The Shipping Law Review: Shipping and the Environment
I Environmental awareness
The environmental impact of modern shipping has long been acknowledged to be a negative externality of the industry. However, it is only in relatively recent times that efforts – both state-driven and voluntary – have been focused on actively mitigating or reducing these negative effects. Regulations, primarily emanating from the United Nations' International Maritime Organization (IMO), have been introduced to address aspects such as oil pollution risk, waste disposal and emissions. The rise of environmental regulation has highlighted the need for operators to maximise efficiency to maintain competitiveness. Although compliance is an administrative and financial burden, it is clear that regulations are a necessary step towards the long-term sustainability of the industry and for the wellbeing of the planet.
Decarbonisation of the shipping industry is, and will remain, the most important and significant environmental challenge facing the industry in the coming years. Unprecedented investment and international cooperation will be required if the industry is to meet the IMO's targets on carbon emissions. It is essential that the global shipping industry is ready and willing to take quick and decisive action to ensure that this challenge is met head on.
In 1973, the IMO adopted the International Convention for the Prevention of Pollution from Ships 1973 (MARPOL). Currently formed of six Annexes, MARPOL attempts to address major environmental issues that affect shipping, with a view to improving safety at sea and protection of the marine environment. The Annexes specify operational restrictions for which the responsibility of enforcement falls to individual Member States. Disciplinary measures for infringements vary widely between Member States. The IMO's Marine Environment Protection Committee (MEPC) meets (in usual times) twice a year to review and update MARPOL provisions, and to review and address the growing number of environmental issues that the industry faces. The 74th MEPC session (MEPC 74) was held between 13 and 17 May 2019. MEPC 75, which was originally due to be held between 30 March and 3 April 2020, was held virtually between 16 and 20 November 2020 as a result of the covid-19 pandemic.
i Annex I – oil
Following the wreck of the Torrey Canyon off the coast of the United Kingdom in 1967, the international shipping community recognised the need to regulate shipping to reduce the incidence of oil pollution, in both frequency and scale. The primary legislative reaction was to allocate the responsibility to owners, using the rationale of the 'polluter pays' principle (see Section III). However, it was soon apparent that the liability regime did not promote preventive action sufficiently.
The IMO's response to tackling incidents of oil pollution (both accidental and operational) has been the formulation of MARPOL Annex I, which is intended to improve tanker safety. Annex I entered into force on 2 October 1983, encapsulating provisions relating to the monitoring and handling of oily water and the segregation of ballast tanks, as well as crude-oil washing systems.
After the Exxon Valdez casualty and the ensuing public scrutiny, the IMO amended Annex I to require double hulls on tankers over 5,000 deadweight tonnage ordered after 6 July 1993.2 The implementation of the double-hull requirement was initially envisaged as a gradual phasing out of the single-hulled fleet, with the inspection of old tonnage and the progressive adoption of new measures. However, these plans were accelerated after the Erika casualty of 2001. A new schedule brought measures prohibiting the carriage of heavy-grade oil by single-hull tankers into effect as of 5 April 2005.
Recent changes have focused on increasing the regulation of operations in polar areas. With the opening of new polar shipping routes, and with considerable mineral deposits and oil and gas reserves being found within the polar territories, investment in these regions is likely to be extensive. The high level of care required in these waters will be reflected in a correspondingly in-depth regulatory regime. The IMO has adopted the International Code for Ships Operating in Polar Water (the Polar Code) to address this issue. The Polar Code covers a full range of requirements, including, but not limited to, design, construction, equipment, operations, training, and search and rescue, as well as environmental issues. MARPOL Annex I, Chapter 9, Regulation 43 prohibits the use of heavy fuel oil in the Antarctic. At MEPC 73, the IMO agreed that a ban on heavy fuel oils should be considered for Arctic waters too. Accordingly, the Pollution Prevention and Response Sub-Committee was tasked with carrying out the necessary methodology and impact assessments, with the result that MEPC 75 agreed to Arctic-specific draft amendments to Regulation 43 (Regulation 43A). If adopted at MEPC 76, Regulation 43A will prohibit the use and carriage (for use as fuel) of heavy fuel oil by ships in Arctic waters on and after 1 July 2024.3
ii Annex II – noxious liquids in bulk
The carriage of noxious liquids by sea poses a substantial environmental risk, addressed by MARPOL Annex II, which entered into force on 2 October 1983. This contains provisions attempting to reduce the likelihood of damage to the marine environment by accidents arising out of the transport of prescribed chemicals. It sets out restrictions and conditions relating to the design, construction, equipment and operation of chemical tankers.
Annex II compels operators of chemical tankers to enter in a cargo record book all operations in connection with noxious liquids being carried. There are also various mandatory conditions that must be followed to ensure that the designated liquids are contained safely and received into certain reception facilities, that discharges are diluted and that these discharges are limited. There is a general prohibition of discharges within 12 nautical miles of the nearest land.4 The Antarctic is designated a special area of protection under MARPOL Annex II.5 At MEPC 74, the MEPC adopted amendments to Annex II to strengthen, in specified sea areas, discharge requirements for cargo residues and tank washings containing persistent floating products with a high viscosity or a high melting point that can solidify under certain conditions (e.g., certain vegetable oils and paraffin-like cargoes), following concerns about the environmental impact of permissible discharges.6 These amendments entered into force on 1 January 2021.
iii Annex III – harmful substances in packaged form
Annex III requires the identification of harmful substances as marine pollutants, to ensure they are packed and in a manner appropriate to minimising accidental pollution. There is an obligation to use clear marks to distinguish these from less harmful substances. A harmful substance for the purposes of the provision is defined as being a substance that was identified as a marine pollutant in the International Maritime Dangerous Goods Code, or that meets the criteria in the Appendix of Annex III.7 Annex III came into force on 1 July 1992 and the MEPC adopted a revised MARPOL Annex III on 13 October 2006.
Annex III prohibits jettisoning cargo that has been identified as harmful, other than in circumstances where it is necessary to do so for the purpose of securing the safety of the ship or life at sea. In addition, owners have to take appropriate measures based on the physical, chemical and biological properties of harmful substances to regulate the washing of leakages overboard, provided that compliance with those measures does not impair the safety of the ship or the persons on board.8
iv Annex IV – sewage
MARPOL Annex IV requires ships to have systems and controls in place to deal with human sewage, for governments to have port reception facilities9 and a requirement for survey and certification.10 Annex IV entered into force on 27 September 2003; a revision entered into force on 1 August 2004.
Every ship is required to have a sewage system up to an approved standard with a comminution and disinfection system, and both a temporary storage tank and a holding tank of an appropriate capacity.11
Annex IV prohibits the discharge of sewage into the sea except at a distance of not fewer than three nautical miles from the nearest land when the ship is discharging comminuted and disinfected sewage using an approved system and not fewer than 12 nautical miles from the nearest land where the sewage has not been comminuted and disinfected.12 Furthermore, untreated sewage must not be discharged instantaneously, but instead should be moderately released during the course of the vessel's voyage at a rate of not less than 4 knots,13 while not producing any visible floating solids or discolouration in the surrounding water.14
As of January 2013, the MEPC has designated a zone of enhanced limitation in the Baltic Sea (the Special Area).15 These amendments established additional requirements for passenger ships operating within the Special Area. The discharge of sewage from passenger ships within the Special Area is generally prohibited other than when it has been appropriately treated,16 with the additional requirement that a vessel's sewage treatment equipment must meet certain nitrogen and phosphorus-removal standards17 when tested for its certificate-of-type approval.
v Annex V – garbage disposal
The revised MARPOL Annex V, which entered into force on 1 January 2013, attempted to revolutionise the way in which the shipping industry regarded its waste disposal management. Annex V sets out obligations as to crew training and vessel garbage management plans on board, as well as vessel garbage record books. There is a general prohibition on the discharge of garbage into the sea except in some limited circumstances. Annex V imposes a complete ban on the disposal at sea of plastics, domestic waste and cooking oil, and other operational waste.
The scope of MARPOL's definition of garbage includes cargo residues.18 Shipowners accordingly face responsibility for the treatment and disposal of residues while hold washing, which cannot be done at sea. The additional time and expense of doing so can be accounted for with appropriate charter party wording, such as the owner-friendly BIMCO (Baltic and International Maritime Council) Hold Cleaning/Residue Disposal Clause. Special areas of enforcement are designated in the Mediterranean Sea, the Baltic Sea, the Black Sea, the Red Sea, the Gulf region, the North Sea, the Antarctic, the Caribbean and the Gulf of Mexico.
Amendments to Annex V came into force on 1 March 2018. From this date, the responsibility for determining whether or not a cargo is hazardous to a marine environment will fall on the shipper with cargo to be classified in accordance with the criteria of the UN Globally Harmonized System of Classification and Labelling of Chemicals. Vessels will also be required to keep a garbage record book, documenting both the disposal of cargo residues and the disposal of garbage generated on board (including electronic waste items, known as e-waste).
vi Annex VI – Prevention of air pollution from ships
On 10 October 2008, the IMO adopted the revised Annex VI, which sets out the framework for limiting emissions of nitrogen oxide (NOx), sulphur oxide (SOx) and particulate matter from ship exhausts. The framework provides for zones of enhanced limits, 'emission control areas' (ECAs), which can be designated for SOx, NOx or both emissions.19 The implementation of the limits has been on a graduated basis since 2012.
As of 1 January 2020, the limit for sulphur in fuel oil used on board ships operating outside designated ECAs was reduced to 0.5 per cent mass by mass (m/m) (the previous limit outside ECAs was 3.5 per cent m/m). Within the IMO-designated ECAs (the Baltic Sea area, the North Sea area, the North American area and the United States Caribbean Sea area) the limit is stricter, at 0.1 per cent m/m. The 2020 0.5 per cent m/m sulphur limit was confirmed by the MEPC 70 on 27 October 2016, ending years of uncertainty surrounding the effective date.
Enforcement, compliance with and monitoring of the 2020 sulphur limit is the remit and responsibility of states that are a party to MARPOL Annex VI. Most ships are expected to use new blends of fuel oil that will be produced to meet the 0.5 per cent sulphur limit in fuel oil or compliant marine gas or diesel oil.20 In 2019, the IMO produced a set of guidelines regarding the technical and safety implications of the new requirement for maximum 0.5 per cent sulphur fuels. Included within the guidelines is a template for a Fuel Oil Non-Availability Report, to accommodate instances in which compliant fuel is unavailable. In addition, a number of shipping, refining, fuel supply and standards organisations have collaborated to produce joint industry guidance on the supply and use of 0.5 per cent sulphur marine fuel, released on 20 August 2019.
It is anticipated that changing to compliant fuels could significantly add to costs, from an estimated US$400 a tonne for fuel oil to as much as US$600 a tonne, according to the International Chamber of Shipping.21 Higher shipping costs may be passed on to the manufacturing and transport supply chains and affect the price paid by end users.
The options for emissions compliance fall under fuel-based and technology-based solutions. Low and ultra-low distillates are available on the market, although these are more expensive than conventional heavy fuel oil, and questions have been raised regarding reliability and how they affect fuel systems that are more suited to conventional fuels. Alternative fuels, including liquid natural gas, biofuels and blended fuels, are expected to be preferred by most shipowners. However, there are concerns about the supply of compliant fuels and the costly process of retrofitting engines to make them compatible with the new fuels. Operators are continually investing time and resources in investigating the viability of exhaust gas cleaning systems, otherwise known as scrubbers, which allow vessels to burn conventional fuel by cleaning exhaust gases. A certain category of scrubbers known as 'open loop scrubbers' has been criticised on environmental grounds owing to concerns about the effects of waste water being dumped into coastal waters. Scrubber wash water discharges have already been banned at a series of major ports in China, India and the United States as well as Fujairah, in the United Arab Emirates, and Singapore. Egypt has banned all such discharges in the Suez Canal. The IMO has commissioned a review of its 2015 guidelines for scrubbers, to be carried out by the Pollution, Prevention and Response Sub-Committee with a view to producing a new output in 2021. The IMO has also instructed the Joint Group of Experts on the Scientific Aspects of Marine Environmental Protection to carry out a review of the potential environmental impact of discharges from scrubbers.
BIMCO has released new clause wording to accommodate the new regulations, including a 2020 Marine Fuel Sulphur Content Clause (to replace the BIMCO Fuel Sulphur Content Clause 2005) and a dedicated Scrubber Clause.
The EU Sulphur Directive22 implemented its own cap of 0.5 per cent as from 1 January 2020 and certain coastal states have started to introduce their own emissions standards. In March 2015, the Hong Kong Air Pollution Control (Ocean Going Vessels) (Fuel at Berth) Regulation was accepted, aiming to reduce the emission of air pollutants from ocean-going vessels using high-sulphur fuel while in berth in Hong Kong. The penalties for breaching the new rules include a fine of up to HK$200,000 and imprisonment for six months for burning non-compliant fuel, and a fine of HK$50,000 and imprisonment for three months for failing to record the required particulars without a reasonable excuse.
MARPOL Annex VI also imposes NOx emission limits for diesel engines. The limits depend on the engine's maximum operating speed and are categorised into three levels of acceptable NOx emissions depending on the vessel's age or the engine installation date.23 The emission levels are Tier I (applicable from 1 January 2000), Tier II (applicable from 1 January 2011) and Tier III (applicable from 1 January 2016, in NOx ECAs only). In November 2014, reversing its previous decision for a five-year postponement, MEPC 66 affirmed the 2016 implementation date for Tier III. The Tier III levels will be enforced in the North American ECA, the US Caribbean ECA and any subsequently designated NOx ECAs.
Ships completed on or after 1 January 2016 will have to comply with more stringent Tier III standards if operating within the North American and US Caribbean NOx ECAs.24
There is a general prohibition under MARPOL Annex VI on the emission of ozone-depleting substances from vessels, although installations that specifically contain hydro-chlorofluorocarbons were not subject to the prohibition until 1 January 2020.25
MARPOL Annex VI also introduced industry-wide efficiency standards in an effort to reduce greenhouse gas (GHG) emissions (including carbon dioxide (see also Section V: Carbon Emissions)). Since 2013, vessel operators have been obliged to comply with the Energy Efficiency Design Index (EEDI) and Ship Energy Efficient Management Plan (SEEMP) rules. The EEDI requires all newbuilds to achieve efficiency greater than an industry average reference line calculated on a five-year basis. The SEEMP requires all vessels to have an on-board energy efficiency plan. The rise of imposed efficiency standards has led to increased scrutiny of vessel design and technological innovation, not only to achieve compliance but also to save operational costs.
The IMO's ultimate objective is believed to be an industry-wide 'market-based mechanism' of tradable carbon credits. Investigations are being undertaken as regards the implementation of this strategy, including the effects of the projected costs. At MEPC 74, amendments to MARPOL Annex VI were adopted in relation to the EEDI regulations for ice-strengthened ships, replacing the words 'cargo ships having ice-breaking capability' with 'category A ships as defined in the Polar Code'. These amendments entered into force on 1 October 2020. MEPC 7526 also adopted further amendments to Annex VI, bringing forward, from 2025 to 2022, the effective date of Phase 3 so that the EEDI demands for certain newbuilds (including gas carriers, general cargo ships and liquid natural gas carriers) are greater. The effect is that vessels constructed from 2022 onwards will have to be significantly more energy efficient than was previously prescribed under Annex VI.
Notwithstanding the regulations above, ports have been active in improving energy efficiency and making efforts to reduce pollution. These include various tax and fee incentives and the rise of shoreside electrical power sources (cold ironing).
In light of historically high fuel costs, operators have been able to reduce their fuel expenditure and consequent emissions by slow steaming. By proceeding at a slower or more economical rate, there are significant fuel savings to be made.27
III Oil pollution liability regimes
i The Civil Liability Convention
The primary international liability framework for oil pollution can be found in the International Convention on Civil Liability for Oil Pollution Damage 1969, replaced by the 1992 Protocol (the CLC Convention). The Convention was formulated following the Torrey Canyon incident in 1967 and imposes strict liability on seagoing vessels constructed or adapted for the carriage of oil as cargo,28 if involved in an incident where there is a discharge of oil within the territorial sea, the exclusive economic zone (EEZ) or a similar area declared by a contracting state.29 The CLC Convention is implemented in the majority of coastal states, although the United States remains a notable non-signatory.
Under the CLC Convention, a shipowner 30 is permitted to limit the level of its liability for oil pollution incidents on the basis of a reference to the tonnage of the vessel. The Convention furthermore obliges owners of ships covered by the Convention to maintain insurance equivalent to their maximum liability for one incident.
The 2000 amendments to the CLC Convention (which entered into force on 1 November 2003) provide for limits of liability as follows:
- for a ship not exceeding 5,000 gross tonnage (GT), liability is limited to 4.51 million special drawing rights (SDRs);
- for a ship of between 5,000 GT and 140,000 GT, liability is limited to 4.51 million SDRs plus 631 SDRs for every additional gross tonne over 5,000; and
- for a ship over 140,000 GT, liability is limited to 89.77 million SDRs.
ii The US Oil Pollution Act 1990
The oil pollution liability regime in the United States is set out in the Oil Pollution Act 1990 (the OPA 1990).31 Liability will attach to a 'responsible party' of a vessel or facility when there is a substantial threat or actual discharges of oil into or on the navigable waters and shoreline of the United States.32 For the purposes of the OPA 1990, the responsible party of a vessel can be the operator, owner or demise charterer of the vessel, excluding any federal or state government bodies. A manager of everyday activities will also most likely be considered to be an operator, and therefore a responsible party within the scope of the Act.33
The Act imposes strict liability for the discharge of oil on the responsible parties, with no de minimis principle;36 as such, any oil spill can result in liability. There is no provision for joint and several liability in the OPA 1990, but in light of judicial interpretation of the Clean Water Act 1972, this principle is likely to apply.37
The OPA 1990 allows damages to be recovered from the responsible parties in relation to:
- compensation and loss resulting from the loss of natural resources;
- damages for injury to and economic loss arising from destruction of real or personal property;
- damages for loss of subsistence use of natural resources (available to all who use the natural resources, regardless of ownership);
- loss in revenue resulting from loss of property;
- loss of profit or earning capacity resulting from the injury or destruction of real property, personal property or natural resources; and
- damages for the increased net costs of providing increased and additional public services during or after removal activities.
Punitive damages for maritime claims are also applicable under the OPA 1990, with a cap placed at a ratio of 1:1 punitive-to-compulsory.38
IV Ballast water management
The unregulated discharge of ballast water was previously recognised as enabling the transfer of potentially invasive foreign species between marine environments and consequently posing significant environmental harm. The effects of such a discharge can be harmful to localised food webs and result in the potential extinction of indigenous organisms. In an attempt to minimise these environmental effects, the IMO has formulated the Convention for the Control and Management of Ships' Ballast Water and Sediments 2004 (the Ballast Water Management Convention (BWMC)). To date, 79 countries representing more than 80.94 per cent per cent of the world's tonnage have ratified the BWMC.
The BWMC came into force on 8 September 2017 but, because of a two-year extension granted by the IMO in July 2017, vessels that have already been built will be required to instal a ballast water management system by their first International Oil Pollution Prevention renewal survey after 8 September 2019. Since this survey is required once every five years, some vessels will not be obliged to instal ballast water management systems until September 2024. All newly built vessels will be required to be delivered with a ballast water management system.
In this regard, vessels are now required to:
- have a ballast water management plan;
- keep on board a ballast water record book and a ballast water management certificate;
- conduct any permissible ballast water exchange in line with the IMO'S D1 Standard; and
- have on board an approved ballast water treatment system in line with the IMO's D2 Standard.
Failure to comply with these requirements will result in port state detention, fines and the possibility of criminal prosecution.
In terms of the practicalities of implementation (and given that the BWMC remains in its early stages), the industry can look to the United States for an indication of how these provisions may work in practice. Ballast water management legislation is already in force there, and the United States Coast Guard Final Rule dated 23 March 2012 on Standards for Living Organisms in Ships' Ballast Water Discharged in US Waters (the US Rules) require vessels calling at US ports to treat ballast water when operating within US territorial waters, or to carry out an exchange of ballast waters before entering the US EEZ. In addition to the US Rules, which came into force in June 2012, individual states have also passed legislation, which has proven in places to be more onerous than the federal framework.
It was always envisaged that amendments would necessarily be made to the BWMC (the months following implementation have been referred to as the 'experience gathering phase') to improve the methodology of data gathering and analysis. Accordingly, MEPC 74 approved amendments to the BWMC concerning the commissioning testing of ballast water management systems and the form of the International Ballast Water Management Certificate. The amendments were adopted at MEPC 75 and are expected to enter into force in June 2022. The Committee endorsed the view that commissioning testing should begin as soon as possible, in accordance with the already approved '2020 Guidance for the commissioning testing of ballast water management systems' (BWM.2/Circ.70). MEPC 74 also approved BWM.2/Circ.67/Rev.1 on the revised data gathering and analysis plan for the experience-building phase associated with the BWMC, to incorporate a link to standard operating procedures, and approving five ballast water management systems that make use of active substances.39
V Carbon emissions
In April 2018, the MEPC (convening at MEPC 72) reached an agreement to target a 50 per cent cut in carbon emissions (compared with 2008 levels) within international shipping by the year 2050. That same year, the IMO set a more refined target of a 40 per cent cut by 2030 (which may be revised again in 2023). This agreement will lead to some of the most significant regulatory changes in the industry in recent years and much greater investment in the development of low carbon and zero-carbon dioxide fuels. The IMO's agreed target is intended to pave the way for phasing out carbon emissions from the sector entirely. The MEPC is supported by an Intersessional Working Group, whose role is to progress matters and maintain momentum in between each meeting of the MEPC.
The most significant document produced to date is the IMO Initial Strategy,40 which divides the aims of the IMO into a set of candidate short-, medium- and long-term measures within a series of specified time frames. The IMO intends to incorporate as many candidate proposals as possible into a more concrete Revised Strategy to be implemented in 2023. The candidate measures have been divided as follows:
- short-term measures to be implemented between 2018 and 2023, which include proposed improvements to the existing energy efficiency framework;
- medium-term measures to be implemented between 2023 and 2030, which include implementation programmes for the effective uptake of alternative low-carbon and zero-carbon fuels; and
- long-term measures to be implemented beyond 2030, which include the development and provision of zero-carbon or fossil-free fuels to enable the shipping sector to assess and consider decarbonisation in the second half of the century.
The short-term measures will be captured in the Revised Strategy, scheduled to be adopted in 2023 at MEPC 80. These measures are based on data collected through the Fourth IMO Greenhouse Gas Study (the Fourth Study), which was commissioned to gather historical emissions estimates for international shipping for the period 2012 to 2018, and seeking to predict possible scenarios for future international shipping emissions (2018–2050). The Fourth Study was issued on 4 August 202041 and concluded that, based on historical emissions and projections, the target of a 50 per cent reduction in carbon emissions across global shipping by 2050 is feasible. The study was approved by the IMO at MEPC 75 and has been well received by commentators, who note that the study parameters are realistic and reflective of the likely levels of global shipping activity in the coming years.
The short-term measures to be included in the 2023 Revised Strategy focus on energy efficiency requirements for existing ships, speed requirements and other technical and operational measures that will be effected through further amendments to MARPOL Annex VI. MEPC 75 approved new carbon-emission specific draft measures42 (for approval at MEPC 76) in two categories, namely:
- technical: in addition to the further strengthening of the Annex VI EEDI (see Section II.vi 'Vessel efficiency'), an Energy Efficiency Existing Ship Index (EEXI), requiring ships to meet a specific required level of carbon emissions, will be implemented. The EEXI will be based on a required reduction factor (expressed as a percentage relative to the EEDI baseline). The EEXI will be verified by a new energy efficiency certificate to be issued on or after 1 January 2023; and
- operational: focusing on strengthening the ship energy efficiency management plan, as required in SEEMP (see Section II.vi 'Vessel efficiency'). As part of these changes, a new carbon intensity indicator (CII) will be applicable to ships of 5,000 GT and above. The CII will determine the annual reduction factor needed to ensure continuous improvement of a ship's operational carbon intensity by applying a specific rating level. Ratings will be on a scale from A to E and will be based on previous operational carbon intensity and the improvements year by year.
The IMO is conscious that these measures risk having a disproportionate effect on smaller nations, particularly island nations that rely heavily on maritime trade. The effect of the short-term measures on these states (based on factors such as geographical remoteness and connectivity to main markets) is currently being assessed. Maritime transport cost models and trade flow models are being used to ascertain how certain measures would affect a country's gross domestic product. The agreed procedure contains four steps: (1) initial impact assessment; (2) submission of commenting documents (if any); (3) comprehensive response to commenting documents (if required); and (4) comprehensive impact assessment.
MEPC 76 will consider mid- to long-term measures in more detail, including measures aimed at incentivising the uptake of low-carbon or zero-carbon fuels (e.g., biofuels or electrofuels (synthetic fuels) such as hydrogen or ammonia). These questions will remain under the consideration of the Intercessional Working Group in the meantime.
VI Looking to the future
Decarbonisation is the most significant challenge that the shipping industry currently faces. There is a clear expectation that the IMO will develop and maintain a firmer stance on regulating the operation of vessels if its own carbon emission targets are to be met. Steps must be taken quickly and decisively if this vast environmental challenge is to be solved. In addition to IMO-led MARPOL amendments, the IMO is eager for states to collaborate and share as much information and technology as possible to enable the industry to rise to and meet this challenge through voluntary measures, as follows:
- The International Maritime Research and Development Board (IMRB)43 is an initiative led by shipping's key global bodies to provide US$5 billion over the course of 10 years to fund key research and development into the decarbonisation of shipping. The aim is for the IMRB to be operational by 2023 so as to enable the substantial research and development that is essential if the IMO carbon emission targets are to be met. The IMRB is to be funded by the industry itself, through a levy of US$2 per tonne on bunker fuel. The intention is for the IMRB to be quasi-independent and overseen by the IMO. However, there remains a divergence of views on how on the various administrative, legal and governance aspects of the proposed mechanism would operate. These points are to be discussed at MEPC 76. Again it is recognised that least developed countries and small island developing states stand to be most adversely affected by the bunker fuel levy and that this will need to be addressed.
- National action plans44 are part of an IMO-led initiative to encourage states to pursue and develop (and share information in relation to pursuing and developing) voluntary plans with a view to improving implementation of IMO instruments and developing vessel efficiency on a national level. On 20 November 2020, the MEPC adopted Resolution MEPC.327(75) to encourage Member States to develop and submit voluntary national action plans to address GHG emissions from ships. So far three countries – Japan, Norway and the United Kingdom – have submitted national action plans and more are expected to follow.
- MEPC 74 adopted Resolution MEPC.323(74) to encourage voluntary cooperation between the port and shipping sectors to contribute to reducing GHG emissions from ships. Accordingly, the MEPC agreed to establish a voluntary multi-donor trust fund (the GHG TC-Trust Fund)45 to provide a dedicated source of financial support for technical cooperation and capacity-building activities to support the implementation of the IMO Initial Strategy on reduction of GHG emissions from ships.
- The IMO–Norway Green Voyage-2050 project46 was launched on 13 May 2019 to respond to the need to provide technical assistance to states and support technology transfer, and to promote green technology uptake to improve energy efficiency and reduce GHG emissions throughout the maritime sector.
Many of the necessary changes may in fact be market driven. Recognising a global desire for a carbon-neutral supply chain, many shipowners are taking their own steps to decarbonise. For example, Maersk, the Danish shipowner, aims to complete its first carbon-neutral voyage by 2023 (using carbon-neutral methanol) and has committed to all newbuild vessels being installed with dual-fuel technology, enabling either carbon-neutral operations or operations on standard very low sulphur fuel oil.47 Whether the necessary changes arise from the private sector, from international regulations, or (most likely) from a combination of both, will become clear in due course. Needless to say, extensive cooperation between, and a willingness by, all of international shipping's many stakeholders will be required to solve this very immediate global problem.
1 Thomas Dickson is an associate at HFW.
2 MARPOL Annex I, Regulation 19.
4 MARPOL Annex II, Regulation 5(1).
5 id., Regulation 5(14).
7 MARPOL Annex III, Regulation 1.
8 id., Regulation 7.
9 MARPOL Annex IV, Regulation 12.
10 id., Regulations 4 and 5.
11 id., Regulation 9.
12 id., Regulation 11.
13 Discharge rate is calculated according to the terms of Paragraph 3 of Resolution MEPC 157(55).
14 MARPOL Annex IV, Regulation 11 (see Resolution MEPC 157(55)).
15 In July 2011, MEPC 62 adopted new amendments by way of Resolution MEPC 200(62), which entered into force on 1 January 2013.
16 See Resolution MEPC 227(64).
17 See Resolution MEPC 227(64), Paragraph 4(2).
18 MARPOL Annex V, Regulation 1(1).
19 Sulphur oxide [SOx] and nitrogen oxide emission control areas [ECAs] are currently in place on the North American coastline and US Caribbean, and SOx ECAs are in place in the North Sea and Baltic Sea.
22 Directive (EU) 2016/802 of the European Parliament and of the Council of 11 May 2016 relating to a reduction in the sulphur content of certain liquid fuels.
23 MARPOL Annex VI, Regulation 13.
25 id., Regulation 12.
27 Brodie, 'Congestion', Commercial Shipping Handbook (Third Edition, 13 August 2014).
28 CLC Convention, Article I.
29 id., Article II.
30 id., Article I(3); the Merchant Shipping Act 1995 defines 'owner' as 'registered owner' at Section 153A(7).
31 Pub L No. 101-380 Section 1, 104 Stat 484 (18 August 1990) Title I, Oil Pollution Liability and Compensation, Sections 1001 to 1020, codified at 33 USC Sections 2701 to 2761.
32 Oil Pollution Act 1990 [OPA 1990], Section 1002.
33 De La Rue and Anderson, Shipping and the Environment (Second Edition, Informa, 2009), p. 656 (for the further categorisation of 'manager').
34 OPA 1990, Section 1002; 33 USC Section 2701(8).
35 The International Marine Carriers v. The Oil Spill Liability Trust Fund 1995, AMC 2072, United States District Court, Southern District of Texas (Houston Division).
36 In re 'Jahre Spray II', 1996 WL 451315 (DNJ); 1997 NMC 845 (DNJ1996).
37 De La Rue and Anderson (op. cit., footnote 31), p. 197.
38 This is to be applied in circumstances when it is found that 'the tortious action . . . is worse than negligent but less than malicious'.
40 Note by the International Maritime Organization [IMO] to the United Nations Framework Convention for Climate Change Talanoa Dialogue, 'Adoption of the initial IMO strategy on reduction of GHG emissions from ships and existing IMO activity related to reducing GHG emissions in the shipping sector'.