A study, commissioned by T&E and conducted by IVL Swedish Environmental Research Institute and CE Delft, has identified and compared the options for regulating nitrogen oxides (NOx) emissions from ships under the European Union (EU) with the options under the International Maritime Organization (IMO).
The study compared the different NOx abatement options available and their associated costs within the shipping industry for both EU-level measures implemented either on their own or in addition to the designation of NOx Emission Control Areas (ECAs) under the governance of the IMO. At the current time the IMO regulates NOx emissions in NOx ECAs, but not within Europe. They only exist in the North American and the US Caribbean Sea and only regulate newbuild ships, built on or after January 1, 2016, and ships sailing within these NOx ECAs.
In order to meet NOx ECA emission limits in Europe, selective catalytic reduction (SCR), exhaust gas recirculation (EGR) or liquefied natural gas (LNG) may be used. Fluctuations in fuel price, expenses associated with retrofitting and quantity of NOx reduced influence the overall costs.
The study suggests that the implementation of European NOx ECAs could reduce emissions, and improvements in efficiency through time may even out increases in traffic in relation to emissions. If NOx ECAs are designated in the Northern Seas the projections indicate higher reductions of NOx after 2020, as these NOx ECAs would not be expected to be effective until 2021. However, the study also indicates that without additional measures to cover existing ships, and new ships operating outside of NOx ECAs, the reduction of NOx will only be gradual towards 2040. Therefore, in order to speed up the NOx reduction rate and cover all EU sea areas and not just those covered by ECAs under the IMO, additional policy measures are warranted at the EU level.
The study shortlisted three options as additional/alternative EU level policy instruments for NOx reduction. Regulated slow steaming with a NOx levy, where the revenues are used to fund the uptake of NOx abatement measures; a stand-alone NOx levy where revenues are not earmarked; or a NOx levy where revenues are used to fund the uptake of NOx abatement measures.
The study found that the NOx levy fund may lead to a direct reduction of NOx emissions. This would work by ships weighing the levy payment against the costs of NOx abatement measures. The costs of the abatement measures are considered from the company perspective, differentiating between the costs for newbuilds and retrofits, and assuming that ships use distillates in the baseline. According to the study, if used as an alternative to a Baltic and North Sea NOx ECA, approximately 70% of emissions can be reduced, but if used as an additional instruments to the ECAs for non-Tier III ships, an annual NOx reduction of 60-30% is estimated.
The study estimates that in the absence of NOx ECA establishment, the relative emission reduction associated with each of the three alternative instruments increases over time. This increase is explained by the gradual phase out of old (Tier O) ships which are, because of their age, assumed, with the exception of slow steaming, not to take any NOx abatement measures but to pay a levy instead.
However, if European NOx ECAs are established, the relative emissions reduction associated with all three additional EU NOx reduction instruments decreases over time and would eventually converge to zero. This decrease can be explained by a gradually decreasing share of the ships that have to comply with the additional instruments which are the non-Tier III ships.
In conclusion, the study suggests that a NOx levy may reduce 70% of NOx emissions on its own, however costs may be higher. As an alternative to implementing European NOx ECAs, combining slow steaming with a levy and a fund would help subsidise the cost of NOx reduction measures, however, the reduction in emissions are not expected to be as great. A levy and a fund could lead to NOx reduction twice that of combining regulated slow steaming, levy and a fund. However, costs for the sector would be higher, and therefore integrating slow steaming into the levy and fund option may be cheaper, albeit less effective in terms of NOx reduction.
Ship Efficiency Review News
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