Maritime Rules and Regulations on Environmental Management Issues
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Maritime regulatory approach has been the key pillar in managing the bulk carrier sector. While European Union, USCG and IMO have worked together to implement key legislations, some regulatory have impacted key stakeholders differently. In relation to this, IMO in accordance with other countries continue upholding rules to restrict excessive carbon emission to the surrounding environment. With the help of European Union, maritime activities have been safeguarded by imposing regulations that limit disposal of organism to the sea during shipping activities. Notably, the non-profit International Council on Clean Transportation outpaced efficient operation that would see growth in fleet operation while taking strong action to help incentivize the regulations. According to IMO (International Maritime Organization) argues that bulk sector has been the epitome of air pollution if no drastic action is taken in place. In an industrial setting, rules and regulation created to reduce gas emission have been received positively. However, there exist some difference among some countries on potential ways of curbing excessive release of toxic chemicals to the atmosphere. Typically, the paper aims to examine difference and similarities recent trends and consequent rule and regulations as set out by IMO (International Maritime Organization), European Union and other countries affecting the bulk carrier’s sector. Based on the findings, introduction of new sulfur cap regulation by IMO in 2020 disrupted the financial measures of business paradigm across different maritime shipping sectors. On the other hand, the complexity of the regulation has drawn some mixed reactions among the key stakeholders in the shipping industry. Considering the ballast water management can be implemented by rich nations, it has drawn controversies and major barrier in the efficiency of smooth water management. Finally, the use of scrubber remains contested regulation that not all the countries support as in accordance to the IMO regulation to prevent carbon emission to the surrounding environment
Table of Contents
1 Introduction 1
2 Findings 1
2.1 A decisive guideline on use of scrubber with the IMO 2020 Sulphur cap 1
2.2 Impact of the US and IMO ballast water management (BWM) regulation 3
2.3 The financial impact of new Sulphur cap regulation on ship-owners 4
3 Conclusion 6
About 90% of global trade is transported by sea whilst the 10% is transported by other means, such as air and roads (Mukherjee, 2020). The UN International Maritime Organization (IMO) shipping agency has been advocating for the overall gas emissions to be reduced by 50%, as stated in the UN sustainable development goals. Whereas the report was aimed at reducing carbon dioxide gas emissions by 2022, CO2 emissions increased from 2.89% to 2.76% between 2012 and 2018 (Wu et al., 2020). The study reported a high risk of climate change projected over the next five years. On the contrary, the occurrence of the COVID-19 pandemic between 2020 and 2021 reduced CO2 emissions by a slight margin different from earlier projections. According to Mukherjee (2020), the growth of shipping activities poses danger to the entire industry and marine life. In response, the European Union and IMO legislated key interventions to prevent further damage of maritime activities from the ever-increasing gas emissions. Specifically, policies were legislated to improve the service of maritime whilst also slowing CO2 emissions. Innovative fuel technologies have been harnessed by Greece and other counterparts to lower gas emissions. Notably, the non-profit International Council on Clean Transportation outpaced efficient operations that would see growth in fleet operations while taking strong action to help incentivize the regulations. Komianos (2018) argues that the bulk sector will be the most affected by air pollution if no drastic actions are taken. In an industrial setting, rules and regulation created to reduce greenhouse gas emissions have been received positively. However, there exists key differences amongst various countries on the potential solutions to curb excessive release of toxic chemicals into the atmosphere. The aim of this paper is to illustrate the differences and similarities on recent trends and consequent rules and regulations as set out by the IMO, European Union and other countries affecting the bulk carriers’ sector.
2.1 A decisive guideline on use of scrubber with the IMO 2020 Sulphur cap
Whilst IMO guidelines advocate for the use of wash water discharge from open loop scrubbers, some countries have countered the decision or prohibited the use of scrubber (Komianos, 2018). There are air pollution control systems and equipment that have been in use based on the European Union and IMO. Some of the equipment and systems have been prohibited by some key countries based on every facet on industrial managing of pollution. One of the controversies that has emerged is the use of scrubber to control air pollution from the bulk carrier sector. In an industrial setting, the equipment acts as an umbrella to eliminate pollutants that are potentially hazardous to the environment. Previous research has supported recent studies on eliminating the scrubbers, which is contrary to the rules and regulation of IMO guidelines. According to Hasanspahić et al. (2022), the scrubbers prevent release dust, chemicals, and vapors, as well as purifying the air in the environment. Although scrubbers are the most common air pollution control devices, some countries have embraced their dissatisfaction on this kind of device. For instance, China’s Ministry of Transport prohibited the use of scrubbers in the country’s inland maritime activities. The document also states that the country banned all potential scrubbers from their coastal domestic use. According to Bayley-Craig (2020), the European Union and IMO had legislated use of Sulphur cap requirement to filter chemicals and dust from being released to the atmosphere. On the contrary, Hong Kong proceeded to prohibit the Sulphur cap requirement which is self-reliant on use of scrubbers. They retaliated that the exemption application must be made 14 days prior to the normal shipping activities. According to Borges (2022), Singapore adjudicated that the use of scrubbers releases harmful residues to the environment and is classified a toxic industrial waste under Singapore authority of Public Health. Therefore, the contradiction on use of scrubbers as regulated under the guidelines of the sustainable development goals on IMO draws mixed reactions amongst key market players around the world.
In Lithuania, the government is currently studying different ways of using scrubber in compliance with their marine environmental control to prevent discharge of harmful materials to the water. From this analysis, the EU prohibits the use of scrubbers whereas the IMO supports the use of scrubbers to adhere to the Sulphur cap requirements. In United States, the Water Quality Certification allows discharge of exhaust gas scrubber into Connecticut as long as it is in accordance with section 6.5.9 of 2013. Amongst many other regulations set by the IMO, the use of scrubbers has attracted a lot of attention upon drawing divergent views and retaliation by countries, premised on the argument that it threatens marine life.
On the other hand, the operational sector of the maritime industry has considered the use of industrial HEPA filters to mechanically remove dust, pollen, and bio-contaminants from the environment. Unlike scrubbers, fiberglass filters are widely used across the globe with low risk of contaminating the environment. In particular, the European Union regulation has embraced use of fabric and fiber glass filters to trap and remove airborne dust from the atmosphere. Prior research suggests that more than 305 of the world’s carbon emissions are from maritime activities; therefore, fabric filters have been considered as a plausible solution toward attaining 99.9% efficiency (Hannaford et al., 2022). Also, electrostatic precipitators are renowned for its 99% efficiency dust removal in large scale. As gas streams pass between components of the electrodes, electrostatic precipitators discharge harmful particles by introducing water to clean the particulates. Therefore, the regulation stated under section 39 of the IMO does not apply to most countries, especially in the EU. Such reasoning is guided by the regional environmental control system legislated in their corresponding regional organizations. The UN has failed to reach a common agreement on achieving zero carbon emissions with the EU territories (Hannaford et al., 2022). As a result, the difference lies between the regulatory aspect of the country and the IMO goals. Despite the IMO and US being the most recognized and influential in management legislation, the unveiling smooth ballast water management implementation has been difficult to be achieved in hostile countries without democracy.
2.2 Impact of the US and IMO ballast water management (BWM) regulation
The conglomeration of US and IMO water management are the most recognized under the dual authority of the US Coast Guard and the Environmental Protection Agency (Mukherjee & Brownrigg, 2013). The complexity of the regulations has drawn mixed reactions among key stakeholders in the shipping industry. Considering that ballast water management can be implemented by rich nations, it has generated controversies and major barriers in the efficiency of smooth water management. Ballast water management is a vital component introduced to manage invasive species introduced into the water through pollution from ships. A number of studies have identified the regulatory aspect of controlling various aquatic species to be difficult (Sigalas, 2022). Ideally, the capable designed ships have discharged harmful organisms to the marine environment. The IMO body enforced a regulation in consultation with the EU to control and prevent pollution by ships into large marine water. The aim of the regulation was to prevent an invasive spread of aquatic organisms and discharge of sediments into the ballast water. During the formation of the BWM, more than 80% of the regulations lacked global awareness. At the same period, the United States Coast Guard put into force the regulation to enhance control and regulation of harmful organisms via ballast water. According to Mukherjee (2020), two major regulative aspects of BWM are not clearly defined and their equal implementation is not applicable. The difference exists in IMO where it has created BWM at the international level while signatory member states lack clear territorial waters. Ideally, US which is not party to BWMC has created its national BWM regulation operating in US national water territories. Such a regulation is considered more demanding and prescriptive compared with the IMO counterparts. Despite efforts to sign a memorandum of understanding between IMO and US on BWM, The US has continued to make its BWM provisions. The major difference that arises on BWM regulatory is the verification and testing guidelines carried out by flag administrators. Although the United States Maritime Authority continues discharging the core regulations provisions, the compliance protocol has reduced significantly. A conditional concern has been made on ship owners who are not familiar with the regulations (Wu et al., 2020). As a result, some of the have been forced to pay huge fees to dock on international port.
On the other hand, the International Chamber of Shipping warns the entry force of IMO will not solve the difficulties experienced by United States. The confusion stems from the testing equipment on the type of shipment that can comply with the set standards. However, the USCG approval is already being considered for vessels entering US waters. But the existing regulations enforced by the US on the use of its waters have negatively impacted international ships seeking to dock in US territories. Consequently, alternate management systems approved by IMO evaluated vessels which are necessary to pass USCG type approval requirements. Currently, there exists over 50 treatment systems under the current IMO regime with IMO final approval (Komianos, 2018). Interestingly, only 30 manufacturers have submitted their approval to the US system authority. This is due to the conflicting interests between the US and IMO requirements that make it impossible for ships to operate on US waters. While IMO has the complete approval of BWM, the USCG requires management plan free from sediments reporting to the US authorities.
2.3 The financial impact of new Sulphur cap regulation on ship-owners
The introduction of the new sulfur cap regulation by IMO in 2020 disrupted the financial measures of business paradigm across different maritime shipping sectors (Hasanspahić et al., 2022). In the absence of policy makers, the bulk shipping sector would be associated with expensive IMO sulfur compliant fuel. The effectiveness of the sulfur cap regulation disrupted the shipping activities not only in European region but across the world. The implementation of this regulation increased the freight rates around the IMO effectiveness date. According to Bayley-Craig (2020), the IMO compliant fuel was aimed at controlling the levels of CO2 emissions. Based on the sulfur cap requirement, profit margins of the bulk carriers reduced significantly. The disruption of the business paradigm was mostly felt by the ship-owners. Previous research propounds that sulfur compliant fuel compromised dry bulk shipping sector by reducing the average shipping activities from 90% to 70% in 2020 during its implementation (Borges, 2022). As such, the high cost-low sulfur fuel increased voyage expenses and absorbed the additional cost of fuel. The absence of fuel protection mechanisms was pointed to IMO guidelines.
Whilst IMO member states felt the pinch of the economic downturn, European countries with access to low sulfur fuel did not suffer financial consequences. This is evident in the context of developed nations, which produce IMO sulfur compliant fuel oils in the maritime industry. While other countries fear tougher regulations on carbon emissions by 2050, the EU seconded the use of low sulfur fuel to curb environmental pollution. According to Hannaford et al. (2022), the EU said in a meeting with European commissioners that the reduction of high sulfur fuel will be achieved after 2026. Although other countries have identified the regulation as being challenging for developing countries to attain, the IMO advocated for reduction in fuel subsidy to allow poor nations to access the low sulfur fuel. The arte of voyage and shipping are not expected to converge, although the freight rates have influenced negatively the total amount of goods shipped from one destination to another. The corresponding shipping route under the IMO guidelines has affected the TCE rate over time. Nevertheless, the variability of fuel oil prices in European nations has remained stable compared with developing countries when introduced in 2020 (Borges, 2022). Even though the increase in fuel oil prices lead to slow freight management, it les to slow transition from high sulfur usage to low sulfur usage. Specifically, the transition to high cost-low sulfur fuel led to significant increase in prices overnight.
For ships using longer routes, the constant rising freight rates led to additional fuel costs to comply with IMO regulation. In light of this, the IMO compliance policy disrupted the long established business relationship with key partners in the bulk carrier sector. According to Sigalas (2022), key industrial players have argued that sulfur emission reduced from 3.5% to 0.5% after implementing the low sulfur fuel. The low sulfur fuel cost increased by $50.25 per ton which is termed minimal during the period of December 2020. On the other hand, shipping companies are adopting new measures to comply with IMO regulations on using low sulfur fuel. Ideally, they have engaged in low steaming practices to reduce the usage of high sulfur fuel in their ships. Several researchers have pointed out the effectiveness of using slow steaming due to its environmental friendly approaches. Considering that slow steaming consumption has a positive relationship with low carbon emission, researchers have prioritized on advocating for slow steaming in adjacent of low sulfur fuel. Sigalas (2022) argues that the implementation of high cost-low sulfur fuel disrupted the maritime shipping industry. The study posits that prevailing shipping business should aim on increasing fright rates yearly rather than reducing the number of freights being in operation (Hannaford et al., 2022). Concerns have been addressed to various key stakeholders to cover the loss experienced during the effectiveness of the high cost-low sulfur fuel to the bulk carrier sector. Following the guideline of IMO 2020, policymakers have considered low sulfur cap regulation to be highly productive. Therefore, the findings of the EU concur with the IMO regulations on positioning the maritime activities into adopting low sulfur fuel to reduce carbon emissions into the surrounding environment. Further, the USCG embraced the need to improve sulfur compliant fuel by revising the fuel subsidies in the most affected countries during the COVID-19 pandemic. As a result, IMO passed some charter to control the low sulfur adoption in a bid to cover the part of the whole voyage expenses.
This paper highlights the differences and similarities of the recent trends and consequent rules and regulations as set by the IMO, European Union, and other countries affecting the bulk carriers’ sector. Based on the findings, the introduction of the new sulfur cap regulation by the IMO in 2020 disrupted the financial measures across different maritime shipping sectors. On the other hand, the complexity of the regulation has drawn mixed reactions amongst key stakeholders in the shipping industry. Considering that ballast water management can be easily implemented by developed countries, there have been controversies which have acted as barriers toward efficient water management. Again, the use of scrubber is a highly contested regulation that had not won the support of all countried in accordance with the IMO regulation to prevent carbon emissions to the atmosphere. Whilst IMO guidelines advocate for the use of wash water discharge from open loop scrubbers, some countries have challenged this stance and subsequently prohibited the use of scrubber. Based on such contradicting guidelines, USCG, IMO, and the EU have failed to establish a neutral ground with common regulations for bulk carriers. Nevertheless, different organizations have continued to work toward ensuring that maritime activities minimize water and air pollution.
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