Policy Analysis pubs.acs.org/est
Ship Compliance in Emission Control Areas: Technology Costs and Policy Instruments Edward W. Carr*,† and James J. Corbett† †
School of Marine Science and Policy, University of Delaware, Robinson Hall, Newark, Delaware 19716, United States S Supporting Information *
ABSTRACT: This paper explores whether a Panama Canal Authority pollution tax could be an effective economic instrument to achieve Emission Control Area (ECA)-like reductions in emissions from ships transiting the Panama Canal. This tariff-based policy action, whereby vessels in compliance with International Maritime Organisation (IMO) ECA standards pay a lower transit tariff than noncompliant vessels, could be a feasible alternative to petitioning for a Panamanian ECA through the IMO. A $4.06/container fuel tax could incentivize ECA-compliant emissions reductions for nearly two-thirds of Panama Canal container vessels, mainly through fuel switching; if the vessel(s) also operate in IMO-defined ECAs, exhaust-gas treatment technologies may be cost-effective. The RATES model presented here compares current abatement technologies based on hours of operation within an ECA, computing costs for a container vessel to comply with ECA standards in addition to computing the Canal tax that would reduce emissions in Panama. Retrofitted open-loop scrubbers are cost-effective only for vessels operating within an ECA for more than 4500 h annually. Fuel switching is the least-cost option to industry for vessels that operate mostly outside of ECA regions, whereas vessels operating entirely within an ECA region could reduce compliance cost with exhaust-gas treatment technology (scrubbers).
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INTRODUCTION Ships emit exhaust gases and particulates (SOx, NOx, PM2.5, and PM10, CO2) directly into the atmosphere as a byproduct of combustion of marine bunker fuels. Sulfur Oxide (SOx) and particulate matter (PM10 and 2.5) emissions have been linked with increased rates of cardiopulmonary illnesses and premature mortality1 and ship emissions are estimated to cause up to 80 000 premature deaths globally each year.2,3 Higher resolution models in Europe estimate that around 520 million life years were lost (YOLL) in 2005 as a result of PM emissions from ships, with around 42 000 premature deaths caused by elevated ozone concentrations resultant from European seas ship emissions.4 Emissions from ships also deposit on terrestrial, marine, and freshwater ecosystems, contributing to ecosystem decline and ocean acidification.5,6 Aerosols have also been shown to increase cloud formation and high-altitude albedo, resulting in a potentially significant cooling effect.7,8 Total damages associated with ship emissions are not fully quantified; however, the acidification and health damages associated with ships have warranted significant controls over marine bunker fuels at a global scale by the International Maritime Organisation (IMO) by implementing sulfur Emission Control Areas (ECAs) under MARPOL Annex VI. This paper presents two analyses. First, this paper evaluates the potential application of a technology-based transit tax to the Panama Canal to stimulate compliance with ECA standards in Panamanian waters (Figure 1). Second, it presents the comparative © 2015 American Chemical Society
costs over a range of abatement technologies for a container vessel to comply with ECA standards based on hours of operation within an ECA.
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CONTROLLING EMISSIONS FROM MARINE VESSELS: WHY PANAMA?
The Panama Canal handles approximately 4% of all global shipping containers.9 The Pacific entrance to the Canal is adjacent to Panama City, home to 1.64 million people, about 45% of the population of Panama. Panama has begun to regulate land-side emissions, establishing in 1998 that the air is a public good,10 and reducing allowable sulfur in motor vehicle diesel and gasoline fuels from 1000 to 500 ppm in 2002;11 however, no Panamanian authority has taken action to regulate ship emissions. Measurements of PM10 concentrations in Panama show a downward trend but far exceed World Health Organisation (WHO) annual mean guidelines of 20 μg/m3 (Figure S1).12 Air quality in Panama is strongly influenced by maritime sources (Figure S2),13 but detailed estimates of the impact of ships on Panamanian air quality are not available. Received: Revised: Accepted: Published: 9584
April 29, 2015 July 29, 2015 July 31, 2015 August 10, 2015 DOI: 10.1021/acs.est.5b02151 Environ. Sci. Technol. 2015, 49, 9584−9591
Policy Analysis
Environmental Science & Technology
fuels in Swedish waters. Within five years the Swedes observed a 75% reduction in SOx levels and over 80% vessel participation.19 The industry-led Fair Winds Charter in Hong Kong agreed upon, and implemented within three years, a voluntary switch to MDO while at berth in exchange for reduced port dues.20 Over 800 vessels participated from 2011 to 2014 and the Hong Kong Legislature then adopted a set of at-berth emission regulations, congruent with the Fair Winds Charter, which went into effect on July 1, 2015.21 Sulfur Abatement Technology Options: Treat or Switch? Vessels have two primary options to control emissions: treat exhaust gases using scrubbing technology, or switch to low sulfur fuel. Liquefied natural gas (LNG) fuels, which have very low sulfur content, have also emerged as an alternative in recent years. We focus on SOx abatement as emission reductions are directly tied to fuel sulfur content, and currently established European ECAs explicitly mandate the control of only SOx emissions. The United States ECAs also include NOx and PM standards. As shown Table S1, SOx controls also result in NOx and PM reductions (6% and 87% respectively), although these are not explicitly controlled for. Selective catalytic reduction (SCR) is an exhaust gas secondary treatment that reduces NOx emissions by more than 80%.4 SCR retrofits are estimated to cost $80/kW while new builds add $55/kW to the delivery price.4 Estimates of net present costs and taxes for vessels using retrofitted SCR and SOx controls are shown in Figure S5 and Figure S6. Scrubbers function by passing residual or heavy fuel oil (HFO) exhaust gases through a buffering solution that captures and binds pollutants, removing up to 95−99% of SOx and PM from exhaust gases.22−24 Buffering solutions are either discharged to sea in the case of open-loop (seawater) scrubbers, or captured and disposed of landside in the case of closed-loop scrubbers. Sea water scrubber capital costs are approximately half those of closed loop systems,4,25 but their buffering capacity declines in brackish or freshwater conditions24 and there are environmental concerns over their use in sensitive areas due to the acidic nature of system effluents.5,6,26 Fuel switching requires either the permanent reassignment of vessel fuel tanks from HFO or the use of a secondary tank carrying low sulfur distillate for temporary use in ECAs. ECAcompliant fuel can be either marine diesel oil (MDO), marine gas oil (MGO), or LNG. MDO and MGO can directly substitute for residual fuel in most marine engines, which means operators can transition between lower-cost residual fuel and ECA-compliant fuels within a voyage. LNG is a cryogenic liquid, and requires separate handling, storage, and engine technologies, which means LNG is generally a permanent alternative requiring new or retrofit engines and fuel systems.27 LNG is estimated to further reduce criteria pollutants compared to MGO. NOx and PM reductions are on the order of 90−95% over MGO, and SOx is virtually eliminated from the emissions profile.28 We briefly address costs associated with LNG upgrades in the Discussion section. The capital costs of retrofitting a vessel for distillate fuel switching are small compared to the cost of fuel and the cost of installing scrubbers (
