Shipping's Dirty Secrets

If you live in a major Asian port city, or near the coast, you may not realize how much of the pollution you breathe is from the shipping industry.

The large container ships that are a feature of Asia's coastal scenery send out plumes of deadly particulate pollution, including acid-rain-causing sulfur oxides. Particulate matter (PM) — especially fine particulate matter measuring less than 2.5 micrometers (PM2.5) — is particularly harmful to human health, causing lung cancer and other cardiopulmonary problems. It's also responsible for most of the haze that blots out skylines in most major Asian cities.

Ships also send out nitrogen oxides which become ozone in the atmosphere. Ozone also causes lung cancer and cardiopulmonary problems.

(We'll focus on particulates because there's more research available, but keep in mind when we estimate the number of deaths below we're ignoring the contribution of ozone.)

If you live in Hong Kong, the world's 5th busiest port, approximately 42% of PM2.5 emissions you inhaled in 2013 came from the maritime sector, according to the Hong Kong government's pollution inventory. And that proportion has been on the rise for a decade as road transport and electrical generation have cleaned up their emissions. Maritime activities are also the largest source of sulfur and nitrogen oxide.

Dr. James Corbett of the University of Delaware, a leading authority on shipping emissions, calculated in a 2007 study that shipping emissions are responsible for 60,000 premature deaths per year worldwide. These deaths are concentrated in East Asia, South Asia and Europe. His study also predicted a 40% rise in deaths attributable to shipping pollution between then and 2012. And according to Dr. Corbett, the death toll is likely still rising: "As population increases and as there's an increase in port activity because of growth in trade, we would expect mortality rates to increase over time in some degree of proportionality."

Container ships usually burn cheap, high-sulfur residual fuel oil. This fuel can contain 3,500 times more sulfur than the diesel allowed for cars in Japan, South Korea, and in the Chinese mainland after stricter limits come into force in 2017. Refineries sell these dirty tar-like fuels which are the leftovers of the oil refining process as a profitable side business.

Because of health concerns, the IMO has set up several emission control areas (ECAs) to protect people living in coastal areas. ECAs are buffer areas around countries' coastlines where ships must switch to cleaner low-sulfur fuels (e.g. distillates or liquified natural gas) that emit less particulate matter. Ships can also install "scrubbers" which remove pollutants emitted from dirtier fuels after combustion.

ECAs are created at the request of the affected countries. They cover most of the U.S. and Canadian coastlines, the English channel, and the Northern and Baltic Seas, protecting the populations of North America and Europe from the dirtiest emissions.

The problem? The world's 10 busiest ports are all in Asia.

Sea Change - a global cap on sulfur

As part of the International Convention for the Prevention of Pollution from Ships (MARPOL), the IMO's members agreed to a global 0.5% cap on sulfur content per volume for 2020. This is less restrictive than European and North American ECAs, but would make Hong Kong and the Chinese mainland's current regulations redundant.

In the short term, a global cap may be a more promising avenue for saving lives. Regulation that creates a level playing field for all sidesteps many of the difficulties that individual ports and countries face in regulating shipping. For example, ports may avoid overly strict regulation for fear of sending traffic to competing ports. Nearby countries may also share responsability for major waterways, making effective ECAs difficult to impose for individual countries. A global cap avoids both these problems.

A 2009 study estimated that a global 0.5% sulfur limit would have begun saving as many as 46,000 lives per year if it had been implemented in 2012, with roughly half of the avoided deaths in Asia.

But there's a catch: the shipping industry pushed for a loophole to be written into MARPOL which gives the IMO the power to delay the measure until 2025. The IMO has until 2018 to make a decision about whether the industry is ready for a stricter global sulfur cap.

Neither governments or industry dispute the effect of dirty fuels on human health. What's up for debate is the timing, fuel availability and the price of adapting refineries. "It's cost." says Dr. Corbett, "The maritime industry for the last 70-plus years has devoted its innovation and technology for engines and propulsion systems to be able to take advantage of the least costly energy resources that were available to them, these were these residual petroleum products."

The fuel price hike which may follow tighter regulation could also be difficult for the shipping industry to absorb. The Baltic Dry Index, an economic indicator that tracks the going rate for shipping, hit an all-time low earlier this year (more likely due to the industry's oversupply of ships than a slowdown in the world economy). With prices so low, shipping companies are struggling to make a profit.

Maersk Line, the world's largest shipping company, reported a decline in first-quarter earnings year-on-year for 2016. In a press release, it attributed the company's difficulties to the "global rate war in container shipping" and challenging market conditions. Signe Bruun Jensen, Maersk's Head of Sustainability, said in an email that Maersk supports global regulations mandating low-sulfur fuel but acknowledges that, "Introducing a stricter vessel emission rule will bring challenges for shipping lines in a difficult market."

According to Mr. Jensen, the North American and European ECAs cost the company about $200 million extra per year. The company was valued at about $185 billion by market cap at the time of publication.

Bill Hemmings, Director of Aviation and Shipping at European NGO Transport & Environment, worries that a delay now could lead to further delays in the future: "We fear if they succeed in delaying it to 2025, they might seek to delay it later on to 2030." The issue will be considered in October 2016. "We're gearing up for the battle," he said.

A New Hope

The IMO's Marine Environment Protection Committee had its 69th meeting at the end of April, in the first test of the IMO's resolve to tackle greenhouse gas emissions since the Paris talks. It was unlikely that an emissions reduction target would be decided, but there were expectations participants would agree to a roadmap for eventually establishing a "fair share" target for the industry.

In an email, IMO Communications Officer Natasha Brown confirmed increased public pressure to act: "You could surmise that the exclusion of international shipping (and aviation) from the final text of the Paris Agreement could be seen as increasing the pressure on IMO to act on GHG [greenhouse gases]."

Since the Paris talks, the IMO has sworn in a new Secretary General, South Korea's Ki-tack Lim. "I see the promotion of sustainable shipping and sustainable maritime development as one of the major priorities of my tenure," said Mr. Lim in his opening statement to the committee.

In the months following COP 21, Pacific nations, including the Solomon Islands and the Marshall Islands, expanded their coalition calling for action and now includes much of Europe, Mexico, Liberia and industry groups. The International Chamber of Shipping, an influential industry group, accepted the need for "decarbonization" of the industry for the first time. The majority of member states and industry were pushing for action.

"For the first time ever in this building you had Annex I countries, you had industry, and on top of that you had the major flag states [...] all lined up," said Mr. Hemmings of Transport & Environment, who was present at the meeting.

The IMO's meeting coincided with the signing of the Paris Agreement on Earth Day. Despite high hopes negotiations collapsed due to a significant minority, composed of BRICS countries led by China as well as the Cook Islands. The IMO's new Secretary General was unable to keep the discussion from being tabled until next October's meeting.

Environmentalist groups were quick to respond: "The IMO has fallen flat on its face in the first test of its determination to tackle greenhouse gas emissions after Paris, unable even to agree to develop a work plan for reducing ship emissions," said John Maggs, Senior Policy Advisor at NGO Seas At Risk.

Dr. Yubing Shi, a specialist in maritime law at China's Xiamen University, explains that developing BRICS countries' shipping industries may not yet have the technology and expertise to easily adapt to stricter standards, and fear losing access to global ports as a result of noncompliance. "That's why China and also BRICS countries, those large developing countries, they don't hope the IMO will respond very quickly to the action that was achieved at the Paris Agreement," he said.

China and other BRICS countries may also prefer that market-based initiatives be handled at the U.N. level, instead of exclusively at the IMO. The IMO applies rules equally to all ships, but the U.N.'s climate change framework recognizes a different responsibility for developing and developed countries. "The two approaches have totally different implications for BRICS countries," said Dr. Shi.

At the meeting, the IMO did approve a mandatory measure calling for ships to report their fuel consumption and emissions. It was also confirmed the Ballast Water Convention, which will oblige ships to treat their ballast water to avoid transporting invasive species, now has the support of 49 states representing 34.79% of the world's merchant tonnage — 35% is required for adoption.