Source: EURLEX
Language: en
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# 52011SC1052

**COMMISSION STAFF WORKING PAPER POLLUTANT EMISSION REDUCTION FROM MARITIME TRANSPORT AND THE SUSTAINABLE WATERBORNE TRANSPORT TOOLBOX /\* SEC/2011/1052 final \*/**

  

TABLE OF CONTENTS

1........... INTRODUCTION........................................................................................................ 2

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

1.2........ BACKGROUND.......................................................................................................... 2

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

2.1........ 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

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/EC[1]
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
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 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 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 protection[4].

·
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 2007-2013[6]

Innovation aid may be granted to
shipbuilding, ship repair or ship conversion yards on the basis of the
Framework on State aid to shipbuilding[7]thus
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 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
System[9],
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 directive[10] 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.

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/EC[11]
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.

2.2.5.
Economic, financial instruments and funding instruments:

In its Roadmap to a Single Transport Area[12], 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 initiative[13].

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 Union[14].

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.

[1]               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%.

[2]               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.

[3]               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.

[4]               OJ C82 of 1.4.2008, p.1.

[5]               OJ L 214 of 9.8.2008; p 3

[6]               OJ C54 of 4.3.2006, p13

[7]               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.

[8]               COM(2011) 415 final

[9]               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

[10]             Council Directive 96/98/EC of 20 December 1996 on
marine equipment, OJ L 46 of 17.2.1997, p.25

[11]             COM(2011)169.

[12]             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

[13]             COM(2011) 144 of 28.3.2011, p.109

[14]             Europe 2020 Flagship Initiative Innovation Union,
COM(2010) 546 final, of 6.10.2010

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