implementation:  develop  non-binding  guidance  followed  by  binding  rules  if 
necessary for sampling and analysis of fuels and reporting by Member States, clarify 
terminology.  

It  is  recommended  that  the  Directive  is  fully  aligned  with  the  IMO  rules  related  to 
fuel  standards  so  as  to  complement  the  IMO  regime  with  the  monitoring  and 
enforcement regime offered by EU law. In going beyond IMO provisions, changes to 
fuel standards for passenger ships on a regular service are proposed.  

Furthermore, and while recognizing that the cost implications resulting from the new 
IMO  rules  are  fully  warranted  on  the  basis  of  benefits  and  costs,  certain  specific 
industries  may  face  significant  impacts.  It  is  therefore  also  recommended  that  the 
Directive  recognizes  and  promotes  the  use  of  innovative  emission  abatement 
technologies  as  an  equivalent  compliance  option.  Such  an  option  will  significantly 
lower  the  IMO  compliance  cost,  thus  also  reducing  the  risk  that  ship  owners  and 
operators  will  fail  to  comply  with  the  new  rules  agreed  internationally.  Facilitating 
technology-based  compliance  will  have  ancillary  benefits  in  the  promotion  of 
innovative  solutions  both  within  the  air  pollution  abatement  technologies  industry 
and in those sectors under the scope of the Directive, in line with the priorities of the 
Europe 2020 Strategy. For similar reasons, it is recommended that the Commission 
and Member States use and, where possible or necessary, adapt existing instruments, 
to assist industry in the transition towards the new standards, notably in SECAs.    

To ensure that the monitoring and enforcement as currently defined in the Directive 
is  rendered  more  effective  and  efficient,  certain  limited  modifications  are 
recommended based on the review of the state of implementation.  

The cumulative impacts of the policy package can be summarized as follows:  

•  Full  implementation  of  an  effective  monitoring  and  control  mechanism  to  reap 

the full human health and environmental benefits of the baseline; 

•  Considerable  improvement  of  Member  States  performance  in  meeting  the 
provisions  in  the  Directives  on  ambient  air  quality  and  national  emission 
ceilings; 

•  Positive economic and social benefits from stimulating innovation aimed at the 
development, production and marketing of alternative compliance technologies; 

•  Reduction of the risk of a shift from sea- to land based transport modes; 

• 

Improvement of the monitoring of fuel quality by port state controls.  

EN 

32 

  EN 

 
 
Finally, it is recommended that the transposition of NOx and PM standards that are 
set  in  the  future  by  the  IMO  is  further  considered,  given  that  air  quality  problems 
related  to  ground-level  ozone  and  fine  particles  persist  and  that  there  are  high 
benefit-cost ratios associated with such actions. It is also recommended that further 
analytical work is conducted to support IMO action in this area.  

EN 

33 

  EN 

 
 
ANNEX I  

EXTERNAL STUDIES CONDUCTED IN SUPPORT OF THIS IMPACT ASSESSMENT  

A. Studies commissioned by the European Commission 

1.  Analysis of Policy Measures to Reduce Ship Emissions in the Context of the Revision of 
the  National  Emissions  Ceilings  Directive  (International  Institute  for  Applied  System 
Analysis –IIASA, April 2007) 

2.  Technical  support  for  European  action  to  reducing  Greenhouse  Gas  Emissions  from 

international maritime transport (Delft CE et all, December 2009) 

3.  Greenhouse  Gas  Emissions  for  Shipping  and  Implementation  Guidance  for  the  Marine 

Fuel Sulphur Directive (Delft CE et all, December 2006) 

4.  Impacts On The EU Refining Industry & Markets Of Imo Specification Changes & Other 
Measures  To  Reduce  The  Sulphur  Content  Of  Certain  Fuels  (Purvin  and  Gertz,  June 
2009) 

5.  Cost  Benefit  Analysis  to  Support  the  Impact  Assessment  accompanying  the  revision  of 
Directive  1999/32/EC  on  the  Sulphur  Content  of  certain  Liquid  Fuels  (AEA  et  al., 
December 2009) 

6.  COMPASS:  The  COMPetitiveness  of  EuropeAn  Short-sea  freight  Shipping  compared 

with road and rail transport (TML et al., August 2010) 

7.  Market-based instruments for reducing air pollution (VITO, June 2010) 

8.  The 0.1% sulphur in fuel requirement as from 1 January 2015 in SECAs – An assessment 
of available impact studies and alternative means of compliance (EMSA, December 2010) 

B. Studies conducted or reviewed by the European Maritime Safety Agency 

1.  AEA (2009) – Cost Benefit Analysis to Support the Impact Assessment accompanying the 

revision of Directive 1999/32/EC on the Sulphur Content of certain Liquids Fuels, 
prepared for the EU Commission.  

2.  COMPASS (2010) – The COMPetitiveness of EuropeAN Short sea freight Shipping 
compared with road and rail transport, performed by Transport & Mobility Leuven, 
supported by EU Commission through DG ENV. 

3.  ECSA (2010) – Analysis of the Consequences of Low Sulphur Fuel Requirements, 

performed by University of Antwerpen, Institute of Transport and Maritime Management 
Antwerpen (ITMMA). 

4.  German Shipowners‟ Association and Association of German Seaport Operators (2010) –
Reducing the sulphur content of shipping fuels further to 0.1 % in the North Sea and 
Baltic Sea in 2015: Consequencs for shipping in this area, performed by Institute of 
Shipping Economics and Logistics.  

5.  Maritime Coast Guard Agency (2009) – Impact Assessment for the revised Annex VI of 

MARPOL, performed by ENTEC. 

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6.  Ministry of Transport and communications Finland (2009), Sulphur content in ships 

bunker fuel in 2015, A Study on the impacts of the new IMO regulation on transportation 
costs, performed by the University of Turku, The Centre for Maritime Studies.  

7.  Shipowner association of Belgium, Finland, Germany, Holland, Sweden and UK and 
endorsed by the wider membership of ECSA and ICS (2010) – Study to Review 
Assessments Undertaken of The Revised MARPOL Annex VI Regulations, performed by 
ENTEC. 

8.  SKEMA (2010) – Task 2 and 3 Impact Study on the future requirements of Annex VI of 
the MARPOL Convention on Short Sea Shipping, supported by DG TREN at the time.  

9.  Swedish Maritime Administration (2009), Consequences of the IMO's new marine fuel 

sulphur regulations.  

C. Other relevant studies:  

1.  Miola,  A.  Ciuffo,  B.,  Marra,  M.,  Giovine,  E.,  (2010)  -  Regulating  Air  Emissions  from 
Ships:  The  State  of  the  Art  on  Methodologies,  Technologies  and  Policy  Options.  ISBN 
978-92-79-17733-0. EUR 24602 . EC, Luxemburg  

2.  Miola,  A.  B.  Ciuffo  “Estimating  air  emissions  from  ships:  Meta-analysis  of  modeling 
approaches and available data sources” Atmospheric Environment 45 (2011) 2242- 2251 

3.  Miola, A ,Ciuffo, B., Marra, M., Giovine, E., (2010) “Analytical framework to regulate air 
emissions  from  maritime  transport.  EUR  24297  EN  2010ISBN  978-92-79-15308-2.  EC, 
Luxemburg 

4.  A.Miola, Paccagnan V, Turvani M, Massarutto A, Mannino I, Perujo  A. (2009)External 
Costs of Transportation. Case Study: Maritime Transport. EUR 23837 EN; ISBN: 978-92-
79-12534-8 EC, Luxemburg 

5.  Miola,  V.  Paccagnan,  V.  Andreoni,  A.  Massarutto,  A.  Perujo,  M.  Turvani  (2008)  - 
Maritime  Transport  –  Report  1:  Review  of  the  measurement  of  external  costs  of 
transportation in theory and practice. EU report EUR 23714 EN ISBN 978-92-79-11279-9 
EC, Luxemburg 

6.  V. Andreoni, A., Miola, A., Perujo, (2008) “Cost Effectiveness Analysis of the Emission 
Abatement in the Shipping Sector Emissions” EU report EUR 23715 EN - ISBN 978-92-
79-11280-5, EC, Luxemburg 

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ANNEX II 

INTERNET QUESTIONAIRE 

An  internet  consultation  was  organised  during  the  period  of  29  October  2010  till  6  January 
2011.  A  total  number  of  243  responses  were  received  and  analysed.  Most  replies  were 
received  from  organisations  (75%).  Most  of  the  replies  originated  from  ship  owners  and 
mangers (33.6%) followed by land operators (11.9%) and administrations (11.1%). Hundred 
six submissions are without sector assignment (43%; "other"). However, it should be kept in 
mind  that  a  considerable  number  of  almost  identical  contributions (67 contributions  derived 
from 6 different templates) were submitted. Most respondents (93%) indicated that they know 
the sector and the legislation related to air pollution from ships.  

The main outcome of the consultation can be summarised as follows: 

•  A general support for aligning the Directive with the MARPOL Annex VI provisions on 
the  sulphur  content  of  fuel  including  the  global  standard  was  expressed  in  submissions 
from all sectors. Critical views  

o  referred to high costs and risk of modal backshift; 
o  suggested to reopen discussion on fuel quality at IMO and 
o 
to first address the availability of the 0.1% SECA standard in a feasibility study; 
o  expressed doubts that the current systems of port state controls is in a position to 

enforce the new fuel standards. 

•  Most  respondents  (91%)  support  a  harmonization  of  EU  provisions  on  the  use  of 

abatement technologies with MARPOL Annex VI. Suggestions received propose to 

o  ensure additional safe guard 
o  not to deviate from IMO provisions 
o  regulate exhaust gas cleaning system under the Marine Equipment Directive 
o  request guarantees from equipment manufacturers on the performance 
o  ensure legal certainty (grandfather clause) 
o  not restrict equivalent measures to abatement technologies  
o  harmonise regulations on trial procedures at IMO 

•  A  majority  of  respondents  (85%)  called  for  a  clarification  of  measures  to  mitigate  the 

costs of the new requirements.  

•  With regard to the designation of new emission control areas (ECAs), 69% of the replies 

were in favour of supporting this process at IMO.  

•  As  regards  to  possible  solutions  for  reducing  compliance  costs,  a  strong  support  was 
expressed to support ship owners willing to invest in new technology (82%), to develop 
adequate  infrastructures  to  support  the  use  of  low  emissions  technologies  in  EU  ports 
(66%,  multiple  answers  were  allowed)  and  to  promote  short  sea  shipping  (59%).  The 
following specific actions are summarized as follows:  

o  Provide incentives for early adopters 
o  Establish and emissions trading System 
o  Ensure legal certainty (grandfather clause for installed equipment) 
o  Introduce a system of emission charges similar to the Norwegian NOx fund 
o  Speed up procedure for the approval of new technologies 
o  Support short sea shipping promotion centers 
o  Exceptions for ships operating in arctic areas 
o  Support for investment for retrofitting of existing and for new ships 
o  clarify standards for scrubber wash water discharges 

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o  establish system of reception facilities 
o  no fee for reception facilities 
o  R&D 
o  Internalise external costs of road transport 
o  Widen ECAs in order to increase economies of scale 
o  Synchronise state aid in order to avoid out-flagging 
o  Develop LNG infrastructure 
o  Penalise non-compliant ship owners 

•  The issue of dispute settlement in case the analysis of a fuel sample raises doubts whether 
the sulphur content of a fuel complies with the legal limit was raised. A majority (64%) 
favoured  provisions  for  dispute  settlement  developed  by  IMO.  Keeping  the  ISO  14596 
method was supported by 11% of the replies. 25% indicated "no opinion".  

•  Most respondents (62%) support to aligning the Directive with the new ISO standard on 
distillate  marine  fuels.  One  third  of  the  replies  indicated  "no  opinion".  The  question 
whether  fuel  quality  parameters  other  than  sulphur  content  should  be  specified  in  the 
Directive  raised  split  views:  About  half  (53%)  of  the  replies  were  against,  36%  were  in 
favour and 12% of "no opinion. A two third majority supported the updating of methods 
to measure the sulphur content of fuels, 22% were against, 13% indicated "no opinion".  
•  With  regard  to  enforcement  of  the  sulphur  standards  of  marine  fuels,  about  one  quarter 
(27%) of the replies indicated that current practices ensure efficient control. Two third of 
the  respondents  considered  that  effective  enforcement  helps  to  deliver  the  intended 
environmental  improvements  of  the  lower  sulphur  marine  fuels  and  43%  (multiple 
answers  were  allowed)  point  out  that  harmonized  enforcement  is  important  for  an  equal 
level playing field for ports.  

•  As regard to the harmonisation of sampling each option put forward (guidelines, binding 
rules,  no  action)  received  similar  support.  However,  preferences  varied  considerable 
within  the  stakeholder  groups:  Among  the  ship  owners  and  managers,  71%  considered 
that no action is necessary; whereas not a single land operator or administrator shared this 
view.  Administrators  favour  guidelines  (63%)  and  land  operators  tend  towards  binding 
rules (57%).  

•  Most of the respondents (78%) replied that the fuel supplier should have an obligation to 
provide  fuel  of  the  correct  quality.  At  the  same  time,  29%  (multiple  answers  were 
allowed) considered that this should be the responsibility of the ship operator. Among ship 
owners  this  view  was  more  polarised  (100%  considered  it  an  obligation  of  the  supplier, 
9% of the ship operator) whereas 46% of the land operators regarded it as an obligation 
for  the  ship  operator  and  32%  as  an  obligation  for  the  fuel  supplier.  The  replies  of 
administrators were close to the overall result.  

•  A  clear  majority  (90%)  of  the  replies  called  for  a  publicly  accessible  register  of  marine 

fuel suppliers.  

•  The  consultation  did  not  reveal  any  priority  on  the  fuel  standard  that  should  apply  for 
passenger ships operating on regular service outside SECAs and visiting EU ports. Within 
the  different  stakeholders,  a  majority  of  55%  of  ship  operators  considers  that  even  the 
current sulphur limit should be deleted. Administrators and land operators did not support 
this view. The former considered that further reductions of air pollution out side SECAs 
are  needed  (44%)  or  that  the  global  standard  should  apply  as  of  2020  (37%).  The  latter 
group considered that the global standard should apply (46%) or is of no opinion (36%).  
•  With regard to the clarification of the concept of "regular service", 30% of the respondents 
considered  a  need  to  clarify  this  term.  The  option  to  apply  to  cruise  ships  the  same 
provisions  as  to  passenger  ships  on  regular  service  was  supported  by  25%  of  the 

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respondents  and  20%  of  the  replies  suggested  to  exclude  cruise  ships  from  these 
provisions. "No opinion" was indicated by 25%.  

•  No  clear  picture  emerged  on  the  clarification  of  the  meaning  of  "port  area".  39%  of  the 
respondents favour to add a definition, 34 did not and 27% are of no opinion. Ship owners 
tend  not  to  seek  clarification  (61%  no,  39%  yes).  Land  operators  favour  clarification 
(46%) or have no opinion (50%). Administrators have no preference.  

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ANNEX III   TRENDS  IN  EMISSIONS  FROM  INTERNATIONAL  SHIPPING  AND  RELATED 
IMPACTS  

1. 

DEPOSITION OF SULPHUR AND ACIDIFICATION OF ECOSYSTEMS IN THE EU  

1.1. 

Emissions of sulphur dioxide 

The  emissions  of  sulphur  dioxide  over  the  period  2000  to  2008  for  the  EU-27 
countries and various sea areas are shown in table 1 below  

Area 

Emissions of SO2  in kT per year 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

2007 

2008 

EU-27 

10436  10174  9685 

9206 

8651 

8126 

7870 

7331 

5867 

Baltic Sea 

216 

221 

227 

233 

239 

245 

225 

205 

185 

North 
English Channel 

Sea  & 

Mediterranean 
Sea 

464 

475 

487 

500 

513 

526 

484 

442 

400 

1108 

1137 

1166 

1196 

1227 

1259 

1277 

1292 

1309 

59 

58 

62 
Black Sea 
Table 1: Emissions of SO2 in the EU 2000-2008. Data provided by EMEP (Cooperative Programme 
for monitoring and evaluation of the long-range transmission of air pollutants in Europe; under the 
auspices  of  the  EMEP  protocol  and  the  Convention  on  Long  Range  Transboundary  Air  Pollution; 
(http://www.ceip.at/emission-data-webdab/emissions-used-in-emep-models/)  

66 

61 

65 

66 

66 

64 

Over  the  period  2000  to  2008,  emissions  from  land-based  sources  in  the  EU  have 
decreased  by  approximately  44%.  Against  this  backdrop,  emissions  from  sea  areas 
not  yet  designated  as  SECAs  such  as  the  Mediterranean  Sea  and  Black  Sea  have 
increased over the same period by 18% and 14% respectively. However, emissions 
of sulphur dioxide in the Baltic Sea and North Sea/English Channel show substantial 
reductions following the entry into force of the first SECA in the Baltic Sea in mid-
2006 and the North Sea and English Channel in mid-2007. It should be recalled that 
the  ships  in  the  Baltic  Sea  region  may  have  been  using  fuels  with  lower  sulphur 
content than the global average (c.a. 2.7%) due to the operation of local schemes to 
incentivise cleaner ships, thereby lessening the apparent benefit of the mandatory use 
of fuels with a maximum permitted sulphur content of 1.5% by mass. In addition, the 
estimates  are  based  upon  limited  information  about  ship  activity,  ship  location  and 
limited measurements of ships' actual emissions. 

1.2. 

Sulphur Deposition and acidification of ecosystems 

Ecosystems  vary  in  their  sensitivity  to  acidifying  gases  and  acidifying  deposition 
such  as  sulphur  and  nitrogen  compounds  (NOx  and  ammonia).  This  sensitivity 
depends  upon  several  factors  including  the  so-called  buffering  capacity  of  soils  or 
underlying  geological  formations.  The  sensitivity  is  described  in  terms  of  a  critical 
load of deposition below which damage is not expected to occur. The sensitivity to 
sulphur  is  shown  in  the  figure  below  which  shows  the  5th  percentile  and  median 

EN 

39 

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sensitivity  of  ecosystems39.  Critical  loads  are  generally  lower  and  ecosystems 
generally more sensitive in North Western Europe. 

Figure 1: Sensitivity of ecosystems to sulphur deposition. Data provided by the Coordination Centre 
for Effects under the LRTAP Convention (CCE Status Report 2009). 

The total  amount of sulphur deposited in the EU-27 geographic  region is shown in 
the  table  2  below  for  the  period  2000  to  2008  and  in  figures  2  and  3  below  which 
also  depict  the  contribution  from  shipping  and  land–based  sources  respectively  for 
the years 2000 and 2007. 

Area 

Estimated deposition of Sulphur in kT per year 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

2007 

2008 

EU-27 

3067 

3027 

2894 

2783 

2649 

2583 

2515 

2348 

2024 

Table 2:. Deposition of sulphur in the EU. Data provided by EMEP: Transboundary air pollution by 
main pollutants (S, N, O3) and PM in the European Union; Agnes Nyiri et al,  MSC-W 1/2010. 

Taking  account  of  the  different  scales  in  the  figures  depicting  total  deposition  and 
that  from  shipping,  it  is  clear  that  the  deposition  of  sulphur  due  to  shipping  in  the 
Southern North Sea region for example is significant and of the order of 200–2000 
mg Sulphur(S) m-2 in the year 2000 and of the order of 200–1000 mg S m-2 in 2007. 
This compares to a total deposition from land based sources of 500–2000 mg S m-2 in 
the years 2000 and 2007 respectively. 

The GAINS integrated assessment model from the International Institute of Applied 
Systems  Analysis  (IIASA)  has  been  used  to  estimate  the  evolution  of  ecosystem 
acidification  risk  up  to  2020  and  203040.  Using  an  energy  projection  ('2009 
PRIMES')  incorporating  the  climate  &  energy  package  of  measures  and  current 
legislation on air pollution abatement (including the latest rules from the IMO on the 

39  

40  

EN 

CCE Status Report 2009: Progress in the modelling of critical thresholds, impacts to plant species 
diversity and ecosystem services in Europe; 
http://www.pbl.nl/en/themasites/cce/publications/040/index.html.  
CCE  Status  Report  2009:  Progress  in  the  modelling  of  critical  thresholds,  impacts  to  plant  species 
diversity 
16. 
ecosystem 
http://www.pbl.nl/en/themasites/cce/publications/040/index.html.  

services 

Europe; 

page 

and 

in 

40 

  EN 

 
 
                                                 
sulphur  content  of  marine  fuels),  future  acid  deposition  has  been  calculated  from 
emissions of sulphur dioxide, nitrogen oxides and ammonia.  

S deposition due to ships in 2000 

S deposition due to ships in 2007 

in 
Figure  2:  Sulphur  deposition 
(http://www.ceip.at/emission-data-webdab/emissions-used-in-emep-models/).  

the  EU 

from 

ships.  Data  provided  by  EMEP; 

Total Sulphur deposition in the EU in 2000 

Total Sulphur deposition  in EU in 2007 

Figure  3:  Sulphur  deposition  in  the  EU  from  land  based  sources.  Data  provided  by  EMEP; 
(http://www.ceip.at/emission-data-webdab/emissions-used-in-emep-models/)  

In the EU27, the area at risk from acidification decreases from 19% in 2000 to 5% in 
2020  and  2030.  The  Average  Accumulated  Exceedance  (AAE)41  represents  the 
extent  to  which  an  ecosystem  critical  load  is  exceeded  and  so  long  as  this  remains 
above zero damage is expected at some point in time. The AAE for critical loads for 
acidification  for  the  EU  27  in  2000  was  determined  to  be  105  acid  equivalents  per 
hectare per year (eq ha-1 yr-1) which declines to  17  and 15 eq ha-1 yr-1 in 2020  and 
2030 respectively.  The areas with the largest exceedances in the year 2000 are in the 

41  

The Average Accumulated Exceedance (AAE) is the area weighted average of the difference between 
deposition and the critical load. From the point of biodiversity protection the aim is to reduce the AAE 
to zero.  

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41 

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UK,  Netherlands,  Germany  and  Poland  but  these  exceedance  areas  diminish 
substantially  in  2030  with  some  smaller  exceedance  areas  remaining  in  the 
Netherlands and Poland 

Even  where  the  acid  deposition  falls  below  the  critical  thresholds  recovery  of  the 
ecosystem may take many years during which time damage may still occur. Based on 
information  provided  by  the  Member  States  to  the  Convention  on  Long  Range 
Transboundary  Air  Pollution  (CLRTAP),  damage  will  still  occur  beyond  2100  in 
countries such as the UK and Germany. This recovery time lag can only be shortened 
by reducing the acid deposition (including sulphur) to levels below the critical load. 

2. 

PM AND SO2 AMBIENT AIR QUALITY 

Directive 2008/50/EC42 on ambient air quality and cleaner air for Europe entered into 
force  on  11  June  2008.  It  merged  the  existing  legislation  into  a  single  directive 
(except for the fourth daughter Directive) with no change to the existing air quality 
objectives  including  those  for  sulphur  dioxide  or  PM10.  It  did,  however,  introduce 
new limits and exposure-related objectives for fine particulate matter (PM2.5). 

2.1. 

Emissions of fine particulate matter (PM2.5) 

The emissions of fine particulate matter (PM2.5) over the period 2000 to 2008 for the 
EU-27 countries and various sea areas are shown in table 3 below.  

Area 

Emissions of PM2.5  in kT per year 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

2007 

2008 

EU-27 

1711 

1697 

1634 

1632 

1618 

1571 

1528 

1492 

1490 

Baltic Sea 

North 
English Channel 

Sea  & 

Mediterranean 
Sea 

22 

50 

23 

51 

23 

52 

24 

54 

25 

55 

25 

56 

25 

55 

24 

54 

24 

54 

123 

126 

129 

132 

136 

139 

142 

145 

148 

Black Sea 

6 

6 

7 

7 

7 

7 

7 

7 

7 

Table  3:  Emissions  of  PM2.5 
(http://www.ceip.at/emission-data-webdab/emissions-used-in-emep-models/)  

the  EU  2000-2008:  Data  provided  by  EMEP; 

in 

The  trends  in  emissions  of  primary  fine  particulate  matter  are  similar  to  those  for 
sulphur dioxide in that emissions from land based sources have declined appreciably 
since  2000  (13%)  whilst  those  in  the  SECAs  have  shown  an  increase  than  a  small 
decrease and a levelling off. Emissions in the Mediterranean Sea have been estimated 
to have increased continuously over the period whilst those from the Black sea have 
been relatively stable. 

42  

Directive 2008/50/EC of the European Parliament and of the Council of 21 May 2008 on ambient air 
quality and cleaner air for Europe; OJ L 152, 11.6.2998, p. 1. 

EN 

42 

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2.2. 

PM10 concentrations 

The population weighted mean concentration of PM10 in urban agglomerations varies 
between 27 and 31 µg/m3 for the years 2001 to 2007 with no discernable trend43. In 
2008, 288 zones in 21 Member States (out of c.a. 900 zones in total) did not comply 
with  PM10  air  quality  limits  which  formally  entered  into  force  on  1  January  2005. 
The identity of these zones has been published and is available on the web44. Sixteen 
of the ports in Table 1 (indicated by asterisk) are situated in air quality management 
zones where an exceedance of the daily (and most stringent) air quality limit value 
for PM10 was recorded in 2007 or 2008. These include the major European ports in 
Rotterdam, Antwerp, Marseille and elsewhere.  

The  Air  Quality  Directive  creates  the  possibility  to  postpone  the  deadline  for 
compliance up until June 2011 for PM10 based on conditions and the approval of the 
European  Commission.  The  single  most  important  condition  is  that  the  notification 
must include an air quality plan that delivers compliance by the extended deadline. 
Up until December 2009, notifications concerning PM10 had been received from 18 
Member  States  covering  307  air  quality  management  zones  (out  of  approximately 
900):   

–  For around 16% of these, the Commission did not raise any objection 

–  A further 15% or so of the zones were already in compliance whilst  

–  Objections were raised for approximately 70% of notified zones.  

As  of  mid-2010,  there  were  open  infringement  proceedings  against  21  Member 
States in respect of PM10. 

2.3. 

Sulphur dioxide concentrations 

There are three air quality limit values for sulphur dioxide which entered into force 
from 1 January 2005 for hourly, daily and annual concentrations respectively. Out of 
775 air quality zones, 9 and 11 zones respectively exceeded either the hourly or the 
daily (or both) limits representing about 1% of all zones. In fact substantial decreases 
of  the  order  of  65%  have  been  observed  in  the  measured  concentrations  of  SO2  at 
traffic-related, urban and rural sites in the period 1997 to 2007. However, as of mid-
2010,  there  were  ongoing  infringement  proceedings  in  respect  of  exceedances  in  5 
Member  States  for  one  or  both  of  the  hourly  or  daily  limits  in  respect  of 
concentrations measured in the period 2005-2008. 

The annual average concentration limit for the protection of vegetation in Directive 
2008/50/EC  is  set  at  20µg/m3  and  is  stricter  than  that  for  the  protection  of  human 
health but nonetheless exceedances were observed at only 2 of the rural monitoring 
stations (although exceedances were also seen at industrial, traffic and urban stations 
which are not necessarily relevant for the protection of natural vegetation). 

43  
44  

http://air-climate.eionet.europa.eu/docs/ETCACC_TP_2009_3_eoi2008_2007aqdata.pdf; p. 41 
http://air-climate.eionet.europa.eu/reports/ETCACC_TP_2009_10_prelim_AQQanalysis_2008  

EN 

43 

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3. 

EUTROPHICATION OF ECOSYSTEMS 

The  critical  load  for  nutrient  nitrogen  expresses  the  risk  that  an  ecosystem  will 
undergo  compositional  change  with  a  loss  of  biodiversity  following  excessive 
deposition  of  reduced  and  oxidised  forms  of  nitrogen.  Agriculture  is  primarily 
responsible  for  most  emissions  of  reduced  nitrogen  in  the  EU  in  the  form  of 
ammonia whilst mobile and fixed combustion sources are responsible for emissions 
of nitrogen oxides (oxidised nitrogen). 

The  exceedance  of  the  5th  percentile  critical  load  (of  all  ecosystems)  for  nutrient 
nitrogen is shown in Figure 4 for the year 2000 and 2020 and 2030 under a business 
as usual scenario. In the EU27 area, the ecosystem areas at risk from eutrophication 
are  74%  in  2000,  56%  in  2020  and  54%  in  2030.  In  addition,  the  area  weighted 
average  of  the  difference  between  deposition  and  critical  loads  (so-called  Average 
Accumulated Exceedance) is 331 equivalents ha-1 yr-1 in the year 2000 and estimated 
to  be  152  and  1444  eq.  ha-1  yr-1  in  2020  and  2030  respectively.  From  the  point  of 
view of achieving biodiversity protection, the AAA should be zero otherwise damage 
is expected at some point in the future. 

Figure 4:. Exceedances of the critical load for nutrient nitrogen under a business as usual scenario in the years 
2000, 2020 and 2030 (5th percentile of all ecosystems). Reproduced from the CCE's Status Report for 2009 under 
the auspices of the UN ECE LRTAP Convention. 

Ship emissions of nitrogen oxides contribute significantly to the observed deposition 
of oxidised nitrogen in the EU. Figure 5 shows the deposition due to ships and land-
based sources of oxidised nitrogen in 2008. The figure shows that ships contribute as 
much  as  land  based  sources  in  some  parts  of  North  Western  Europe  bordering  the 
North Sea, Baltic Sea and English Channel. 

EN 

44 

  EN 

 
 
 
 
 
 
 
 
Ship-derived deposition of oxidised nitrogen 

EU-27 land-based deposition 

Figure 5:  Oxidised nitrogen deposition in the EU from ships and land-based sources. Data 
provided by EMEP; (http://www.ceip.at/emission-data-webdab/emissions-used-in-
emep-models/).  

4. 

GROUND LEVEL OZONE 

4.1 

Current ozone air quality 

Impacts of ozone on health are associated with short term effects on the respiratory 
system,  chronic  disease  and  death.  Health  impacts  have  been  observed  at 
concentrations as low as 70µg/m 3 which is below the current guideline of the World 
Health  Organization  (daily  8-hour  average  concentration  of  100  µg/m3).  The 
Commission has estimated that there may be as many as 21 000 cases of premature 
death each year due to acute exposure to ozone. 

The  European  Environment  Agency  prepares  a  report  annually  on  the  observed 
concentrations  of  ground  level  ozone  of  the  previous  summer.  The  latest  report 
covers  ozone  levels  measured  in  200945  and  figure  6  below  shows  the  degree  to 
which  the  long  term  objective  for  the  protection  of  health  was  exceeded.  The  long 
term objective is expressed in terms of a concentration of ozone in air of 120 µg/m3 
expressed as the daily maximum 8-hour mean concentration.  

45  

Air pollution by ozone across Europe during summer 2009: Overview of exceedances of EC ozone threshold values for April–September 2009; EEA Technical 
Report N°2 / 2010. http://www.eea.europa.eu/publications/air-pollution-by-ozone-across-europe-during-summer-2009    

EN 

45 

  EN 

 
 
 
                                                 
N° of monitoring stations with an exceedance of the long term air 
quality objective for ozone 
(120 µg/m3 as daily max 8-hour average concentration) 

2500

2000

Stations with an exceedance

Stations without an exccedance

N° of stations 

1500

1000

500 

0

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

year

Figure 6: . Exceedences of the long term objective for ozone in the EU 

Whilst  EU-27  emissions  of  ozone  precursors,  weighted  according  to  their 
contribution  in  ozone  formation  fell  about  40  %  in  the  period  1990–2005  the 
concentrations  measured  at  rural  ground-level  stations  during  the  summer  months 
show atmospheric ozone concentrations remaining largely unchanged over the period 
1997 to 2009 (and ignoring the extreme year of 2003). The constant baseline levels 
are the net result of a number of possible processes: 

–  the increase in hemispheric background concentrations; 

–  less ozone deposition during the (more frequent) dry periods during summer, 

increased ozone formation due to higher temperatures; 

–  less ozone formation due to emissions reduction.  

Between the late 19th century and 1980, concentrations of background ozone in the 
mid-latitudes of the northern hemisphere doubled to approximately 60–75 µg/m 3 and 
have since increased to 80 µg/m3. The increase since 1980 is not fully understood but 
is thought to be due mainly to increases in emissions from poorly regulated sectors in 
northern hemisphere countries, such as international shipping and aviation. Increased 
ozone  from  the  stratosphere  may  also  have  contributed.  The  Task  Force  on 
Hemispheric  Air  Pollution  (HTAP)  under  the  Convention  on  Long  Range 
Transboundary Air Pollution (LRTAP) will publish a further assessment on ozone at 
the end of 2010. 

It  is  clear  that  Northern  hemisphere  background  concentrations  of  ozone  are  now 
close  to  established  levels  for  impacts  on  health  and  the  terrestrial  environment 
raising concerns about the global impacts of ozone. Importantly, it is now believed 
that the overall impact of ozone on health is driven by the many days when ozone is 
at or slightly above background levels rather than the few days during photochemical 
episodes with very high concentrations. 

EN 

46 

  EN 

 
 
A  comprehensive  study  conducted  by  the  Royal  Society  in  200846  concluded  that 
because  ozone  is  a  global  pollutant,  a  globally  coordinated  approach  is  required 
(UNEP  or  CLRTAP)  for  ozone  management  and  that  national  or  even  regional 
controls are unlikely to achieve their policy objectives in the absence of such a global 
framework. Whilst the Royal Society report pre-dates the 2008 agreement to amend 
MARPOL  Annex  VI,  it  recommended  that  the  IMO  and  ICAO  must  agree  to 
regulate NOx, carbon monoxide and VOCs from international shipping and aviation 
as  far  as  is  technically  feasible,  to  implement  agreed  emissions  controls  and  to 
continue research into the development of emission reduction technologies in these 
sectors47. 

4.2 

Ozone and particles as radiative forcers 

There  have  been  numerous  articles  about  the  linkages  between  air  pollutants  and 
climate  change  and  how  short-term  climate  change  mitigation  can  be  achieved  by 
tackling  some  of  the  most  potent  air  pollutants.  Ground  level  ozone  (including 
methane as an important precursor) and particulate matter including "black carbon" 
are  particularly  relevant.  These  are  the  most  significant  air  pollutants  in  terms  of 
public  health  impacts  but  methane,  ozone  and  black  carbon  also  have  significant 
atmospheric  warming  contributions  (ozone  is  rated  as  the  third  most  important 
greenhouse  gas  based  on  radiative  forcing).  The  climate  co-benefits  have  not 
previously  been  recognised  in  developing  air  quality  policies  and  may  provide 
additional justification and support to propose air quality improvement measures.  

46  

47  

Ground-level ozone in the 21st century: future trends, impacts and policy implications – Summary for 
policy makers, The Royal Society, October 2008, p. 9 
Ibid, Recommendation 7, page 103. 

EN 

47 

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ANNEX IV – ISSUES ARISING FROM THE REVIEW OF THE DIRECTIVE 

1.  INTRODUCTION 

Liquid  fuels  used  for  motorised  transport,  industrial  and  commercial  combustion  and 
domestic heating contain sulphur which is released upon combustion in the form of sulphur 
oxides. Primary particulate matter is also emitted during the combustion of the fuels. These 
emissions contribute to local air quality problems (where limits exist for sulphur dioxide and 
particulate  matter  concentrations  in  ambient  air),  including  in  urban  areas,  and  regional  air 
pollution impacts such as the acidification of natural ecosystems. 

Historically, the sulphur content of certain liquid fuels was regulated by Directive 93/12/EC 
which placed restrictions on the marketing of diesel fuels used in road vehicles and gas oils 
used  for  transport  in  general  (but  excluding  aviation).  The  provisions  on  road  fuels  were 
subsequently repealed and replaced by those in Directive 98/70/EC.  

The  provisions  on  the  sulphur  content  of  gas  oils  now  appear  in  the  Directive  which  also 
addresses the sulphur content of land-based heavy fuel oil and heating oil as well as marine 
fuels used both inside and outside of EU territorial seas.  

The current provisions on marine fuels essentially incorporate into EU law the rules from the 
IMO on marine fuels used in SOx Emission Control Areas (SECAs) as they were before their 
amendment in October 2008. Annex VI of the Marine Pollution Convention 73/7848 governs 
air  pollution  emitted  by  ships,  operating  under  the  auspices  of  the  United  Nations'  IMO.  It 
was  adopted  in  1997  and  at  that  time  included  provisions  establishing  the  Baltic  Sea  as  a 
SECA which required fuels with no more than 1.5% by mass to be used. Outside of SECAs, 
marine  fuels  could  contain  up  to  4.5%  by  mass.  In  2000,  an  amendment  to  Annex  VI  was 
adopted  by  the  IMO  which  designated  the  North  Sea  and  English  Channel  as  an  additional 
SECA but neither was immediately operational because at the time the ratification threshold 
consisting  of  sufficient  ratifications  by  IMO  Member  States  and  sufficient  representation  of 
world tonnage had not yet been met.   

In  2005,  when  the  co-legislators  amended  the  Directive  and  introduced  the  IMO's  rules  on 
marine  fuels  to  be  used  in  SECAs49,  the  provisions  of  MARPOL  Annex  VI  had  still  not 
entered into force. Nonetheless they were widely recognised as being insufficient to address 
observed  environmental  impacts  due  to  shipping  and  that  without  further  action  sulphur 
dioxide (SO2) emissions from ships would continue to grow and surpass all emissions of SO2 
from  land-based  sources  in  the  EU  by  2020.  These  problems  were  acknowledged  in  the 
Commission's  Communications  on  a  "Strategy  to  reduce  atmospheric  emissions  from 
seagoing  ships"50  and  "the  Thematic  Strategy  on  Air  Pollution"51  both  of  which  advocated 
further  reductions  in  marine-based  SO2  emissions  given  their  greater  cost  effectiveness 
relative to further reductions of land-based emissions.  

48  

49  
50  
51  

The  International  Convention  for  the  Prevention  of  Pollution  from  ships  1973  as  modified  by  the 
Protocol of 1978 (is commonly referred to as MARPOL 73/78) operates under the auspices of the IMO 
and contains several annexes address various forms of ship related pollution. 
Directive 2005/33/EC of 6 July 2005; OJ L 191, 22.7.2005, p. 59. 
COM(2002) 595 final 
COM(2005) 446 final 

EN 

48 

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Given  this  background,  the  co-legislators  called  upon  the  Commission  when  adopting 
Directive  2005/33/EC  to  undertake  a  later  review  of  the  legal  requirements  on  fuel  sulphur 
content (and for marine fuels in particular). 

Directive 2005/33/EC represents a substantial amendment to the parent Directive 1999/32/EC 
particularly in respect of the sulphur content of marine fuels. Member States were obliged to 
transpose the former Directive by 11 August 2006 but only three Member States had reported 
their  national  transposing  measures  by  that  date.  Seven  Member  States  submitted  their 
transposition  information  later  in  2006  whilst  the  last  Member  State  to  transpose  reported 
only  in  April  2010.  In  response  to  the  late  and/or  missing  transpositions,  the  Commission 
initiated  16  infringement  procedures,  all  of  which  are  now  closed  following  complete 
transposition. 

Given  that  Directive  2005/33/EC  was  adopted on  6  July  2005  and  published  in  the  Official 
Journal  on  22  July  a  transposition  deadline  of  11  August  2006  represents  a  relatively  short 
period within which to undertake the required transposition into national law. However, this 
short period was necessary because of the entry into force of the SECA in the Baltic Sea on 
11 August 2006 pursuant to Article 4a(2)(a) of the Directive. Transposition into national law 
always presents an administrative burden for the Member States and cannot be avoided if a 
directive is selected as the appropriate legislative instrument. However, a directly applicable 
regulation  could  be  considered  for  future  reviews  of  the  legislation  given  the  technical  and 
precise nature of the subject matter covered by the current Directive. 

2.  COMPLIANCE AND MONITORING, REPORTING AND VERIFICATION ISSUES 

Evidence of non-compliance 

Studies  conducted  by  EMSA  found  evidence  of  non-compliance  with  several  provisions  of 
the Directive: 

EMSA assessed the level of compliance based on Lloyds Register and Det Norske Veritas52 
data on the sulphur content of different fuels covered by the Directive. The data covers some 
50  EU  ports  and  15,000  fuel  samples.  The  sulphur  content  of  the  fuels  was  measured 
according to method of analysis ISO 8754. These studies have shown that: 

-  residual  fuel  oil  -  Article  4a  of  the  current  Directive  stipulates  that  fuels  with  a  sulphur 
content in excess of 1.5% by mass cannot be used in SECAs. 4.1% to 9.2% of samples taken 
in 2008 of residual fuel oil bought as being 1.5% sulphur content (for use in SECAs) were in 
fact  non-compliant.  However,  three-fifths  of  these  non-compliant  samples  were  within  the 
margins of error associated with the specific method of analysis (ISO); 

- marine gas oil - Article 4b(3) of the current Directive stipulates that from 1 January 2008 
marine gas oil cannot be used if it has a sulphur content in excess of 0.1% by mass. Samples 
taken  in  2008  had  sulphur  content  in  excess  of  0.1%  in  between  19.5%  and  25.5%  of  the 
cases. From 2010 equivalent stipulations have applied to marine gas oils placed on the market 
and all marine fuels used while a ship is at berth in an EU port; 

52   

Lloyds Register and Det Norske Veritas are private international classification societies responsible for 
defining and maintaining shipping standards.  

EN 

49 

  EN 

 
                                                 
- fuels used by passenger ships– Article 4a(3) requires passenger ships entering or leaving any 
EU ports (i.e., even in non-SECAs) on a regular service to use a fuel with a sulphur content 
below 1.5% by mass. This requirement has applied since 11 August 2006. Samples obtained 
between that date and 27 April 2008 were often in excess of the legal requirement (except in 
France and parts of Spain). The relatively low number of ships controlled only allows to see 
this  as  a  strong  indication.  In  some  cases  the  sulphur  content  of  passenger  ship  fuels  was 
between 2.3% and 3.3%. The fact that both the sample analysed and the bunker delivery notes 
showed  exceedances,  suggests  a  lack  of  knowledge  of  the  Directive  by  both  operators  and 
competent authorities. 

2.1.  Issues related to enforcement and the robustness of the testing and analysis 

A  concern  raised  by  bunker  fuel  suppliers  and  ship  owners  is  the  statistical 
interpretation of the result of the analysis of a fuel sample.  

EN ISO 4259 states that "most laboratories do not carry out more than one test on each 
sample for routine quality control purposes, […]". According to this standard, a given 
test result X and a fuel sulphur limit A is interpreted as follows: 

–  A supplier can be certain with 95% confidence that the fuel respects the limit if 
X < (A – 0.59R) where R is the reproducibility of the specific test method used to 
measure the sulphur content and which is specified in each test method. A result 
between A and (A- 0.59R) is not proof of non-compliance; 

–  A  recipient  can  be  certain  with  95%  confidence  that  the  fuel  fails  the  relevant 
sulphur  limit  if  X > (A +0.59R)  where  R  is  again  the  reproducibility  of  the 
specific test method. 

The Directive refers to several possible test methods each with its own reproducibility 
which  varies  with  the  sulphur  content  as  shown  below  according  to  the  maximum 
permitted sulphur content. 

Test Method/Max 
Fuel sulphur level 

ISO 8754:2003 

1.5% 

1.0% 

0.5% 

0.1% 

EN ISO 14596:2007 

1.5% 

1.0% 

0.5% 

0.1% 

Marine Fuels and Heavy Fuel Oil 

Reproducibility 

A + 0.59R 

A – 0.59R 

0.134 

0.093 

0.053 

0.020 

0.04 

0.04 

0.02 

0.02 

1.58% 

1.05%  

0.55%  

0.12%  

1.52%  

1.02%  

 0.52%  

0.12%  

1.42%  

0.94%  

0.45%  

0.09%  

1.48%  

0.98%  

0.49%  

0.09%   

Table 1: Uncertainty limits related to the measurement of the sulphur content of marine fuels. 

EN 

50 

  EN 

 
 
 
According to the IMO standard53, two sub-samples of a given fuel sample are tested in 
succession. If the results of test are within the repeatability of a test method, the results 
are considered as valid. In the next step, an average of the two results is calculated and 
if this average is equal to or falls below the applicable limit required by the Directive, 
the fuel oil is deemed to meet the requirements.  

Example: A passenger ship on regular service that is obliged to use fuel with a sulphur 
content not higher than 1.50% orders fuel. A fuel sample is taken and is analysed in 
accordance with ISO 8754. (1) According to ISO 4259 one analysis is carried out and 
the  test  result  indicates  1.58%  sulphur  content.  Such  a  result  is  deemed  acceptable 
within  the  95%  confidence  interval.  (2)  According  to  the  IMO  method,  two 
subsamples  are  analysed.  A  test  result  of  1.42%  and  1.58%  sulphur  content, 
respectively,  results  in  an  average  of  1.50%  and  is  considered  to  meet  the 
requirements.  

There is thus a grey area where the measured sulphur content lies in between the two 
values of (A+ 0.59R) and (A – 0.59R) where compliance with the standard in the IMO 
rules or EU legislation is uncertain. Arguably, a purchaser should insist on a measured 
sulphur  content  of  less  than  (A  –  0.59R)  in  any  contract  for  the  purchase  of  marine 
fuel.  Member  State  regulatory  authorities  will  probably  wish  to  be  sure  of  a  non-
compliance  before  acting  and  therefore  will  probably  want  to  see  measured  fuel 
sulphur levels in excess of (A + 0.59R) before acting. The recommended test method 
for sulphur measurement in ISO 8217:2010 on marine fuel quality stipulates the ISO 
8754 method from 2003 whereas the Directive permits this and an alternative method 
EN ISO 14596 which generally has lower uncertainty. 

Additional issues have arisen relating to the location and frequency of sampling for the 
verification  of  compliance  in  respect  of  the  requirements  of  national  law  and  the 
burden of proof to secure a conviction. These issues are a matter for the member State 
competent authorities who best understand the requirements of national law and what 
should be done to ensure successful prosecution of non-compliance offences. It must 
be  remembered  that  the  Member  States  have  an  obligation  under  the  Directive  to 
implement a system of penalties that is effective, dissuasive and proportionate. 

2.2.  Compliance with marine fuel sulphur limits: statistical analysis by EMSA 

The European Maritime Safety Agency has assisted the Commission in assessing the 
degree  of  compliance  by  ship  operators  with  the  various  marine  fuel  sulphur  limits. 
EMSA has secured access to anonymised analyses conducted by Lloyds Register and 
Det Norske Veritas of the fuel samples sent to them by ship operators following fuel 
purchases.  EMSA  was  provided  with  monthly  statistical  data  on  sulphur  levels  of 
heavy fuel oils (RFO), marine diesel oils and marine gas oils bunkered on board ships 
and placed on the market in the EU. This captured some 50 European ports and 15,000 
fuel samples (approximately 600  samples per month) where the sulphur content was 
tested  according  to  the  method  ISO  8754  developed  by  the  International  Standards 
Organisation.  

53 Appendix VI of MARPOL Annex VI 

EN 

51 

  EN 

 
                                                 
2.2.1.  Residual Fuel oil 

EMSA  found  that  only  a  small  number  of  bunker  deliveries  in  the  EU  had  sulphur 
levels  in  excess  of  the  permitted  1.5%  for  fuels  intended  to  be  used  in  SECAs.  The 
monthly  degree  of  non-compliance  in  2008  ranged  from  4.1%  to  9.2%  of  samples 
tested. However, three fifths of the non-compliant samples had sulphur levels within 
the uncertainty range of the test method (1.58%). 

2.2.2.  Marine gas oil 

Pursuant to Article 4b(3), marine gas oils cannot be placed on the market in the EU if 
their  sulphur  content  exceeds  0.1%.  The  monthly  amount  of  "off-spec"  samples  of 
marine  gas  oils  in  2008  varied  between  19.5%  and  25.5%.  This  indicates  that  there 
may be an ongoing contravention with the requirements of the Directive in respect of 
marine gas oils which needs to be verified with samples taken in 2010 following the 
entry into force of the EU's legal provisions on 1 January 2010. 

2.2.3.  Fuels used by passenger ships entering or leaving EU ports 

Pursuant  to  Article  4a(4)  of  the  Directive,  operators  of  passenger  vessels  on  regular 
services  to  or  from  EU  ports  must  use  fuels  with  a  maximum  permitted  sulphur 
content  of  1.5%  by  mass.  This  obligation  has  applied  since  11  August  2006.  EMSA 
selected  8  different  routes  for  analysis  covering  the  main  Southern  European  ferry 
routes  covering  a  period  11  August  2006  to  27  April  2008.  The  fuel  sulphur  results 
obtained by EMSA demonstrate that except in the case of France and parts of Spain, 
the  overwhelming  majority  of  fuel  samples  contained  sulphur  in  excess  of  1.5%. 
Moreover, in several areas the average fuel sulphur values based on either the Bunker 
Delivery Note or the fuel sulphur analysis were in the range of 2.3 to 3.3%. Based on 
these  results,  EMSA  concluded  that  ferry  companies,  fuel  suppliers  and  regulatory 
authorities are not well informed of the prevailing legal requirements. 

2.3.  Non-Compliance with the requirement to use 0.1% sulphur fuels whilst at berth 

Article  4b  of  the  Directive  requires  ships  at  berth  in  EU  ports  to  use  fuels  with  a 
sulphur content not exceeding 0.1% by mass as from 1 January 2010. This obligation 
was brought into force in 2005 when the co-legislators adopted Directive 2005/33/EC 
at second reading. 

In order to comply, certain ships had to modify their on-board boilers so as to be able 
to  burn  marine  distillates  safely54.  The  necessary  adaptation  is  in  most  cases 
technically  uncomplicated  and  retrofit  kits  are  provided  by  boiler  manufacturers. 
Whilst  ship  operators  had  five  years  or  so  to  prepare  for  the  entry  into  force  of  this 
new  obligation  many  ships  did  not  undertake  the  necessary  modification  to  their 
boilers in good time thereby creating a large demand on the boiler manufacturers just 
before the 1 January 2010 deadline. 

Whilst  recognising  the  potential  safety  hazard  the  Commission  does  not  have  the 
general  authority  to  delay  the  legal  requirements  of  the  Directive.  Moreover,  the 
Member States are still obliged to enforce the requirements of the Directive. A short 

54  

Distillate  fuels  have  a  lower  flash  point  and  can  present  an  explosion  risk  in  a  boiler  which  has  not 
undergone the necessary adaptation. 

EN 

52 

  EN 

 
                                                 
term  solution  was  found  whereby  the  Commission  recommended55  to  the  Member 
States'  competent  authorities  to  take  into  account  the  positive  actions  taken  by  a 
particular  ship  operator  to  ensure  its  compliance  when  enforcing  the  Directive's 
provisions.  So  that,  for  example,  an  operator  that  had  signed  a  contract  for  the 
technical modification to its boilers but which had to wait for the retrofit to be carried 
could  be  treated  more  leniently  than  a  ship  that  had  taken  no  preparatory  measures. 
Some ships are able to use liquefied natural gas (LNG) as part or for all a ship's fuel 
needs.  LNG  contains  no  sulphur  and  so  its  use  provides  an  alternative  means  to 
comply  with  the  0.1%  fuel  sulphur  requirement  as  does  the  use  of  shore  side 
electricity. The Commission has adopted guidelines on the use of LNG in respect of 
compliance  with  Article  4b  of  the  Directive56  and  a  recommendation  on  the  use  of 
shore side electricity57. 

As noted earlier, ships are required to use fuels with a maxim sulphur content of 0.1% 
whilst at berth in EU ports. This regulation entered into force on 1 January 2010 and 
the  Commission  does  not  yet  have  any  official  information  on  compliance  with  this 
provision  as  the  Member  States  are  not  obliged  to  report  until  mid-2011.  Include 
reference COSS/MS first impressions? 

However,  DNV  fuel  quality  testing  services  (DNVPS)  has  undertaken  a  customer 
survey in relation to this and the entry into force of the IMO's new SECA regulation 
on fuel sulphur content (1.00% max from 1 July 2010)58. According to DNVPS, when 
the previous SECA regulations came into force imposing a limit of 1.5% sulphur for 
marine  fuels,  DNVPS'  sulphur  test  results  showed  that  even  by  early  2010,  around 
10%  of  all  samples  of  RFO  had  an  associated  Bunker  Delivery  Note59  certifying  a 
sulphur  content  less  than  1.50%  sulphur  but  where  the  sulphur  content  was  greater 
than 1.50% when tested. This is an apparent improvement from the position in 2008 
which  showed  around  17.5%  of  those  samples  tested  were  over  the  1.50%  limit 
certified in the Bunker Delivery Note. DNVPS' testing of the sulphur content of fuels 
used at berth has shown a higher proportion of results under the limit (0.1%) than for 
fuels  used  in  SECAs.  Apparently,  only  a  few  port  areas  show  systematic  potential 
non-compliance. Fuel availability was reported to be an issue in some ports, although 
generally  for  0.1%  gas  oil,  the  larger  ports  have  products  available.  DNVPS  reports 
that specially made residual fuel oil (1.00% low sulphur RFO) is generally not being 
delivered but that the market is trying to adapt to the 1 July 2010 change from 1.5% to 
1.00% in SECAs. 

One  of  the  survey's  findings  regarding  Port  State  controls  was  that  many  ports  had 
already  begun  to  verify  compliance  with  the  Directive,  with  additional  smaller  ports 

55  

56  
57  

58  

59  

Commission Recommendation on the use of low sulphur fuels at berth in Community ports; OJ L 348, 
29.12.2009, p. 73. 
http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:348:0073:0074:EN:PDF  
2010/769/EU 
Commission Recommendation on the promotion of shore-side electricity for use by ships at berth in 
Community ports; OJ L 125, 12.5.2006, p. 38.  
http://eur-lex.europa.eu/LexUriServ/site/en/oj/2006/l_125/l_12520060512en00380042.pdf  
Experience  with 
2010.: 
in 
http://www.dnv.co.uk/industry/maritime/publicationsanddownloads/publications/dnvbullkcarrierupdate/
2010/1_2010/ExperiencewithlowsulphurinEuropeanports.asp  
IMO rules requires a marine fuel supplier to provide a Bunker Delivery Note with every purchase of 
marine fuels. This BDN must indicate the maximum sulphur content of the fuel delivered and be kept 
by the master of the ship for possible inspection  by port state and flag state authorities. 

European 

sulphur 

Ports, 

dated 

June 

low 

25 

EN 

53 

  EN 

 
                                                 
starting  to  verify.  An  important  signal  for  those  customers  that  might  be  checked  in 
the future was that 15% of the gas oil bunker samples tested had a sulphur value above 
the  limit  of  0.10%  which  is  higher  than  indicated  by  DNVPS'  testing.  However,  no 
one  in  the  DNVPS'  study  had  been  fined,  delayed  or  banned  from  ports  for  non-
compliance with the 0.1% sulphur requirements whilst at berth in EU ports. 

2.4.  Annual reports on the quality of marine fuels 

2.4.1.  Reporting requirements 

Pursuant  to  Article  7.1  of  the  Directive,  Member  States  must  report  annually  to  the 
Commission  information  on  the  sampling  and  analyses  conducted  pursuant  to 
Article 6  for  the  purpose  of  (i)  ensuring  that  the  sulphur  content  of  marine  fuels 
complies with the relevant provisions in Articles 4a and 4b; and (ii) that the sulphur 
content of heavy fuel oil used in land based installations complies with Article 3; and 
(iii) that the sulphur content of gas oil complies with Article 4.   

Article  6  describes  the  types  of  sampling,  analysis  and  inspections  that  should  be 
performed  to  ensure  compliance,  i.e.:  sampling  and  analysis  of  marine  fuels  for  on-
board  combustion  while  being  delivered  to  ships  […]  and  contained  in  tanks  or 
bunkers  […],  as  well  as  inspections  of  ship's  log  books  and  bunker  delivery  notes. 
Samples are to be taken with a sufficient frequency and for sufficient quantities so that 
they  produce  representative  results  for  the  fuels  used  by  vessels  steaming  in  the 
relevant waters and ports. Sampling of marine fuels should commence as of the date 
on which the relevant maximum permitted sulphur content value enters into force (see 
table below).60  For fuels used in SECAs this date was 11 August 2006 (Baltic Sea) 
and 11 August 2007 (North Sea and English Channel) and for 0.1% sulphur fuels used 
whilst at berth in EU ports the date was 1 January 2010. 

2.4.2.  Overview of Member State reports 

The  Commission  received  26  reports  covering  the  calendar  year  2007,  the  first  full 
calendar year following the transposition deadline for Directive 2005/33/EC. For the 
year  2008,  25  reports  were  received  13  of  which  came  after  the  reporting  deadline. 
Pending  the  decision  to  launch  infringement  procedures,  a  series  of  reminders  were 
sent between 2008 and 2010. 

2.4.3.  Conclusions drawn on the basis of the Member States' reports 

Member  State  reports  submitted  to  the  Commission  pursuant  to  Article  7  have  been 
analysed  on  an  annual  basis  by  the  Commission  assisted  by  the  European  Maritime 
Safety  Agency  (EMSA).  Analysis  has  shown  that  reports  received  from  Member 
States  vary  significantly  in  structure  and  content  with  many  reports  exhibiting 
significant  information  gaps  making  assessment  difficult.  The  most  important  issues 
would appear to be: 

–  Few reports distinguish between sampling and results related to fuels for marine 

use and similar fuels used in land based installations; 

60  

Note that the sampling, analysis, and inspection provisions for specifications contained in international 
legislation are not covered by this Directive or EU legislation. 

EN 

54 

  EN 

 
                                                 
–  the number of samples taken and sampling frequency in the EU are very low and 
are insufficient to ensure that samples are representative of the fuels used and sold 
and that the Directive is correctly implemented; 

–  Sampling  and  analysis  were  almost  exclusively  used  to  monitor  the  sulphur 
content of fuels covered by the Directive whereas Article 7.1 specifically requests 
monitoring of other maritime fuels not directly covered by the Directive (i.e. fuels 
having to comply with the global limit for sulphur of 4.5%); 

2.5.  Safety issues related to fuel quality  

Whilst  it  is  difficult  to  obtain  clear  statistics,  there  seems  to  be  a  relatively  high 
incidence  of  engine  failures  linked  to  fuel  quality,  particularly  in  SECA  areas.  In 
order  to  produce  SECA  compliant  fuels  there  has  been  a  greater  tendency  to  blend 
different fuel grades.  

The  greater  the  degree  of  blending  the  greater  the  possibility  that  the  resultant  mix 
could be unstable and leading to sludge formation and blocked fuel pumps. Creating 
blends  with  lower  sulphur  content  may  furthermore  be  increasing  the  level  of 
"catfines" consisting of aluminium silicates used in fluidised catalytic cracking units 
at oil refineries. This may be due to an increased use of cycle oils61 as "cutter" stock 
in the fuel blend 

In  2010,  the  International  Standards  Organisation  (ISO)  finalised  a  revision  to 
ISO 8217  on  marine  fuel  quality  standards.  This  revision  lowers  the  permitted 
amount  of  aluminium  silicates  ("catfines")  and  the  sludge  limits.  It  remains  to  be 
seen whether these limits will be respected by suppliers once purchasers ensure that 
the new standard is routinely inserted into their fuel supply contracts. At the current 
time,  all  issues  regarding  fuel  quality  and  liability  are  determined  by  the  contract 
between  supplier  and  purchaser.  Ultimately,  there  may  be  a  role  for  establishing  a 
mandatory fuel quality standard for marine fuels placed on the market in the EU as 
this would permit intervention by public authorities in the Member States to ensure 
compliant fuel quality. 

2.6.  Issues related to interpretation difficulties and associated implementation issues 

The text of the Directive itself has led to confusion when it comes to distinguishing 
between marine gas oil and marine diesel oil. The origin of this is that the Directive 
has introduced an "or" between viscosity and density which suggests that only one of 
the two is determinative whereas the ISO Fuel Standard 8217 requires both criteria to 
be satisfied.  

Another  difficulty  encountered  by  competent  authorities  is  the  precision  of  the 
various sulphur limits specified in the Directive. The sulphur limit for fuel used by 
ships at berth is specified to one decimal place whereas article 4, now only covering 
gas oil used on land, refers to a sulphur content of 0.10% (i.e. 2 decimal places) and 
article 4b on the use and placing on the market of marine gas oil refers to 0.1%. All 
sulphur limits in MARPOL Annex VI are indicated with 2 decimal places and it is 
probably sensible to align the Directive with ANNEX VI. 

61  

Cycle oils are a low sulphur, highly viscous refinery product from the FCC process and which tends to 
contain an elevated amount of catfines 

EN 

55 

  EN 

 
                                                 
The  meaning  of  "port"  has  also  raised  uncertainty  in  relation  to  the  requirement  to 
use marine fuels with a maximum permitted sulphur content of 0.1%. This is relevant 
as ships at anchorage are also covered by this article if they are inside a community 
port. It is up to the Member States to decide what is considered to belong to the port 
area.  Many  will  use  the  definition  as  provided  by  Article  11  of  the  United  Nations 
Convention on the Law Of the Sea (UNCLOS). 

2.7.  Trials and the use of new abatement technologies 

The  provision  in  Article  4c  of  the  Directive  on  trials  and  use  of  new  emission 
abatement technologies has been subject to discussion, both with Member States and 
with  industry.  The  requirement  to  notify  the  Commission  and  Member  States  6 
months  in  advance  and  the  limitation  of  the  trial  period  to  18  months  have  been 
considered as burdensome thus leading to only a few uses of that possibility.  

2.7.1.  Scrubber technologies 

Scrubber  technologies,  however,  have  clearly  advanced  since  the  adoption  of 
Directive  2005/33/EC.  There  are  now  several  manufacturers  that  can  supply 
scrubbers62  that  meet  approval  of  Class63  or  Recognized  Organization64  and  the 
IMO's  guidelines  on  scrubbers  which  set  out  criteria  for  the  discharge  water  (a  by-
product of scrubber operation). 

There is an important difference between the provisions in MARPOL Annex VI and 
the Directive regarding monitoring of exhaust emissions. The former allows both for 
type  approval  of  scrubbers  and/or  for  continuous  monitoring  of  emissions  but  the 
Directive  always  requires  on-board  equipment  for  continuous  monitoring  of 
emissions.  

Industry has claimed that the stricter provisions of the Directive might be a potential 
impediment  to  the  installation  of  scrubbers  because  of  the  additional  cost  of 
monitoring sensors.  

2.7.2.  Other equivalent technologies  

In  May  2010,  by  means  of  committee  procedure,  a  Commission  Decision  was 
adopted  based  on  Article  4c  to  approve  the  use  of  a  dual  fuel  system  for  LNG 
carriers as means to comply with the requirement in article 4b on the use of fuel with 
a  sulphur  content  not  exceeding  0.1%  for  ships  at  berth.  However,  LNG  carriers 
often  use  a  mixture  of  sulphur  free  LNG  and  heavy  fuel  oil  with  a  relative  high 
concentration of sulphur. The Commission Decision allows for such a mixture to be 
used provided the overall emissions are equal to or lower than would be the case with 
using fuel containing 0.1% sulphur65.  

62  
63  
64  
65  

Communications by both EGCSA and EMEC 
A Classification Society or a non-governmental ship inspection and survey organization 
Ship inspection and survey organizations as referred to in Directive 94/57/EC 
(2010/769/EU  

EN 

56 

  EN 

 
                                                 
This  decision  significantly  reduces  compliance  costs  for  LNG  carriers  as  it  can  be 
deployed  without  modifications  to  the  ships'  boilers  which  might  cost  well  over  1 
million Euros66. 

2.8.  Fuel used by passenger ships on regular service to or from EU ports  

Article 4a(4) of the Directive requires passenger ships on regular services to or from 
EU  ports  to  use  fuel  with  a  maximum  permitted  sulphur  content  of  1.5%  by  mass. 
This  obligation  applies  irrespective  of  the  fact  whether  the  passenger  ship  operates 
inside of an established SECA albeit  the 1.5% fuel sulphur level was established so 
as to be the same as that previously required by all ships operating within a SECA.  

For passenger ships operating in SECAs (English Chanel, the North Sea or the Baltic 
Sea)  the  obligation  to  use  fuels  with  a  maximum  sulphur  content  of  1.5%  will  be 
superseded  by  the  new  IMO  rules  on  the  sulphur  content  of  marine  fuels  whereby 
(all) ships operating in SECAs will need to use fuel with a maximum sulphur content 
of 0.10% from 2015 onwards. Hence, there will be no additional cost incurred due to 
the Article 4a(4) provisions in the Directive 

At present, Article 4a(4) continues to apply, however, for passenger ships operating 
to or from EU ports outside of SECA areas such as the Mediterranean Sea. Hence, 
the Directive did impose additional costs as reported in this section.   

Passenger  ships,  including  RoRo  vessels  and  Ferries  (but  excluding  cruise  ships), 
contribute to air pollution in the Mediterranean Sea as indicated in table 2 below. The 
data base  did  not contain separate  information on cruise ships. The emissions from 
cruise ships are expected to be significantly lower than those from passenger ships. 

Pollutant 

SO2 
NMVOC 
CO 
PM 
NOx 

Emissions in 2010 (kT per year) 
88.56 
3.61 
9.45 
4.58 
112.35 

Table 2: The estimated emission from passenger ships, excluding cruise ships, in the Mediterranean 
Sea for 2010, based on extrapolation of emissions from 2000 data. 

Assuming the total amount of fuel used by passenger ships in the Mediterranean Sea 
area  is  2.953  million  tonnes  and  that  the  price  premium  between  residual  fuel  oil 
containing 1.5% sulphur and 2.7% (observed on average outside of SECAs) is of the 
order of € 20 per tonne of fuel then the co st effectiveness of the sulphur abated can 
be  determined  as  shown  in  table  3  below.  Additional  fuel  costs  would  amount  to 
approximately €59 million and abated em issions would be around 70 900 tonnes of 
SO2 giving a cost-effectiveness of €830 per tonne of SO 2 abated. 

The incremental cost estimates depend upon the fuel price premium selected for the 
calculations.  ENTEC  UK  has  also  determined  the  cost-effectiveness  of  sulphur 
emissions  that  are  abated  from  ships  by  using  desulphurisation  technology 
(scrubbers). For new ships the cost effectiveness is between €320 – 390 per tonne of 
SO2  abated  whilst  for  retrofitting  existing  ships,  the  cost-effectiveness  is  between 
€500 – 580 per tonne abated for larg e and small ships respectively. 

66  

AEA report 

EN 

57 

  EN 

 
                                                 
Fuel consumed 
(tonnes) 

Fuel sulphur content 
(%) 

SO2 released on 
combustion 
(tonnes) 

Fuel costs increase with 
+€20/tonne premium (k€) 

2953000 
2953000 

2.70 
1.50 

159,462 
88,590 

- 
59,060 

Cost effectiveness 

 Emissions abated (tonnes SO2) 
 Cost effectiveness (€/tonne SO 2) 
Table 3: Cost effectiveness of reduced emissions of sulphur dioxide from passenger ships operating in 
the Mediterranean Sea using 1.5% sulphur fuel instead of RFO containing 2.7% sulphur. 

70,872 
833 

The  cost  effectiveness  of  measures  to  reduce  sulphur  from  ships  are  of  the  same 
order  of  magnitude  as  the  least  expensive  measures  available  to  reduce  SO2 
emissions from last based sources as shown below for the case of Germany in respect 
of a 2020 end point. 

Marginal Abatement cost  in €/t onne of SO2 abated for Germany (2020)

d
e
t
a
b
a

2
O
S
e
n
n
o
t
/

20000
19000
18000
17000
16000
15000
14000
13000
12000
11000
10000
9000
8000
7000
6000
5000
4000
3000
2000
1000
0
305

310

315

320

325

330

335

340

Emissions remaining (kT)

Figure  1:.  Cost  curve  for  the  abatement  of  sulphur  dioxide  emissions  in  Germany  in  2020.  Data 
generated  by  the  GAINS  integrated  assessment  model  from  IIASA  using  the  Primes  2009  energy 
baseline from January 201067. 

In  addition,  the  emission  of  PM  was  estimated  a  4.58  kton.  Assuming  that  the 
majority  of  passenger  ships  uses  medium  speed  engines,  the  PM  emission  when 
using  fuel  with  1.5%  sulphur  is  1.787  kg/ton  and  when  using  2.7%  fuel  2.596  per 
ton.  So  if  ships  would  still  have  used  fuel  containing  2.7%  sulphur,  than  the  total 
emission of PM would have been 6.65 kton, an increase of 2.07kton representing an 
additional annual reduction of damage of €1,2 million.  

3.  CONCLUSIONS  

The analysis of Member State reports indicates that on the whole there is insufficient 
monitoring undertaken of fuel sulphur levels for the fuels covered by the Directive. It 
is difficult to be sure that fuel suppliers and users are ensuring that fuels comply with 

67  

http://gains.iiasa.ac.at/index.php/gains-europe  

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€
 
 
 
                                                 
the  requirements  of  the  Directive  and  this  is  borne  out  in  reports  on  fuel  quality 
published  by third  parties  such as  fuel quality monitoring laboratories. As such the 
Directive's aims to protect the environment and health, and to ensure safety and fair 
competition  in  the  shipping  industry  are  compromised.  Possible  solutions  to  tackle 
this issue include: 

–  More fuel sulphur monitoring and fuel quality monitoring should be undertaken to 
assess  compliance  against  the  requirements  of  the  Directive  and  ISO  8217  on 
marine  fuel  quality  particularly  in  relation  to  (i)  the  placing  on  the  market  of 
marine  gas  oils  (sulphur  content  less  than  0.1%);  (ii)  fuels  used  by  passenger 
vessels travelling to and from EU ports (sulphur content less than 1.5%); and (iii) 
ship safety related to fuel-induced engine failure. 

–  A  Commission  Recommendation  on  harmonized  guidelines  for  sampling  and 
inspections accompanied by harmonized formats for reporting to the Commission; 

–  Development  of  a  CEN  technical  standard  for  monitoring  and  reporting  as  has 

been done for road fuels; 

–  Infringement proceedings against those Member States that undertake insufficient 

monitoring and inspection; 

–  Ultimately,  if  these  approaches  do  not  work  the  Commission  could  propose 
detailed legislation on monitoring and reporting based upon technical advice from 
EMSA and or other studies. 

In relation to fuel parameters indirectly linked to sulphur and which may influence 
engine operation and engine failure, there may ultimately be a need to guarantee that 
marine  fuels  placed  on  the  market  actually  conform  to  the  recognised  international 
standards.  

Where the bunker supplier is at fault, the fuel purchaser may only have recourse to 
private (contract) law in the absence of any public law/statutory requirements on the 
quality of marine fuels placed on the market in the EU. 

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ANNEX V –CRITERIA FOR NEW EMISSION CONTROL AREAS

68 

68  

Full text of the 2008 MARPOL Annex VI: 
http://www.imo.org/OurWork/Environment/PollutionPrevention/AirPollution/Documents/23-Add-1.pdf 

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EN 

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ANNEX VI  BENEFITS  AND  COSTS  RELATED  TO  THE  NEW  RULES  ON  SULPHUR  CONTENT  OF 

MARINE FUELS ADOPTED BY IMO PARTIES IN 2008  

Several studies were initiated by the Commission to look at the additional costs and 
benefits of moving to the fuel sulphur requirements promulgated by the IMO. These 
have  looked  at  the  costs  of  additional  refinery  processing  requirements,  increased 
emissions of  CO2 as well as the likely price of sulphur compliant fuel. In addition, 
some air quality benefits have been monetized whilst other benefits have also been 
identified qualitatively. 

1. 

ESTIMATED BENEFITS FROM MOVING TO LOWER SULPHUR FUELS 

There are also significant health, environmental and operational benefits of moving 
to lower sulphur marine fuels. The new fuel standard will not only reduce sulphur, 
but  will  in  parallel  also  reduce  emissions  of  fine  particles  and  other  pollutant 
emissions associated with the combustion of petroleum derived fuels. In addition, use 
of  a  distillate  fuel  is  likely  to  increase  of  new  engines69  and  thus  contribute  to 
higher  safety  and  reduced risk  of  accidents and oil spills at sea. Old engines might 
require modifications to enable running on low sulphur fuels permanently. 

A study conducted by AEAt70 estimated that the benefits associated with the use of 
0.1% sulphur marine fuels are between twice and 26 times the costs as shown in the 
table below. The lower bound for the costs represents the costs for fitting scrubbers 
to  reduce  SO2  emissions  whilst  the  upper  bound  represents  the  high  estimate  using 
only low sulphur fuels to reduce SO2 emissions.  The range for the benefits is based 
on  the  use  of  the  value  of  a  life  year  (lower  bound)  or  the  value  of  statistical  life 
(upper bound) to value premature mortality from exposure to particulate matter. 

Costs  and  benefits 
(€billions)  

in  2015 

Baltic  Sea  ,  North  Sea  and 
the  English  Channel  as 
SECAs 

Costs 

Benefits71 

Low 
High 
Low72 
High 

0.6 
3.7 
8 
16 

Table 1:  Annual costs versus the annual benefits of using fuel not exceeding 0.10% sulphur compared 
to the base case (1.5%). 

69  

70  

71  

72  

Final  Report  of  the  Cross Government  /  Industry  Scientific  Group of Experts, IMO,  December  2007, 
page 68 
Cost  Benefit  Analysis  to  Aupport  the  Impact  Assessment  accompanying  the  revision  of  Directive 
1999/32/EC on the Sulphur Content of certain Liquid Fuels, AEA, December 2009  
NB the monetised benefits presented are underestimates of the full benefits. Benefits arising from 
positive effects on other receptors including ecosystems, agriculture and buildings including cultural 
heritage are not included.. 
The  lower  bound  figures  are  seen  as  less  robust  than  the  upper  bound  figures.  The  lower  figures  are 
based on value of life-years lost (VOLY) monetised costs produced under the New Energy Externalities 
Developments  for  Sustainability  (NEEDS)  Project.  The  results  of  this  work  have  not  been  peer-
reviewed. 

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Further  analysis  was  undertaken  to  assess  the  effect  of  further  uncertainties  on  the 
balance  of  costs  and  benefits.    This  found  that  the  probability  of  benefit  exceeding 
cost  can  be  described  as  virtually  certain,  using  terminology  developed  by  the 
Intergovernmental  Panel  on  Climate  Change  (IPCC).  The  probabilities  calculated 
here  are  quantified  only  against  benefits  for  improved  health.  The  inclusion  of 
impacts  to  materials  (including  cultural  heritage)  and  ecosystems,  in  particular, 
would add to the benefits and further increase the already certainty that the benefits 
exceed the costs. 

The  benefits  are  clearly  dominated  by  the  reduction  of  emissions  of  fine  particles. 
There  are  two  factors  contributing  to  the  reduction  of  particulate  matter  emissions. 
The  cleaner  fuel  will  reduce  the  primary  emissions  of  particles  and  reduce  SOx 
emissions  which  in  turn  reduce  the  formation  of  secondary  aersol  such  as  sulphate 
particles. The AEAt study assumed particulate matter emissions from 0.1% residual 
fuel oil to be 54% below those associated with 1.5% residual fuel oil. In the case of 
0.10% marine gas oil, particulate matter emissions are 90% lower73. Measurements 
(figure 1) resulted in comparable reduction levels74. 

Figure 1:  Relation between the sulphur content in fuel and PM mass (Reproduced by kind permission 
of Germanischer Lloyd) 

If  scrubbers  are  used,  the  reductions  of  particulate  matter  can  be  reduced  by  0  to 
85%75. US EPA mentions an example reducing 80%76. 

Several studies have looked into the consequences but none of them as extensive as 
the AEAt study. 

The AEAt study77 assumes the cost (€0.9 – 4 billion)  to be higher than the benefits 
(€0.33  –  0.8  billion).  However,  the  study  itself  clarifies  the  benefits  are 
underestimated for several reasons. Most importantly, as only the benefits to the UK 

73  
74  

75  
76  
77  

AEA December 2009, page 87 
Schiffsemissionen Partikelminderung durch Schwefelgrenzwerte, Dipl. Ing. Claus Kurok, Schiff  Hafen 
September 2009 
AEA December 2009, page 63 
http://www.epa.gov/region1/eco/diesel/sp-vessels.html#SeaWaterScrubber  
Impact  Assessment  for  the  revised  Annex  VI  of  MARPOL,  ENTEC  on  behalf  of  UK  Maritime  and 
Coast Guard Agency, July 2009 

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are  quantified,  it concludes that most  of  the benefits  will be outside UK due to the 
prevailing western winds. 

A  study  from  the  Antwerp  University78  quantified  external  costs  of  some  transport 
corridors  including  costs  additional  road  transport.  However,  it  seems  as  if  no 
increase of overall transport is foreseen. This combined whit the assumption that the 
same  number  of  ships  would  sail  but  with  (far)  less  cargo  heavily  influences  the 
outcome. The benefits have not been calculated like in the studies mentioned above 
but a fixed price per tonne abated emission is assumed. The prices used seem quite 
unbalanced as for PM from shipping in the North Sea a value of €8210 per tonne is 
used whereas PM emissions in Belgium and the Netherlands from road transport are 
valued at €180,000 per tonne. However, for  the Thematic Strategy on Air Pollution, 
very different figures have been used79: €28,000 per tonne PM2.5 for the North Sea 
and  for  Belgium  and  the  Netherlands  respectively  €61,000  and  €63,000.  As  PM 
emissions dominate the benefits to health, the difference in assumptions is likely to 
influence the outcome. 

If only quantifying total emissions due to modal shift80, the conclusion is that in all 
cases where cargo moves from ship to road this would be accompanied by an overall 
reduction in air pollutant emissions due to the lower emissions of SOx, NOx and PM 
per tonne km. 

2. 

QUANTIFYING THE COST INCREASE OF LOWER SULPHUR FUELS 

A ship operator has two means with which to comply with the new sulphur emission 
requirements.  The  first  involves  the  installation  of  on-board  sulphur  emissions 
abatement technology or to use lower sulphur marine fuels. The costs of abatement 
technology can be substantially lower than using cleaner fuels (see below). 

Low  sulphur  fuel  will  come  at  a  significant  cost  because  additional  refinery 
processing will be required to deliver large quantities of marine fuel containing less 
than  1%  sulphur  and  ultimately  less  than  0.1%.  More  specifically,  additional 
investment  will  be  required  to  convert  residual  ("heavy")  fuel  oil  to  distillate  fuels 
like marine gas oil which will be needed for compliance with the 0.10% maximum 
permitted  sulphur  content  coming  into  force  in  2015.  Marine  gas  oil  is  less  dense, 
less  viscous  but  more  expensive  to  produce  than  residual  fuel  oil.  Additional 
production costs at refineries will ultimately be passed on to fuel users in the form of 
higher prices.  

On the 1st June 2010, the price of IFO 380 was $417 per tonne whilst that of marine 
gas oil was $646 per tonne representing a difference of 55%. The magnitude of this 
difference has been routinely observed over several years as seen from Figure 1 and 

78  

79  

80  

Analysis  of  the  Consequences  of  Low  Sulphur  Fuel  Requirements,  University  of  Antwerp  and 
Transport and Mobility Leuven, commissioned by ECSA 
Damage  per  tonne  emission  of  PM2.5,  NH3,  SO2,  NOx  and  VOC  from  each  EU25  Member  State 
(excluding Cyprus) and surrounding seas, March 2005 
Impact  Study  on  the  future  requirements  of  Annex  VI  of  the  MARPOL  Convention  on  Short  Sea 
Shipping, SKEMA, June 2010 

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is  consistent  with  the  estimated  increased  refinery  costs  of  converting  RFO  with 
1.5% sulphur content to marine gas oil with 0.1%81.  

2.1. 

Impacts on EU fuel producers (refiners) 

The  impact  on  EU  refineries  has  been  assessed  by  analysing  a  maximum  impact 
scenario by assuming that ships would not reduce their fuel consumption, use other 
fuels  or  abatement  equipment.  The  investments  necessary  to  upgrade  EU  refineries 
would increase by $13.2 billion above the $19.1 billion already envisaged as part of 
the business as usual situation assuming no further change to fuel standards for ships 
and a need to comply with the EU refined product demand as forecast in December 
200882. This additional investment would allow the refineries to convert heavy fuel 
oil  into  lighter  products  amongst  which  diesel  oils  suitable  for  use  by  the  shipping 
industry. Alternatively, refiners could import distillate products to satisfy demand in 
the EU. However, the EU is currently already a net importer of distillate fuels due to 
the  high  demand  for  road  diesel  and  aviation  fuel  and  a  net  exporter  of  motor 
gasoline. 

Additional  conversion  of  residual  fuel  oil  components  to  distillates  will  require 
additional  processing  and  energy  use  at  the  refinery  which  will  result  in  additional 
carbon dioxide (CO2) emissions. These have been estimated at nearly 7 Megatonnes 
per annum. This represents an increase of around 5% in current total carbon dioxide 
emissions from EU refineries. The overall increase is somewhat mitigated due to the 
reduction in utilisation of Fluid Catalytic Cracker or FCC units. In addition, part of 
the  additional  CO2  emissions  will  be  off-set  during  use  on  the  ship,  thanks  to  the 
lower carbon intensity of the fuel and because pre-heating of residual fuel oil will no 
longer be necessary in the ship's fuel system as will pre-treatment of fuel83. 

The increase in annual operating costs for EU refineries related to the additional CO2 
emissions has been estimated in the range of €170 million per year to €520 million 
per year based  on CO2 emission allowance costs ranging between  €25 and €75  per 
tonne. This represents an increase in unit operating costs in the range $0.04 to $0.13 
per barrel equivalent or between 1% and 4% of operating costs84. 

Additional  processing  of  residual  fuel  oil  has  been  undertaken  for  many  years 
because  of  the  price  premium  placed  on  distillate  fuels  and  the  new  fuel  sulphur 
requirements are likely to accelerate this process.    

2.2. 

Estimated cost increase for ship operators 

The  resulting  cost  increase  for  ship  operators  will  depend  on  many  factors.  The 
relative importance of the fuel price differs between cargoes and is highly dependent 
on  the  crude  oil  price.  Currently,  fuel  costs  can  be  assumed  to  be  between  10% 

81  

82  
83  

84  

Impacts  on  the  EU  refining  industry  &  markets  of  IMO  specification  changes  and  other  measures  to 
reduce the sulphur content of certain liquid fuels: Final report prepared for the European Commission 
by Pervin & Gertz 30 June 2009 
Pervin & Gertz 30 June 2009, page 74 
Final  Report  of  the  Cross Government  /  Industry  Scientific  Group of Experts, IMO,  December  2007, 
page 68 and 155 
Purvin & Gertz 30 June 2009, page 11 

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65 

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(RoPax)  and  47%  (LoLo  or  short  distance  container  carriers)  of  the  overall 
operational costs for short sea shippers and up to 60% for container vessels85. 

Assuming  a  fuel  price  increase  of  65%  (middle  estimate  of  the  Purvin  &  Gertz 
analysis), the operational costs would increase by between 6.5% and 24% for short 
sea shipping and by 40% for certain container lines. In absolute terms, the increased 
transport costs would be between €2 and 
€11 per tonne (depending on type of ship 
and cargo) and €2 per passenge r travelling from Sweden to Finland (assuming crude 
oil  price  of  $100  per  barrel)86.  These  costs  increases  assume  no  technological 
alternatives (such as stack gas scrubbing) and as such that ship owners would not try 
to  mitigate  against  increased  fuel  prices  which  seems  unlikely  given,  for  example, 
the efforts of the global container industry to reduce fuel consumption in response to 
recent high fuel prices. The Purvin and Gertz figures should be seen as a 'worst case 
scenario'. There are several ways in which an operator can reduce the additional costs 
including: 

–  The use of sulphur abatement equipment in order to reach an equivalent emissions 
performance  as  provided  by  low  sulphur  fuels.  This  will  reduce  the  additional 
costs  by  about  80%  whilst  there  will  be  costs  and  issues  to  be  addressed  in 
relation to the operation of such equipment such as waste disposal87; 

–  The use of Liquefied Natural Gas will reduce fuel costs by 20% relative to the use 
of marine gas oil and has as an additional advantage in terms of reduced emissions 
of  other  pollutants  such  as  NOx,  fine  particles  and  CO2.  This  not  only  gives 
additional  benefits  for  health  and  environment,  it  can  also  give  additional  cost 
savings  for  ships  calling  at  Norwegian  or  Swedish  ports  where  port  dues  and 
fairway dues incentivise better environmental performance 

–  Measures to reduce fuel consumption. The most obvious way is to reduce speed. 
According to Maersk, a 20% speed reduction results in a reduction of 40% in fuel 
consumption  for  container  ships.  According  to  a  presentation  given  by  TT-line, 
their  high  speed  RoPax  (25  knots)  consumes  50%  more  fuel  than  a  similar  size 
vessel  operating  at  18.5  knots.  Therefore,  speed  reduction  has  been  observed 
widely during the recent financial crisis and period of elevated fuel prices. Maersk 
for example managed in response to high fuel prices in 2008, to reduce the energy 
intensity  of  containers  it  transported  in  2008  by  15%  compared  to  the  previous 
year88. 

–  Other technical and operational measures to reduce fuel consumption. A study on 
policy  measures  to  reduce  green  house  gas  emissions89  derived  a  marginal  CO2 
abatement  cost  curve  for  the  Maritime  Transport  Sector  for  2030.  This  curve 
displays the overall costs and savings relative to normal operational costs. For a 
bunker  fuel  price  of  US$  700/tonne  (interest  rate  9%),  the  abatement  measures 

85  

86  

87  

88  
89  

The  Competitiveness  of  European  Short  sea  freight  Shipping  compared  with  road  and  rail  transport, 
Transport and Mobility Leuven, August 2010 
Consequences  of  the  IMO's  new  marine  fuel  sulphur  regulations,  Swedish  Maritime  Administration, 
May 2009 
Cost  Benefit  Analysis  to  Aupport  the  Impact  Assessment  accompanying  the  revision  of  Directive 
1999/32/EC on the Sulphur Content of certain Liquid Fuels, AEA, December 2009 
Maersk, Annual report 2008 
Technical  support  for  European  action  to  reducing  Greenhouse  Gas  Emissions  from  international 
maritime transport, CE Delft, December 2009, page 13 and 260 and following  

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considered  could  maximally  reduce  the  total  2030  fuel  consumption  by  on 
average 33% (min/max 27-47%). The largest part, 31%, would be measures that 
have  negative  marginal  abatement  costs  (so  the  savings  would  outweigh  the 
additional  costs).  Should  the  fuel  price  go  up  from  US$  700/tonne  to  US$ 
1,050/tonne, the cost effective reduction potential would increase from on average 
33% to 36%. So it is clear that as fuel costs increase the number of cost effective 
options to improve fuel economy also increases. 

2.3. 

Impact of the IMO 2008 agreement on modal share 

From 2015, the maximum permitted sulphur content of marine fuels that can be used 
in SECAs will be 0.10% compared to 1.00% currently. The expected increase in fuel 
costs  that  will  accompany  this  change  has  raised  concerns  by  transport  users  and 
businesses  particularly  in  the  Baltic  Sea  region  about  the  impact  of  increased 
transport costs on local businesses and on short sea shipping in particular. 

Whilst  a  policy  exists  to  encourage  short  sea  shipping,  a  general  aim  of  the  EU's 
transport  policy  has  been  to  ensure  that  the  transport  costs  for  all  transport  modes 
fully reflect relevant  externalities such  as air pollution. With this  in  mind,  in  2008, 
the  Commission  presented  Communications  on  the  "greening  of  transport"90  and  a 
strategy  to  internalise  the  external  costs  of  transport91.  These  principles  have  been 
reconfirmed  in  the  2011  White  Paper  on  Transport92.  Furthermore,  in  2008,  the 
Commission  presented  a  proposal  to  amend  the  "Eurovignette"  Directive93  so  as  to 
permit the Member States to incorporate a financial element related to air pollution, 
noise  and  congestion  into  road  tolls  for  heavy  goods  vehicles.  Such  charges  would 
nonetheless  remain  optional.  Whilst  the  European  Parliament  has  adopted  its  first 
reading resolution, the Council has so far not managed to reach political agreement 
on this proposal. 

Beyond  this  strategy  on  internalisation,  one  must  expect  that  different  modes  like 
short sea shipping and road haulage can and should compete with each other (where 
this is possible). Short sea shipping will face stronger competition from road freight 
transport  as  a  result  of  increased  marine  fuel  costs  due  to  operations  in  a  SECA 
despite the fact that road fuels are heavily taxed (unlike marine fuels). In 2007, road 
fuel was more than three times as expensive as heavy fuel oil and twice as expensive 
as marine gas oil (chapter 2.5). So also if ships shift to use of MGO, road fuel will 
remain significantly more expensive94. 

Besides competition with road, short sea ships will also experience competition from 
rail and deep sea shipping. 

90  
91  
92  

93  

94  

COM(2008) 433 : "Greening Transport" 
COM(2008) 435 : "Strategy for the internalisation of external costs" 
White Paper: Roadmap to a Single European Transport Area – Towards a competitive and resource 
efficient transport system, COM(2011) 144, 28.3.2011 
COM(2008) 436 : proposal for a directive of the EP and of the Council amending Directive 1999/62/EC 
on the charging of heavy goods vehicles for the use of certain infrastructures. 
Member State taxation must comply with a minimum rate of 302 Euro per 1000 litre for diesel oil but in 
most Member States the figures is between €400 and €600 per 1000 litre (ref:  http://www.energy.eu/ )).  

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Several studies assess the potential impacts on short sea shipping. These studies have 
each taken different assumptions and scope which unavoidably leads  to differences 
in the overall impacts on the modal shift. 

None of these reports assume that ships take measures to reduce fuel consumption. 
Yet,  an  increased  fuel  price  will  make  a  number  of  operational  and  technical 
measures  to  reduce  fuel  consumption  cost  effective  (see  further  explanation  in 
paragraph 4.2.3.). So the real fuel cost increase is likely to be less. 

In all studies the oil price is seen independent of the cargo volumes to be transported. 
It  is  likely  that  a  high  oil  price  will  only  materialize  in  case  of  strong  economic 
growth, with strong increase in cargo volumes. 

One  study  aimed  at  assessing  the  competitiveness  of  several  types  of  (short  sea) 
shipping95. It calculated the impact of several policy measures and concluded that the 
main impact comes from the fuel requirement in SECAs as of 2015 and to a lesser 
extend potential future measures to reduce greenhouse gas emissions and designation 
of NOx Emission Control Areas. 

This study assumed that compliance with the MARPOL regulation is obtained by the 
use of low sulphur fuel – as most expensive scenario for shipping. In addition, it only 
focussed on those lines which are susceptible for modal shift. 

Table 1:  Modal share of the SSS option and change of modal share  

Including  all  measures  combined,  by  2025  the  maximum  change  of  modal  share 
calculated ranges from -1% for Ropax Small to -7% for LoLo ships. These resulting 
modal  shifts  are  fairly  limited,  especially  noting  that  it  is  considered  a  "worst  case 
scenario". 

Compared to the other studies, the oil price for 2025 (taken from iTREN) is relative 
low.  On  the  other  hand,  the  maximum  modal  shift  is  predicted  for  the  longer 
distances  and  the  study  has,  by  taking  an  average  speed  of  60  km/h  for  trucks 
regardless  of  driving  time  legislation,  clearly  underestimated  road  costs  for  longer 
distances. So the competitive position of shipping will be better than assumed in this 
report. 

Another  study  done  for  the  European  Commission96  quantified  a  number  of 
parameters  that  will  influence  costs  of  maritime  and  road  transport  and  how  that 

95  
96  

TML, August 2010 
Impact  Study  on  the  future  requirements  of  Annex  VI  of  the  MARPOL  Convention  on  Short  Sea 
Shipping, SKEMA, June 2010 

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could  translate  into  change  of  transport  modes  for  some  selected  freight  corridors 
where a choice exists between routes with more, less or no ship transport. Whereas 
the scope of the report does not allow to draw conclusions on an overall modal shift, 
the study gives insight in consequences of different policy instruments or scenarios. 
The  impact  of  introducing  MARPOL  Annex  VI  was  found  the  most  important 
potential  cost  increase  for  short  sea  shipping  whereas  a  decrease  in  truck  driver 
salary would have a similar impact by decreasing road freight costs. The study found 
that  the  vulnerability  for  mode  shift  on  the  same  transport  corridor  with  different 
choices of road/ship transport could be very different. Shipping lines with a relatively 
high  fuel  consumption  seem  to  be  influenced  most.  Even  it  the  SECA  standard  for 
sulphur  in  fuel  would  have  been  set  at  0.50%,  still  a  clear  impact  on  mode  shift  is 
observed,  be  it  less  than  with  0.10%.  Where  scrubbers  are  assumed  to  be 
implemented  by  ship  operators,  the  compliance  costs  are  obviously  much  reduced 
and the study concluded that there will be almost no risk of modal shift in such cases. 

The  study  assessing  the  additional  fuel  costs  for  ships  visiting  Finnish  ports97 
assumes maximum 30 to 50% increase in shipping freight charges but again does not 
quantify potential modal shift.  

The  study  focussing  on  Sweden98  assumes  oil  prices  per  barrel  of  $60,  $100  and 
$150, resulting in mgo prices per tonne of $662, $1158 and $1650 respectively. The 
resulting  reduction  in  the  share  of  ships  is  assessed  at  -2%,  -7%  and  -10%, 
respectively, resulting especially in the middle scenario in a remarkable increase in 
rail  transport  (+8%).  This  study  is  the  only  one  to  also  include  impact  on  rail 
transport. 

The report does not reveal if and how the oil price scenarios are translated into prices 
for road and rail transport, nor if other costs increases have been taken into account. 

Assuming the middle scenario, the cost per tonne per voyage would increase between 
€2 and €10 (depending on type of ship and car
go). Per passenger the costs increase 
for a ferry from Stockholm to Turku (Finland) would be about €2. 

The  study  done  on  behalf  of  the  ECSA  (European  Community  Shipowner 
Association)99  predicts  significant  shift  towards  road  transport  (3  to  50%)  whereas 
the  use  of  fuel  containing  0.5%  sulphur  would  not  lead  to  any  modal  shift  at  all. 
Therefore, the future SECA standard is believed to counteract an important portion 
of  the  benefits.  The  potential  mode  shift  is  however  far  higher  than  assessed  in 
studies mentioned above which might be influenced by a number of assumptions that 
are not clear or questionable: 

(1) 

In is not clear how the oil price increases are included in truck costs or how 
other  legislation  (like  Euro  VI)  is  included.  The  average  speed  for  trucks 
seems optimistic: 90km/h on highways, 75km/h on other roads. 

97  

98  

99  

Sulphur content in ship bunker fuel in 2015, Ministry of Transport and Communications, Finland, April 
2009 
Consequences of IMO's new marine fuel sulphur regulations, Swedish Maritime Administration, May 
2009 
Analysis of the Consequences of Low Sulphur Fuel Requirements, Universiteit Antwerpen and TML; 
commissioned by ECSA, January 2010 

EN 

69 

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(2) 

(3) 

(4) 

It is not clear how capacity of other transport modes is taken into account and 
whether indeed certain changes would be feasible at all. 

The  total  amount  of  freight  transport  is  assumed  to  be  stable  and  certain 
percentage  of  modal  shift  is  assumed  to  result  in  the  same  number  of  ships 
carrying  less  cargo,  which  will  impact  on  the  freight  charge.  However,  as 
trade and certainly container trade is expected to increase, even a relative loss 
in market share could still be an increase in absolute terms. 

The  assumed  price  for  fuel  containing  0.50%  sulphur  is  underestimated  as 
unlike  assumed  in  the  report,  it  would  be  a  distillate  fuel.  Basing  the  future 
price on historical figures leads to further underestimation as before there was 
no legal requirement so no price premium for this fuel. 

So  in  summary,  it  is  clear  that  with  the  introduction  of  the  2015  emission 
requirements,  short  sea  shipping  will  experience  increased  costs  and  competition 
from  road,  rail  and  deep  sea  shipping.  This  will  impact  especially  those  shipping 
lines  that  already  today  are  least  competitive,  for  example  due  to  a  relatively  high 
fuel consumption.  Based  on  the  information  available  today,  it seems however that 
the impacts are not as imposing as suggested by the industry. At the same time, given 
the  large  range  in  predictions,  there  is  a  clear  level  of  uncertainty  to  what  might 
happen and the European Commission will therefore be keeping a close eye on the 
consequences and look for solutions in case of disproportional impacts. 

2.4. 

Potential impact on trade 

The choice as to where goods are sourced geographically will depend on the relative 
cost difference between similar products (from different locations) to which transport 
costs may contribute. It is clear that the impact of an increase in transport costs will 
be small for goods transported by containers due to the relatively high value of goods 
transported.  So  the  cargoes  most  at  risk  of  enhanced  competition  are  rather  the 
relatively low value goods transported by bulk carriers. For industries in the Nordic 
region the most relevant products include paper pulp and iron ore. 

The assessment of the potential impact on European imports and exports (especially 
regarding to trade in low value goods) showed that with ECAs as they are now, the 
sailing to and from European ports from/to other continents becomes only marginally 
more expensive. While this leaves Short Sea Shipping at a risk of losing activity to 
more fuel efficient Deep Sea Vessels making extra stops, other aspects than explicit 
costs  (flexibility,  opportunity  costs,  load  factors)  will  likely  temper  this  effect. 
Hence, it is not expected that changes in entry/exit points or shifts in modal balance 
(SSS to land) will take place. Given the marginal cost increase of maritime transport 
and  the  marginal  share  of  maritime  transport  cost  in  end  user  prices,  the  new 
legislation  will  cause  negligible  cost  increase  to  end  user  prices  of  national 
consumption100. 

An independent consultant assessed the price increase for goods transported from the 
middle  of  the  Baltic  Sea  to  the  English  Channel  at  $2  per  tonne  for  bulk  goods 
(relative  to  the  fuel  price  of  September  2009).  This  is  consistent  with  a  Swedish 

100  

TML, August 2010 

EN 

70 

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report  assessing  the  price  increase  at  €2  to  €9  for  containers
fluctuations of iron or paper pulp, this increase is limited.  

101.  Relative  to  price 

2.5.  Miscellaneous concerns  

Some concerns have been raised on whether ship engines can cope with low sulphur 
fuel  which  is  less  lubricating.  However,  several  communications  from  both  engine 
manufacturers  and  lubricating  oil  manufacturers  indicate  that  this  should  not  be  an 
issue.  More  over  the  revised  ISO  8217:2010  specification  for  marine  fuels  now 
contains minimum lubricity requirements. 

A more widespread concern will be the availability of compliant fuel when the new 
sulphur limits enter into force. As on the first of January 2015 the sulphur limits of 
fuels used by ships passing through SECAs will reduce significantly by a factor of 
ten from 1% to 0.1% by mass. It can not be excluded that there might be problems 
regarding universal fuel availability in all ports. However, as the amount of fuel used 
in SECAs is only a few percent of the total amount this is likely to be a temporary 
problem and the situation is not significantly different to previous changes in marine 
fuel  sulphur  requirements.  Indeed,  given  that  the  USA  and  Canada  have  also 
introduced  SECA's  covering  a  200  mile  zone  contiguous  with  the  USA/Canadian 
coastline  it  is  more  likely  that  geographically  balanced  availability  of  SECA 
compliant fuel will be seen in practice. 

101  

Swedish  Maritime  Administration  (2009),  Consequences  of  the  IMO's  new  marine  fuel  sulphur 
regulations  

EN 

71 

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ANNEX VII  TRENDS IN ACTIVITY, FUEL QUALITY AND PRICES, AND MODAL SPLIT 

1.  TRENDS RELATED TO THE USE OF MARITIME FUELS 

1.1.  Maritime and port activity 

Table  1  shows  the  total  freight  traffic  for  major  EU  ports  ranked  in  order  of 
increasing traffic (bulk and container cargoes) in millions of tonnes per annum. Most 
of  the  top  25  busiest  ports  below  have  shown  consistent  growth  in  the  2000–2007 
period whilst the financial crisis has affected traffic in 2008 although the degree is 
mixed  with  some  ports  actually  having  experienced  continued  growth  such  as 
Amsterdam, Bremerhaven, Antwerp and Rotterdam. 

% 
change 
07-08 
2.7 
3.5 
0.6 
0.0 
2.4 
19.0 

Port  

 Member
State 

2000 

2005 

2006 

2007 

2008 

UK 

-1.5 

66.279 

52.501 

65.267 

64.033 

60.686 

93.308 
70.801 
47.133 

92.561 
73.897 
62.516 

NL 
BE 
DE 
FR 
FR 
NL 

47.892 
44.318 
21.958 
33.117 
24.835 
43.797 

302.545  345.819  353.576  374.152  384.210 
116.003  145.835  151.705  165.512  171.237 
76.950  108.253  115.529  118.190  118.915 
92.523 
96.527 
91.279 
75.636 
69.973 
63.885 
74.366 
56.794 
42.044 

Rotterdam** 
Antwerpen** 
Hamburg 
Marseille** 
Le Havre** 
Amsterdam** 
Grimsby & 
Immingham 
-0.4 
Algeciras** 
0.4 
London** 
0.4 
Dunkerque** 
9.2 
Valencia** 
0.6 
Taranto** 
12.2 
Bremerhaven 
-3.9 
Genova** 
1.9 
Constantza** 
-8.7 
Tees & Hartlepool 
4.9 
Göteborg 
1.2 
Barcelona** 
-6.5 
Southampton** 
-4.9 
Wilhelmshaven 
6.5 
Forth 
-6.6 
Trieste** 
-1.2 
Bilbao** 
1.1 
Milford Haven 
-0.2 
Zeebrugge** 
Table 1: Freight traffic (bulk and container) in Mtonnes at major EU ports 2000 to 2008. Data taken 
from 'EU Energy and Transport in figures, statistical pocket book 2010.** signifies a port situated in 
an air quality management zone that experienced an exceedance of the daily air quality limit value for 
particulate matter PM10  in 2007 or 2008 (see section 2). 

61.869 
52.965 
50.464 
50.182 
49.522 
48.956 
46.469 
45.750 
45.436 
42.331 
41.516 
40.974 
40.556 
39.054 
37.195 
36.862 
35.875 
34.768 

62.128 
52.739 
50.244 
45.935 
49.240 
43.618 
48.358 
44.916 
49.779 
40.353 
41.040 
43.815 
42.643 
36.681 
39.833 
37.313 
35.496 
34.843 

60.023 
51.911 
50.386 
40.742 
50.871 
40.350 
44.425 
42.888 
53.348 
39.912 
38.267 
40.556 
43.106 
31.556 
44.644 
36.118 
34.307 
32.763 

55.184 
53.843 
48.503 
34.990 
47.869 
33.728 
42.640 
44.377 
55.790 
36.479 
37.061 
39.947 
45.977 
34.218 
43.355 
32.219 
37.547 
28.442 

51.472 
33.261 
25.787 
34.773 
43.402 
41.143 
44.015 
26.623 
33.768 
32.660 

ES 
UK 
FR 
ES 
IT 
DE 
IT 
RO 
UK 
SE 
ES 
UK 
DE 
UK 
IT 
ES 
UK 
BE 

In the period 2005-2007 container traffic at the largest EU ports grew substantially so 
that in the top 25 ports listed below in Table 2 only 4 experienced growth lower than 
10%  during  the  period  whilst  at  Zeebrugge  a  change  of  74%  was  recorded.  The 
financial  crisis  affected  traffic  in  several  ports  whilst  for  some  growth  continued 
strongly. 

EN 

72 

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Port 

2007 

2008 

2006 

2005 

Member
State 

% 
change
07/08 
Rotterdam 
-1.3 
Hamburg 
-1.5 
Antwerpen 
6.3 
Bremerhaven 
11.6 
Valencia 
18.3 
Algeciras 
-3.6 
Gioia Tauro 
-8.6 
Felixstowe 
-6.3 
Barcelona 
-1.6 
Le Havre 
-6.4 
Southampton 
-15.1 
Genova 
18.9 
Constantza 
-2.7 
Zeebrugge 
17.6 
Las Palmas, Gran Canaria 
-0.6 
La Spezia 
4.9 
London 
14.7 
Marseille 
-14.8 
Bilbao 
-6.5 
Göteborg 
2.7 
Medway 
49.2 
Dublin 
-9.1 
Liverpool 
-0.3 
Kotka 
8.8 
-0.2 
Gdynia 
Table 2: Container traffic in 1000 TEU at major EU ports 2005 to 2008. Data taken from 'EU Energy 
and Transport in figures, statistical pocket book 2010.  

10,773.4 
9,913.5 
7,878.9 
4,884.0 
3,048.9 
3,419.9 
3,464.2 
3,342.3 
2,605.6 
2,684.7 
1,905.2 
1,229.6 
1,444.7 
1,191.0 
1,309.8 
1,130.1 
857.8 
1,058.5 
956.1 
840.9 
514.5 
744.2 
675.7 
576.5 
611.9 

10,631.0 
9,767.3 
8,378.9 
5,451.4 
3,606.3 
3,297.6 
3,164.8 
3,131.4 
2,564.5 
2,511.6 
1,616.8 
1,461.9 
1,405.3 
1,400.8 
1,302.5 
1,185.9 
983.5 
901.4 
894.1 
863.9 
767.6 
676.5 
673.9 
627.1 
610.9 

9,575.4 
8,878.1 
6,718.2 
4,479.3 
2,614.8 
3,262.5 
2,835.2 
3,029.8 
2,314.6 
2,118.9 
1,502.3 
1,145.7 
1,170.4 
895.5 
1,291.1 
1,086.5 
742.6 
950.2 
898.7 
811.8 
594.3 
680.7 
613.4 
460.6 
458.7 

9,194.6 
8,084.3 
6,220.9 
3,696.1 
2,415.0 
3,183.1 
3,123.2 
2,759.7 
2,071.3 
2,144.3 
1,384.2 
1,037.6 
867.0 
682.3 
1,209.7 
915.6 
765.1 
910.6 
861.5 
771.7 
702.9 
590.2 
613.1 
376.5 
392.9 

NL 
DE 
BE 
DE 
ES 
ES 
IT 
UK 
ES 
FR 
UK 
IT 
RO 
BE 
ES 
IT 
UK 
FR 
ES 
SE 
UK 
IE 
UK 
FI 
PL 

Whilst there has been an overall increase in freight activity at EU ports, this growth 
is  dominated  by  a  shift  towards  containerised  freight.  This  has  implications  for  the 
relative  modal  shares  of  seaborne  versus  road  transport  within  the  EU  given  that 
products transported by container are generally of a higher value and relatively less 
affected  by  increased  transports  costs  (such  as  those  potentially  caused  by  a 
requirement for lower sulphur fuels).  

1.2. 

Trends in the sulphur content of marine fuels 

The  IMO  has  established  a  monitoring  programme  which  reports  on  the  sulphur 
content  of  marine  fuels  sold  globally.  The  information  is  provided  by  third  party 
organisations  involved  in  analysing  fuel  quality  on  behalf  of  fuel  purchasers.  The 
monitoring  programme  reports  annually  and  results  are  available  since  1999102. 
However, the average fuel sulphur level has been determined by averaging each fuel 
sulphur measurement but not taking into account the quantity (mass) of fuel that the 
sample  represents.  In  2009,  106,503  samples  of  residual  fuel  oil  were  tested 
(associated  with  94,323,860  tonnes  of  RFO  bunkered)  with  an  average  sulphur 
content (not mass weighted) of 2.35% m/m. As shown in Table 3 below, this figure 
has declined significantly since 2006 because of the introduction of SECA-compliant 
fuels and the more frequent testing of such fuels by fuel purchasers. 

Year 

Corresponding quantity of 

Number of Samples 

Tonnes per 

Average 

102  

MEPC 61/4 "sulphur monitoring for 2009": Paper prepared by the IMO secretariat and submitted to the 
61st session of the Marine Environment Protection Committee of 16 February 2010.  

EN 

73 

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residual fuel oil (tonnes) 

tested 

bunkering 

sulphur content

1999 

47,000,000  

2000 

49,000,000  

2001 

56,000,000 

2002 

59,000,000  

2003 

67,395,141 

2004 

74,408,066  

2005 

82,436,438  

2006 

86,857,565  

2007 

92,757,373  

2008 

97,600,555  

2009 

94,323,860  

53,000 

54,000 

62,000 

63,000 

66,958 

66,312 

79,592 

86,117 

97,172 

106,925 

106,503 

886 

907 

903 

936 

1006 

1122 

1035 

1008 

954 

913 

886 

2.7% 

2.7% 

2.7% 

2.6% 

2.7% 

2.7% 

2.7% 

2.59% 

2.42% 

2.37% 

2.35% 

Table  3:  Average  sulphur  content  of  residual  fuel  oil  from  1999  to  2009  based  on  the  number  of 
samples tested (i.e. not weighted by mass of residual fuel oil) 

The average sulphur content based solely on the average of sulphur measurements is 
not  representative  of  the  actual  fuel  used.  For  example,  when  the  average  sulphur 
content  of  residual  fuel  oil  in  2009  is  weighted  by  the  mass  of  fuel  bunkered  the 
average sulphur content is 2.60% as reported by the IMO rather than 2.35% based on 
the simple average of fuel sulphur measurements. Having recognised this weakness 
in  its  fuel  quality  testing  guidelines,  the  IMO  intends  to  ensure  that  fuel  sulphur 
monitoring data is mass weighted in future years. 

1.3.  Marine fuel prices 

There  are  three  broad  categories  of  marine  fuel  which  are  covered  by  the 
international ISO standard ISO 8217 all of which are generally exempt from taxation. 
The  first  category  of  marine  fuel  is  referred  to  as  "residual  fuel  oil  (RFO)", 
"intermediate  fuel  oil  (IFO)"  or  "heavy  fuel  oil  (HFO)"  and  is  characterised  by  its 
dark colour, high boiling point and high viscosity such that heating is required before 
it  can  be  pumped  to  a  ship's  engines.  Different  grades  of  residual  fuel  oil  are 
identified  by  their  specific  viscosity  in  centistokes.  IFO  380  is  a  mix  of  (heavy) 
residual oil and some (light) distillate oil. The fuel used in SECAs is typically a low 
sulphur IFO. 

The  second  category  is  the  lightest  marine  fuel,  known  as  marine  gas  oil  (MGO) 
which is a middle distillate fuel and has properties similar  to  heating fuel and road 
diesel. Currently, this fuel is only allowed to be placed on the market in the EU if its 
sulphur content does not exceed 0.1%. The third category covers marine diesel oils 
(MDO)  which  are  heavier  distillate  fuels  and  in  practice  are  made  from  blending 
light  distillate  fuels  together  with  RFO  components.  There  is  no  legal  requirement 
related  to  the  use  of  this  quality  of  fuel  but  MDO  is  currently  only  allowed  to  be 
placed on the  market (sold)  in the EU if it contains no  more than 1.5%  sulphur by 
mass. 

The evolution in the  spot  price  of the three  categories  of  marine  fuel  since  2004  is 
depicted  in  Figure  1  below.  Unsurprisingly,  this  shows  that  marine  gas  oil  is  more 
expensive than residual fuel oils by about $150-200 per tonne but that this difference 
has been smaller since 2008. There is little difference in price between high and low 

EN 

74 

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sulphur  residual  fuel  oils.  Price  information  for  low  sulphur  RFO  is  only  available 
from  2006  when  the  requirements  for  the  first  SECA  in  the  Baltic  Sea  formally 
entered into force thereby creating a demand for this fuel. The entry into force of the 
second  SECA  in  the  North  Sea  and  English  Channel  in  August  2007  seems  not  to 
have  had  any  significant  impact  on  marine  fuel  prices.  The  price  of  all  refined 
products is heavily influenced by the price of crude oil which exhibited a sharp rise 
in 2008 where crude prices rose to $125 per barrel.  Any price increase effect from 
the  lowering  of  the  sulphur  content  of  MGO  from  1  January  2008  (from  0.2%  to 
0.1%) in the EU is probably masked by the changes in the crude price. 

Price Evolution of Maritime Fuels from 2004 to mid-2010

IFO380

MGO

LS380

]

D
S
U

[

e
c
i
r
P

1400

1200

1000

800

600

400

200

0

14/01/2004

28/05/2005

10/10/2006

22/02/2008

06/07/2009

18/11/2010

Year

Figure 1:  Monthly average prices for high sulphur IFO380, low sulphur (1.50%) IFO380 and MGO 
in Rotterdam from 1 October 2004 to 15 June 2010. Data provided by Bunkerworld. 

The  US  Energy  Information  Administration  has  produced  energy  forecasts  for  the 
consumption  and  prices  of  energy  products  including  transportation  fuels  such  as 
residual fuel oil103.  Figure 2 shows the predicted evolution of the price of RFO out 
until 2035 for a "reference" case and low and high sensitivity cases.  RFO prices are 
predicted to be fairly static over the next 10 years or so in the reference case. 

103  

http://www.eia.doe.gov/oiaf/aeo/pdf/0383(2010).pdf  

EN 

75 

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1400

1200

1000

800

600

400

200

e
n
n
o
t

r
e
p
$

8
0
0
2

0
2005

Price evolution of Residual Fuel Oil

Low

Reference

High

2010

2015

2020

2025

2030

2035

2040

Year

Figure  2:  Predicted  price  evolution  of  residual  fuel  oil  in  2008  $  per  tonne.  Data  taken  from  the 
Annual Energy Outlook 2010 of the US Energy Information Administration. 

1.4. 

Trends in modal share of freight transport 

During the period 2000-2008 total freight transport in the EU-27 increased by 2.0% 
per annum whilst those for road, sea and rail increased at 2.7%, 1.7% and 1.2% per 
annum respectively (see table below). 

EU-27 Freight 
transport in 
Billion tonne-km 
1995 
1996 
1997 
1998 
1999 
2000 
2001 
2002 
2003 
2004 
2005 
2006 
2007 
2008 

Road 

Rail 

inland 
waterways 

pipelines 

sea 

Air 

Total 

1289 
1303 
1352 
1414 
1470 
1519 
1556 
1606 
1625 
1747 
1800 
1854 
1915 
1878 

386 
392 
410 
393 
384 
404 
386 
384 
392 
416 
414 
440 
453 
443 

122 
120 
128 
131 
129 
134 
133 
133 
124 
137 
139 
138 
147 
145 

115 
119 
118 
125 
124 
127 
133 
128 
130 
132 
136 
135 
127 
124 

1146 
1160 
1193 
1232 
1268 
1314 
1334 
1355 
1378 
1427 
1461 
1505 
1532 
1498 

2 
2.1 
2.2 
2.3 
2.3 
2.5 
2.5 
2.4 
2.4 
2.5 
2.6 
2.7 
2.8 
2.7 

3060 
3096.1 
3203.2 
3297.3 
3377.3 
3500.5 
3544.5 
3608.4 
3651.4 
3861.5 
3952.6 
4074.7 
4176.8 
4090.7 

Table 4 :. Freight transport demand in the EU 1995-2008. Data from statistical pocketbook 2010. 

EN 

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ANNEX  VIII  –  CURRENT  AND  POTENTIAL  FUTURE  SUPPORT  MEASURES  THAT  COULD  BE 
USED FOR THE IMPLEMENTATION OF MARPOL ANNEX VI.  

1. 

INTRODUCTION 

The  introduction  of  the  new  environmental  standards  on  sulphur  emissions  is  expected  to 
entail  changes  of  a  technical  and  operational  nature  in  the  shipping  business  as  well  as  in 
upstream and downstream industries. Accordingly, the Commission will further examine the 
possible impacts namely on shipping and especially in the Short Sea Shipping (SSS) sector. 
On one hand  impacts might result from higher costs due by the use of low sulphur bunker 
fuels. In this context, cost developments will be monitored in order to propose well informed 
policy responses to avoid possible distortions in the logistics chain and modal backshift from 
sea  to  land.  On  the  other  hand,  making  use  of  the  equivalent  compliance  methods  would 
require  investments  for  the  retro-fitting  or  newbuilding  of  ships,  which  would  also  often 
require additional operational efforts, both on-board and on-shore. Especially a switch to the 
use  of  LNG  or  LPG  will  need  adequate  infrastructure  and  superstructure  to  support  the 
implementation of the technology. 

The  European  Commission's  proposal  is  intended  to  be  both  flexible  and  neutral  as  regards 
the way in which compliance with the new limits can be achieved, leaving the choice of the 
most appropriate technology to the operators. Nevertheless, compliance needs to be achieved 
on time and at the scale required while minimising any possible unwanted collateral effects. 
To  this  end,  a  number  of  short-term  accompanying  measures  are  being  considered  by  the 
Commission to seek solutions for minimizing the compliance costs.  

The  following  text  discusses  support  measures  to  address  the  imminent  challenges  for  the 
shipping  sector  relating  to  coping  with  the  effects  of  the  extra  costs  induced  by  actions  to 
improve its environmental performance, by reducing the SOx emissions from ships as foreseen 
in the revision of Directive 1999/32. 

In Chapter 3 it describes possible international measures to avoid trade distortions and finally 
it presents the Commission’s considerations on an additional set of measures to address, from 
a broader perspective, the environmental impact of shipping in the medium and longer term. 
In this respect, a "sustainable waterborne transport toolbox" could assist the sector to improve 
its  environmental  performance  while  maintaining  its  competitive  position.  This  multi-
dimensional  policy  approach  would  explore  measures  such  as:  hard  and  soft  regulatory 
measures,  green  ship  technology  and  alternative  fuels,  adequate  green  infrastructure, 
economic  and  funding  instruments,  research  and  innovation,  international  cooperation,  etc. 
These  measures  will  be  put  in  place  following  the  adoption  of  the  Roadmap  to  a  Single 
European Transport Area - White Paper on Competitive and Sustainable Transport System104, 
and the new TEN-T Policy and Guidelines, and will require further assessment and validation 
with the stakeholders. 

104   Commission White Paper – Roadmap to a Single European Transport Area – Towards a competitive and 

resource efficient transport system, COM(2011) 144 of 28.3.2011 

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2. 

SHORT  TERM  MEASURES  TO  SUPPORT  THE  IMPLEMENTATION  OF  NEW  SULPHUR 
LIMITS  

2.1. 

EU Instruments 

a) 

TEN-T Work Programme 2011 

In  2011,  the  TEN-T  Work  Programme  will  continue  to  finance  projects  addressing 
environmental issues and facilities. These may include for instance the deployment of LNG 
and  scrubber  technologies,  such  as  LNG  stations  and  port  reception  facilities  aiming  at 
collecting  the  sludge  produced  by  scrubbers.  LNG  bunkering  vessels  can  also  be  funded  as 
pilot projects. 

b) 

Marco Polo II – Work Programme 2011 

The Marco Polo Work Programme for 2011 includes as a political priority the encouragement 
of  the  use  of  maritime  services  that  implement  innovative  technologies,  which  significantly 
reduce polluting emissions from ships. Therefore, the use of low sulphur fuel, SO2 abatement 
technologies, and the use of alternative fuels like LNG will be specific eligibility criteria for 
Short  Sea  Shipping  projects  under  the  Call  for  2011.  In  practice  this  means  that  SSS-based 
projects  submitted  under  the  Modal  shift,  Catalyst  and  Motorways  of  the  Sea  actions  shall 
only  be  eligible  provided  they  implement  innovative  technologies  or  operational  practices 
which significantly reduce polluting emissions of maritime transport, such as the use of low 
sulphur fuels, alternative fuels like LNG and abatement technologies. 

c) 

EIB --European Clean Transport Facility (ECTF) 

The maritime transport sector can already benefit from the European Investment Bank (EIB) 
loans.  The  EIB  introduced  the  European  Clean  Transport  Facility  (ECTF)  at  the  end  of 
2008, which should significantly underpin innovation in the sector, by supporting investments 
targeting  research,  development,  and  innovation  in  the  areas  of  emissions  reduction  and 
energy efficiency in the European transport industry. The ECTF will amount to EUR 4bn per 
year  and  targets    in  particular  the  shipping  industries.  The  average  EIB  lending  for 
shipbuilding  and  maritime  infrastructure  has  been  to  the  order  of  €500m-€550m  in  recent 
years 

d) 

Strategic Transport Technology Plan (STTP) 

The STTP under preparation for 2011 will support research, development and innovation with 
a  view  to  ensuring  the  implementation  of  the  research  results  especially  into  innovative 
products  and  processes.  It  could  in  particular  help  the  introduction  of  new  abatement 
technologies or of new fuels such as LNG. 

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2.2. 

State aid measures 

2.3. 

State aid measures 

Member States may decide to compensate for the net increased costs for the ship industry to 
comply with new EU standards by providing State aid under certain conditions. 

Such  State  aid  must  have  an  incentive  effect,  contribute  to  environmental  protection  and 
comply  with  existing  guidelines  or  regulations,  in  particular  the  Community  Guidelines  on 
State  aid  for  environmental  protection105  or  the  Commission  Regulation  N°  800/2008  of  6 
August 2008(General block exemption)106. 

When  new  EU  standards  are  considered  or  adopted,  Member  States  may  in  particular  grant 
two categories of investment aid. 

In case of investments which take place before the adoption of new EU  standards,  Member 
States may grant investment aid enabling companies to go beyond existing EU standards.  

When new EU standards have been adopted but are not yet in force, Member States may grant 
investment aid for early adaptation ahead of the entry into force of the new standards.  

In order to reduce the administrative burden, Member States may grant investment aid to go 
beyond EU standards and investment for early adaption to SME, without prior notification to 
the Commission, in accordance with the provisions of Commission Regulation N° 800/2008 
of 6 August 2008 (General block exemption)107. 

Financing  of  port  reception  facilities  and  LNG  fuelling  stations  may  be  under  certain 
conditions approved by the Commission under Community Guidelines on National Regional 
Aid for 2007-2013108.  

Aid to research, development and innovation may  be  granted to shipbuilding, ship repair or 
ship  conversion  yards  on  the  basis  of  the  Framework  on  State  aid  to  shipbuilding109.  This 
Framework will expire at the end of 2011 and is currently being reviewed by the Commission. 

It  follows  from  the  above  that  Member  States  could  grant  aid  to  support  measures  such  as 
retro-fitting air pollution control devices or marine engines on vessels ahead of the entry into 
force  of  the  new  standards,  or  developing  onshore  infrastructure,  such  as  for  marine-LNG 
refuelling stations. 

3. 

INTERNATIONAL ACTION 

Similar standards for all Baltic Sea third States are necessary in order to avoid potential traffic 
flow shifts between Baltic ports. In this context, the Commission proposes to use international 
dialogue,  e.g.  within  the  framework  of  the  EU-Russia  Common  Spaces,  or  as  appropriate 
within  the  Helsinki  Commission,  so  that  all  Baltic  third  countries  do  ratify  MARPOL  and 

105   OJ C82 of 1.4.2008, p.1. 
106   OJ L 214 of 9.8.2008; p 3 
107   OJ L 214 of 9.8.2008; p 3 
108   OJ C54 of 4.3.2006, p13 
109  OJ C 317 of 30.12.2003, p.11, and the Communication from the Commission concerning the prolongation of 

the Framework on State Aid to Shipbuilding, OJ C 173 of 8 July 2008, p.3.  

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effectively comply with all Annex VI requirements. In more general terms, the Commission is 
preparing  a  Communication  to  set  conditions  for  a  renewed  transport  policy  with  its 
neighbours, one aim of which will be to make transport more efficient and bring it closer to 
EU standards. 

The Commission will also stimulate the exchange of  experiences  and  best practices on new 
emissions  abatement  technologies  and  the  use  of  alternative  fuels,  compliance  monitoring, 
safety  and  cost  aspects  with  third  countries  bordered  by  SOx  ECAs,  as  the  United  States  of 
America. The ultimate objective is to set up harmonised standards based on cost effectiveness 
assessment, which will permit to use vessels in all seas without technical hindrances.  

4. 

MEDIUM-TERM  AND  LONG-TERM  MEASURES  TO  FOSTER  SUSTAINABLE  MARITIME 
TRANSPORT  

In  the  long  run,  the  main  challenges  of  the  shipping  sector  relate  to  meeting  the  increasing 
demand for transport in an efficient and sustainable way, and to contribute to the general EU 
effort  to  reducing  the  GHG  emissions  from  transport.  To  this  end,  as  mentioned  above,  the 
Commission  is  considering  a  "sustainable  waterborne  transport  toolbox"  which  could  assist 
the  sector  to  improve  its  environmental  performance  while  maintaining  its  competitive 
position.  This  would  be  an  integrated,  multi-dimensional  action,  tailored  to  the  sector's 
specific  needs.  Its  implementation  could  be  undertaken  by  the  Commission,  the  Member 
States, and the relevant stakeholders, either individually or jointly.  

Following the adoption of the Roadmap to a Single European Transport Area - White Paper 
on  Competitive  and  Sustainable  Transport  System,  and  in  line  with  the  new  TEN-T 
Guidelines  and  Policy,  as  well  as  further  assessment  and  validation  with  the  relevant 
stakeholders,  the  sustainable  waterborne  transport  toolbox  will  include  the  following 
measures:   

1.  Regulatory measures to reduce emissions from ships, not exclusively in the context of 
transposing  international  emission  reduction  requirements,  but  also  to  create  the  adequate 
regulatory  framework  to  facilitate  the  implementation  and  the  safe  and  secure  use  of  green 
ship technologies and the development of the necessary standards, notably in an amendment 
of the marine equipment directive110. The European Commission, in cooperation with EMSA 
will  assess  the  benefit  of  averaging  compliance  methods  which  could  provide  to  operators 
some flexibility to meet the requirements of the directive on sulphur emissions.  

This  may  lead  to  a  change  of  legal  requirements,  which  will  be  submitted  to  the  IMO. 
Furthermore,  in  its  Roadmap  to  a  Single  Transport  Area111,  the  Commission  announced  its 
intention to proceed, over the period 2016-2020, to internalising the costs for local pollution 
and noise in ports, as well as for air pollution at sea, which would reduce potential imbalances 
between regions resulting from the implementation of SECAs. 

2. 
Implementation  of  advanced  green  technology  and  alternative  fuels.  The 
Commission  will  analyse  the  creation  of  a  dedicated  programme  to  promote  the  use  of 

110  
111  

Council Directive 96/98/EC of 20 December 1996 on marine equipment, OJ L 46 of 17.2.1997, p.25 
Commission Staff Working Document accompanying the White Paper – Roadmap to a Single European  
T    Transport Area – Towards a competitive and resource efficient transport system, SEC(2011) 391 
final of 23.3.2011 

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alternative  fuels,  notably  LNG,  contributing  to  the  global  effort  to  reduce  GHG  emissions 
from transport and optimise ship energy efficiency. 

3.  Development of adequate green infrastructure and superstructure to support clean 
vessel  technologies  such  as  LNG  shore-based  infrastructure  and  bunker  delivery  logistics.  
The  use  of  LNG  requires  investment  in  terminals  with  LNG  filling  stations  for  ships. 
Appropriate  locations  for  developing  safe  and  efficient  LNG  bunker  logistics  need  to  be 
identified.  The  case  for  specific  governmental  support  for  the  initial  development  of  the 
necessary  shore  based  infrastructure  will  be  examined.  The  Commission  will  consider 
supporting the deployment of LNG shore-based infrastructure and bunker delivery logistics in 
the  European  Union.  A  support  programme  for  the  development  of  a  EU  LNG  bunkering 
network  or  the  installation  of  coastal  stations  will  be  studied.  These  actions  will  be  part  of 
wider  programmes  (like  TEN-T  or  Marco  Polo)  and  may  be  also  assessed  with  these 
respective programmes. 

Given the budgetary constraints of the TEN-T programme, which provides for relatively low 
co-funding rates, a better coordination will be required with funding opportunities under the 
Structural Funds  (European Rural  Development Fund  and the  Cohesion Fund), which allow 
for  higher  co-funding  rates.  To  this  end,  the  Commission  aims  to  develop  a  transport 
infrastructure  framework,  encompassing  the  investment  strategies  of  both  the  TEN-T  and 
Structural Funds. In view of continued pressure on public sector budget resources, unlocking 
the potential of private finances is very important to support investment in green technologies 
and  alternative  fuels.  In  its  Roadmap  to  a  Single  Transport  Area112,  the  Commission 
announced its intention to establish an enabling framework for the development of PPPs, and 
to participate in designing new financing instruments for the transport sector, such as the EU 
project bond initiative113. 

Research and innovation: moving towards low carbon waterborne transport requires 
4. 
substantial  research  efforts.  Furthermore,  it  is  very  important  to  optimise  research  and 
innovation activities and to ensure the timely deployment of their results.  The Commission in 
its Strategic Transport Technology Plan (STTP) will address options for all transport modes, 
and  notably  for  waterborne  transport.  Furthermore,  funding  for  European  research  and 
innovation relevant to this mode of transport should be part of future framework programmes, 
and  industry-driven  priorities  be  reinforced,  as  supported  by  the  Communication  on 
UnAnnex 
Innovation 

112  

113  

EN 

Commission  White  Paper  –  Roadmap  to  a  Single  European  Transport  Area  –  Towards  a  competitive 
and resource efficient transport system, COM(2011) 144 of 28.3.2011 
Commission  White  Paper  –  Roadmap  to  a  Single  European  Transport  Area  –  Towards  a  competitive 
and resource efficient transport system, COM(2011) 144 of 28.3.2011, p.109 

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ANNEX IX 

ADMINISTRATIVE BURDENS 

The  European  Commission's  Impact  Assessment  Guidelines  request  that  administrative 
burdens  associated  with  the  delivery  of  EU  legislation  are  assessed  and  reduced  where 
feasible whenever an impact assessment is conducted. 

For the purposes of legislative impact assessment 'administrative burdens' are strictly defined 
as  information  obligations  that  are  placed  on  citizens,  businesses  or  public  administration 
(excluding the EU) by EU legislation and that entail financial costs. These obligations can be 
to provide or record and keep information. 

The Directive contains information obligations mostly related to compliance monitoring and 
reporting.  The  following  is  a  mapping  of  information  obligations  currently  included  in  the 
Directive: 

•  For Member States 

Article 

Description 

Comment 

This provision is not revisited in this impact assessment. 

This  is  a  conditional  obligation,  dependent  on  the  use  of 
abatement technologies to meet compliance (instead of low 
sulphur fuels). This provision is not revisited in this impact 
assessment.  

This provision is not revisited in this impact assessment.. 

Art. 4a (6)  Maintain  a  register 
of  local  suppliers 
of marine fuel 

to 
Art. 4c (4)  Communicate 
IMO  criteria 
for 
the  assessment  of 
on 
impacts 
ecosystems 
of 
streams 
waste 
associated 
with 
abatement 
technologies. 

Art. 7 (1) 

Provide 
the 
Commission with a 
short yearly report  

•  For companies 

Article 

Description 

Comment 

Art  4a  (5), 
4b 
Art. 
(1b) 
and 
Art. 6 (1a) 

Register 
fully 
information  on  the 
sulphur  content  of 
fuels  in  log  books 
and  bunker  delivery 
notes. 

Ships hold log books on which operational information is 
registered.  This  requires  the  entry  of  information  on  the 
sulphur  content  of  fuel,  which  also  has  to  be  present  on 
the  bunker  delivery  note.  There  is  an  IMO  obligation  to 
keep  fuel  bunker  delivery  notes  for  at  least  one  year.  In 
general  the  sulphur  content  of  fuel  has  to  be  known  by 
the  operator  to  ensure  it  is  compatible  with  a  ship's 

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installed  technology.  This  provision  is  not  revisited  in 
this impact assessment. 

This provision is not revisited in this impact assessment. 

This provision is not revisited in this impact assessment. 

This is a conditional obligation, dependent on the use of 
abatement  technologies  too  meet  compliance  (instead  of 
low sulphur fuels). This provision is not revisited in this 
impact assessment. 

Art. 4a (6)  For  fuel  suppliers. 
Document 
the 
sulphur  content  of 
fuels  on  a  bunker 
delivery note. 

Art. 4c (1)  Notify in writing the 
Commission and the 
port  State  on  trials; 
provide  full  results 
to  the  Commission 
and to the public. 

Art. 4c (4)  Document 

that 
streams 
with 

waste 
associated 
abatement 
technologies used to 
meet 
compliance 
have  no  impact  on 
ecosystems. 

The options generated in the impact assessment would not introduce some changes  to these 
information obligations.  

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