Today there are more than 100,000 cargo ships on the sea, transporting the solids, liquids and gases that we all need to live. The rapid growth of middle class consumers in India and China is only likely to push this number up even further.
For many of us, this is out of sight out of mind, since the shipping industry conducts much of its activity out on the open seas. But ignorance is far from bliss: our reliance on the shipping industry negatively impacts our oceans and the air we breathe.
Cargo ships burn so called “bunker” fuel, which is a ‘residual’ product from the refining of crude oil. It contains high levels of sulfur—typically 2,500 times more than the petrol fuel used in cars. Sulfur is linked to acid rain as well as respiratory and cardiac diseases. In Europe alone, a widely cited study estimates that 50,000 people suffer premature deaths each year due to maritime sulfur emissions.
Over the last decade, the International Maritime Organization (IMO)—a specialised agency of the UN regulating international shipping—has been implementing progressively stricter regulations to decrease sulfur emissions from cargo ships.
These new rules, however, can only achieve their intended result if all maritime companies comply. Due to the high costs of compliance and weak enforcement there is a temptation for some to cut corners on compliance. That can put those that are compliant at a competitive disadvantage.
This has prompted industry leaders to address these concerns. The Trident Alliance, for example, was founded in July 2014 by 10 shipping companies to focus on the need for robust and effective enforcement of sulfur regulations.
Getting some fresh air in our lungs
The beginning of this year marked the latest wave of IMO regulations mandating a decrease in sulfur limits for all commercial vessels in Emission Control Areas (ECAs). ECAs are defined coastal regions in North America and Northern Europe where more stringent sulfur limits apply. The new limit requires no more than .10% sulfur content, a 90% reduction on the previous limit of 1.00%.
However, as Roger Strevens, Chairman of the Trident Alliance indicates, without full compliance from shipping companies, the regulation will not achieve the full outcome of protecting the environment and human health. Prior to January 1st 2015 only one in every thousand vessels was tested for compliance with sulfur regulations, according to the European Commission.
Furthermore, insignificant fines were levied on those found to be in breach of the regulations. That problem is not helped by the fact that individual European jurisdictions have the right to set the level of fines as they see fit. In many cases, low penalties are dwarfed by the potential operational cost savings of non-compliance.
There is broad agreement that regulations to help safeguard the environment are vital (NGOs like Friends of the Earth and the Natural Resources Defense Council understand that sustainability in the shipping supply chain is not an option). Implementation of the new ECA limits has shown that industry can adopt these expensive changes, but it is essential that all are compelled to comply.
By the end of this year we should discover whether the combined efforts of progressive nation states, NGOs and strong industry voices will be enough to ensure effective enforcement on the high seas.
Our oceans, lungs, and global economy depend on it.
The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of The Economist Intelligence Unit Limited (EIU) or any other member of The Economist Group. The Economist Group (including the EIU) cannot accept any responsibility or liability for reliance by any person on this article or any of the information, opinions or conclusions set out in the article.
