COMMISSION STAFF WORKING PAPER POLLUTANT EMISSION REDUCTION FROM MARITIME TRANSPORT AND THE SUSTAINABLE WATERBORNE TRANSPORT TOOLBOX
Date: 2011-09-16
Institutions: European Commission
Subjects: EU programme, diesel fuel, environmental impact, marine pollution, maritime transport, pollution from ships, reduction of gas emissions, research and development, soft energy, sulphur

EUROPEAN COMMISSION 

Brussels, 16.9.2011 
SEC(2011) 1052 final 

COMMISSION STAFF WORKING PAPER 

POLLUTANT EMISSION REDUCTION FROM MARITIME TRANSPORT AND THE 
SUSTAINABLE WATERBORNE TRANSPORT TOOLBOX 

Accompanying the document 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

on the review of the implementation of Directive 1999/32/EC related to the 
sulphur content of certain liquid fuels and on further pollutant emission 
reduction from maritime transport 

{COM(2011) 441}

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TABLE OF CONTENTS 

1. 

1.1. 

1.2. 

2. 

2.1. 

INTRODUCTION........................................................................................................ 2 

THE CONTEXT .......................................................................................................... 2 

BACKGROUND.......................................................................................................... 2 

ACCOMPANYING MEASURES............................................................................... 3 

Short term measures under the current EU policy framework and financial 
perspective.................................................................................................................... 3 

2.1.1.  EU Instruments............................................................................................................. 3 

2.1.1.1.  TEN-T Work Programme 2011-Multi-Annual Programme for Motorways of the Sea

...................................................................................................................................... 3 

2.1.1.2.  Marco Polo II – Work Programme 2011...................................................................... 4 

2.1.1.3.  European Investment Bank's lending policy and instruments in support of sustainable 
shipping ........................................................................................................................ 4 

2.1.2.  Other measures............................................................................................................. 4 

2.1.2.1.  State aid measures ........................................................................................................ 4 

2.1.2.2.  International dialogue and technical co-operation ....................................................... 5 

2.2. 

Medium to long term measures to foster sustainable shipping -- A sustainable 
waterborne transport toolbox ....................................................................................... 6 

2.2.1.  Regulatory measures .................................................................................................... 6 

2.2.2.  Non-regulatory measures ............................................................................................. 7 

2.2.3. 

Implementation of advanced green technology and alternative fuels.......................... 7 

2.2.4.  Development of adequate green infrastructure and superstructure: LNG shore-based 

infrastructure and bunker delivery logistics................................................................. 7 

2.2.5.  Economic, financial instruments and funding instruments:......................................... 8 

2.2.6.  Research, Development and Innovation ...................................................................... 8 

3. 

The way forward .......................................................................................................... 8 

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1. 

INTRODUCTION 

1.1. 

THE CONTEXT 

At European Union level, certain rules on the sulphur content of marine fuel, laid down in the 
Annex VI -Regulations for the prevention of Air Pollution from Ships - of the International 
Maritime Organisation (IMO) MARPOL 73/78 Convention, have been incorporated in the EU 
Directive 2005/33/EC1 amending Directive 1999/32/EC relating to a reduction in the sulphur 
content of certain liquid fuels and amending Directive 93/12/EEC. 

In  October  2008,  MARPOL  Annex  VI  was  amended,  introducing  requirements  for  lower 
sulphur fuels globally, but also more stringent limits in the Emission Control Areas (ECAs)2. 
In order to ensure regulatory consistency, the relevant EU legislation will be aligned with the 
latest  IMO  requirements.  In  addition,  the  alignment  with  the  international  standards  will  be 
accompanied at EU level by a set of dedicated measures, which are further elaborated in the 
present Staff Working Paper. 

The European Commission's proposal for sulphur reduction in marine fuels 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 
minimising the compliance costs. 

Furthermore, in order to assist the sector to achieve a broader set of sustainability criteria in 
the long run, a set of medium to long term measures are being contemplated -"a sustainable 
waterborne  transport  toolbox."  These  measures  aim  at  promoting  the  use  of  green  ship 
technology, alternative fuels, the development of adequate green transport infrastructure and 
superstructure,  exploring  possible  funding  instruments  and  implementing  the  results  of 
research, development and innovation activities. 

1.2. 

BACKGROUND 

The  proposed  Directive  amending  Directive  1999/32/EC  as  regards  the  sulphur  content  of 
marine fuels introduces as of 1 January 2015 a new limit of 0.1% on the maximum allowable 
sulphur content of any fuel oil used on board ships within the European designated Sulphur 
Emission  Control  Areas  (SECAs).  The  introduction  of  this  new  environmental  standard  is 

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The Directive lays down the maximum permitted sulphur content of heavy fuel oil, gas oil and marine 
gas oil used in the EU. See in this context also Directive 98/70/EC relating to the quality of petrol and 
diesel  fuels  as  amended.  In  addition  to  this,  the  EU  legislation  incorporates  some  additional 
requirements like the obligation for ships at berth or anchorage in EU ports to use fuels containing max. 
0.1% sulphur by mass, and the obligation for passenger ships on regular service to or from EU ports to 
use fuels containing maximum sulphur content of 1.5%.  

European  designated  Emission  Control  Areas  (ECAs)  include  the  Baltic  Sea,  North  Sea,  and  the 
English  Channel,  exclusively  controlling  SOx  thus  they  are  called  Sulphur  (or  sulphur  oxides-SOx) 
Emission  Control  Areas,  or  SECAs.  Outside  Europe,  the  200  nautical  miles  zone  around  U.S.  and 
Canada  has  been designated recently  as  the  North  American  Emission  Control Area,  controlling both 
SOx and NOx from ships.  

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likely  to  entail  changes  of  a  technical  and  operational  nature  in  the  shipping  business.  The 
Commission services will further monitor possible impacts on shipping business, especially in 
the Short Sea Shipping (SSS) sector. 

The revised Directive allows the use of equivalent compliance methods, which may be used 
instead  of  low  sulphur  content  fuel,  providing  they  are  at  least  as  effective  in  terms  of 
emissions reduction. Thus, compliance using alternative methods such as exhaust gas cleaning 
system (scrubbers) could be applied. In addition, any other technology-based method that is 
verifiable and enforceable to limit SOx emissions to a level equivalent to that prescribed by 
the Directive will be permitted. Accordingly, this allows using additional compliance methods 
such as alternative fuels like Liquefied Natural Gas (LNG) where appropriate. 

Scrubbers  remove  the  unwanted  pollutants  from  the  engine's  exhaust  gases  and  can  achieve 
over  99%  reduction  as  regards  SOx  emission.  LNG  contains  no  sulphur,  and  has  the  added 
advantage of substantial reductions in CO2, NOx and particulate emissions. 

However,  both  technologies  have  drawbacks,  especially  the  need  for  adaptation  of  existing 
ships,  a  possible  loss  of  cargo  space,  and  in  the  case  of  LNG  lack  of  adequate  bunkering 
infrastructure and the need to minimise methane slippage. 

Nevertheless, available studies report that both technologies could provide viable alternatives 
to  the  switch  to  low  sulphur  fuels  and  their  expected  payback  time  (relative  to  the  cost  of 
distillate  fuels)  could  be  relatively  short  for  both  of  them.  Also,  LNG  can  already  be 
considered perfectly suitable for ships trading on regular schedules, hence required to bunker 
in a limited number of ports. 

Nevertheless,  it  is  for  shipowners  to  select  the  specific  technology  best  suited  for  their 
individual fleets  in order to  achieve compliance  with the new limits.  It  is expected  that this 
would  foster  technical  innovation  in  engine  technology.  The  European  Commission's 
legislative  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. 

There is a need that competitiveness and sustainability are both considered equally important 
issues. 

2. 

ACCOMPANYING MEASURES 

2.1. 

Short  term  measures  under  the  current  EU  policy  framework  and  financial 
perspective 

The  main  purpose  of  these  existing  short-term  measures  is  to  support  compliance  with  the 
new  environmental  standard  at  the  scale  required,  while  minimising  any  possible  unwanted 
collateral effects. 

2.1.1.  EU Instruments 

2.1.1.1.  TEN-T Work Programme 2011-Multi-Annual Programme for Motorways of the Sea 

In  2011,  the  Work  Programme  for  the  development  of  Motorways  of  the  Sea  (MoS)  within 
the Trans-European Transport Network (TEN-T) will continue to finance projects addressing 

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environmental  issues  and  promoting  the  development  of  related  green  infrastructure  and 
facilities.  Implementation  projects,  pilot  actions,  and  studies  supporting  the  deployment  of 
LNG  or  scrubber  technologies  or  the  promotion  of  shore-side  electricity  are  among  the 
priority  actions  of  the  TEN-T  MoS  work  programme.  For  example,  these  may  include  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 could 
also be funded as pilot projects. The allocated budget for the 2011 call for the TEN-T MoS 
has been increased from 30 to 70 million €. 

2.1.1.2.  Marco Polo II – Work Programme 2011 

The  Marco  Polo  Work  Programme  for  2011  gives  priority  to  supporting  maritime  services 
that implement innovative technologies, which significantly reduce polluting emissions from 
ships.  Therefore,  the  use  of  low  sulphur  fuel,  SOx  abatement  technologies,  and  the  use  of 
alternative fuels like LNG will be selection criteria for Short Sea Shipping projects under the 
Call for 2011. 

2.1.1.3.  European Investment Bank's lending policy and instruments in support of sustainable 

shipping 

At European level, possibilities for financing are already available for the sector through the 
lending  of  the  European  Investment  Bank  (EIB)3.  Financing  of  shipping  is  part  of  the  core 
business of the EIB's overall long term transport lending. 

The EU shipping projects  funded by the EIB  are of various types and have been eligible in 
some particular cases under sustainable transport or regional development criteria. The Bank 
has  for  several  decades  financed  shipping,  such  as  the  purchase  of  new,  or  more  rarely  the 
retrofitting of ships. 

In line with the EU 2020 Strategy and the EU transport policy objectives and targets, the EIB 
will  continue  to  provide  financial  support  to  the  commercial  shipping  sector.  Particular 
attention will be given to projects that better assist the sector to cope with the environmental 
challenges and encourage, in line with EU legislation, the development of clean technology, 
and  increased  fuel  efficiency  as  well  as  more  concentrated  effort  in  the  safe  and 
environmentally  efficient  methods  of  phasing  out  older  and  less  fuel  efficient  vessels.  In 
addition,  the  Bank  will  continue  supporting  investment  in  Research,  Development  and 
Innovation in the shipping industry. 

2.1.2.  Other measures 

2.1.2.1.   

State aid measures 

Retrofitting  existing  vessels  or  ordering  new  generation  greener  vessels  (for  use  of  cleaner 
fuels  or  air  pollution  control  devices)  will  entail  substantial  additional  investment  costs  for 
ship operators. The financial burden of upgrading a fleet should in principle be borne by the 
ship-owners, since it is a normal operating expenditure required to stay in business. Member 

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The EIB has lent more than €120bn  to the transport sector over the past decade. Out of the total, about 
4% has been for maritime transport (ports and vessels).The annual EIB lending to shipbuilding has been 
approximately € 300 million.  

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

Such State aid must comply with existing guidelines and regulations and, in principle, must 
present  an  incentive  effect.  When  new  EU  standards  are  considered  or  adopted,  Member 
States may in particular grant two categories of investment aid pursuant to and in accordance 
with the Guidelines on state aid for environmental protection4. 

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• 

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  into  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 in relation to SMEs, Member States may grant 
such  investment  aid  without  prior  notification  to  the  Commission,  in  accordance  with  the 
provisions  of  Commission  Regulation  (EC)  N°  800/2008  of  6  August  2008  (General  block 
exemption Regulation)5. 

Financing of port reception facilities and LNG fuelling stations may be supported under the 
conditions laid down in the Guidelines on National Regional Aid for 2007-20136  

Innovation  aid  may  be  granted  to  shipbuilding,  ship  repair  or  ship  conversion  yards  on  the 
basis  of  the  Framework  on  State  aid  to  shipbuilding7thus  broadening  the  range  of  options 
available  to  ship-owners  for  complying  with  stricter  environmental  standards.  This 
Framework will expire at the end 2011 and is currently being reviewed by the Commission. 

It follows from the above that Member States have various options enabling them to support 
measures such as retrofitting air pollution control devices or marine engines on vessels ahead 
of  the  entry  into  force  of  the  standards,  or  developing  onshore  infrastructure,  such  as  for 
marine-LNG refuelling stations. 

2.1.2.2.  International dialogue and technical co-operation  

Similar standards for all neighbouring States are necessary in order to avoid potential traffic 
flow  shifts  from  European  ports.  In  April  2011,  Russia  deposited  the  instruments  of 
ratification of MARPOL Annex VI. The Commission services will use international dialogue, 
e.g.  within  the  framework  of  the  EU-Russia  Common  Spaces,  or  as  appropriate  within  the 
Helsinki Commission and  the Convention of long-range transboundary air pollution, so that 
all Baltic countries efficiently control the application of the legislation. In more general terms, 
the  Commission  has  adopted  the  Communication  "The  EU  and  its  neighbouring  regions:  A 

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OJ C82 of 1.4.2008, p.1. 
OJ L 214 of 9.8.2008; p 3 
OJ C54 of 4.3.2006, p13 
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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renewed approach to transport cooperation"8, one aim of which will be to make transport with 
its neighbours more efficient and bring it closer to EU standards. 

Technical  co-operation,  the  exchange  of  knowledge,  experiences  and  best  practices  on  new 
emissions abatement technologies need to be stimulated with the support of the Commission 
services.  Similarly,  the  use  of  alternative  fuels,  compliance  monitoring,  safety  and  cost 
aspects  with  third  countries  that  have  designated  Emission  Control  Areas  (ECAs)  off  their 
coasts, such as the United States of America also need to be promoted. 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. 

2.2.  Medium  to  long  term  measures  to  foster  sustainable  shipping  --  A  sustainable 

waterborne transport toolbox 

In  line  with  the  2011  Roadmap  to  a  Single  European  Transport  Area  -  White  Paper  on 
Competitive and Sustainable Transport System9, and the new TEN-T Guidelines and Policy – 
currently under preparation – the Commission is considering the adoption of medium to long 
term measures to foster sustainable and competitive shipping. 

To  this  end,  after  further  assessment  and  validation  with  the  relevant  stakeholders,  the 
Commission services will elaborate a "sustainable waterborne transport toolbox" which could 
assist the sector to improve its environmental performance while maintaining its competitive 
position.  

The  sustainable  waterborne  transport  toolbox  describes  measures  along  the  following 
components:  regulatory  and  non-regulatory  measures,  green  ship  technology  and  alternative 
fuels,  adequate  green  infrastructure,  economic  and  funding  instruments,  research  and 
innovation, international cooperation, etc. 

2.2.1.  Regulatory measures  

Creating  the  adequate  EU  regulatory  framework  is  important  not  only  in  the  context  of 
transposing  international  emission  reduction  requirements,  but  also  to  facilitate  the  safe  and 
secure implementation and use of green ship technologies and alternative fuels, as well as the 
development  of  the  necessary  standards.  In  this  context,  the  Commission  services  are 
assessing  whether  a  revision  of  the  marine  equipment  directive10  is  necessary  and  what  the 
impacts of such a revision could be. 

The absence of common rules for the distribution and bunkering of LNG to ships would need 
to be addressed. The Commission services, in co-operation with EMSA and other interested 
parties  will  assess  whether  the  adoption  of  common  EU-wide  guidelines  or  standards  are 
justified.  They  will  closely  monitor  the  environmental  effects  of  the  IMO’s  wash  water 
criteria for exhaust gas cleaning systems to see whether further strengthening of the criteria by 
IMO would be justified in view of further practical experience. 

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COM(2011) 415 final 
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 
Council Directive 96/98/EC of 20 December 1996 on marine equipment, OJ L 46 of 17.2.1997, p.25 

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2.2.2.  Non-regulatory measures  

The  Commission  services  would  undertake  the  development  of  a  platform  gathering  the 
relevant public and private stakeholders that could facilitate technical dialogue, share of best 
practices and experiences and enhance the co-operation amongst all interested parties. 

2.2.3. 

Implementation of advanced green technology and alternative fuels 

The  European  industry  has  already  developed  a  proven  know-how  in  "green"  shipping 
technologies,  which  could  assist  the  shipping  sector  to  improve  its  environmental 
performance. 

The introduction of ships using alternative fuels could be a longer term solution for shipping. 
The  introduction  of  LNG  or  other  alternative  fuels  is  more  likely  to  happen  with  new 
constructions,  without  excluding  retrofitting  which 
is  doubtless  considerably  more 
challenging  and  may  require  particularly  refined  solutions  or  substantial  conversion  of 
existing ships. 

Dual-fuel-engines may also provide a solution. These designs would allow ships to use LNG 
or light fuel oil (LFO) in function of the suitability and the availability of refuelling. 

The  Commission  services  will  analyse  potential  specific  EU  actions  to  promote  the  use  of 
alternative  fuels  contributing  also  to  the  general  EU  effort  to  reduce  GHG  emissions  from 
transport and optimise ship energy efficiency. 

2.2.4.  Development of adequate green infrastructure and superstructure 

The use of alternative fuels requires investment in terminals, such as LNG filling stations for 
ships.  Appropriate  locations  for  developing  safe  and  efficient  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  services  would  consider  supporting  the  deployment  of  shore-based 
infrastructure  for  alternative  fuels  and  bunker  delivery  logistics  in  the  European  Union. 
Accordingly,  specific  actions  for  the  development  of  inter  alia  an  EU  LNG  bunkering 
network or the installation of coastal stations will be studied. 

Likewise,  the  use  of  shore-side  electricity,  where  feasible,  requires  investment  in  onshore 
infrastructure as well as on board vessels. An exemption from the electricity tax as recently 
proposed by the Commission in its proposal for a revision of the Energy Taxation Directive 
2003/96/EC11 can be a first incentive to this end. 

Given  the  budgetary  constraints  of  the  current  TEN-T  programme,  which  provides  for 
relatively low co-funding rates, a better coordination with other funding opportunities needs 
to be explored, such as through Structural Funds (European Rural Development Fund and the 
Cohesion  Fund),  which  allow  for  higher  co-funding  rates.  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. 

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COM(2011)169. 

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2.2.5.  Economic, financial instruments and funding instruments: 

In  its  Roadmap  to  a  Single  Transport  Area12,  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 initiative13. 

Fair transportation pricing - Internalise the externalities to ensure that externalities such as air 
pollution  damage  are  adequately  reflected  in  the  transport  prices  for  all  modes  would  be 
further considered. To this end, an initiative covering all modes of transport, to internalise in a 
co-ordinated and stepwise manner a greater level of external costs across the whole transport 
sector could be proposed. 

In addition, the Commission services will explore ways to encourage a bottom-up approach in 
encouraging  the  industry  and  public  sector  to  set-up  and  manage  a  fund  –  similar  to  the 
Norwegian  NOx  fund  approach–  by  charging  operators  for  emissions  and  then  using  the 
available funds for abatement technology, research etc. 

2.2.6.  Research, Development and Innovation 

Moving  towards  low  pollution  and  low  carbon  waterborne  transport  requires  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 is preparing a 
Strategic  Transport  Technology  Plan  (STTP),  which  would  address  options  for  all  transport 
modes,  including  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  should  be  reinforced,  as  supported  by  the  Communication  on 
Innovation Union14. 

3. 

THE WAY FORWARD 

The Commission services will pursue the necessary consultations and studies to propose the 
Sustainable  Waterborne  Transport  Toolbox,  formulating  medium  and  long  term  measures, 
which  would  address  from  a  broader  perspective  and  in  an  integrated  manner  the 
environmental  challenges  the  sector  is  confronted  with.  The  Sustainable  Waterborne 
Transport  Toolbox  will  help  collaborative  efforts  from  all  stakeholders  in  moving  further 
towards  a  truly  smart,  sustainable  and  more  competitive  shipping  sector  that  can  support 
economic growth with minimised environmental impacts. 

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14 

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 
COM(2011) 144 of 28.3.2011, p.109 
Europe 2020 Flagship Initiative Innovation Union, COM(2010) 546 final, of 6.10.2010 

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