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U.S., Canada propose clean-fuel requirements along coasts

July 02, 2009

The International Maritime Organization will vote on whether to approve a rule subjecting all ships sailing within 200 miles of the U.S. and Canadian coastline to stricter air pollution limits.

The vote will take place during an IMO meeting in London, July 13 to 17.

According to the U.S. Environmental Protection Agency, which submitted the proposal as a joint U.S.-Canada request, this Emission Control Area would significantly reduce air pollution from oceangoing ships by banning fuels with high levels of nitrogen and sulfur oxides.

"The ECA would be expected to save as many as 8,300 lives and provide relief from respiratory symptoms for over 3 million people each year," the EPA said in the proposal to the IMO. "In total, the monetized health-related benefits of the proposed ECA are estimated to be as much as $60 billion in the U.S. in 2020."

For the cruise industry, the pricier fuel and emission-control technologies necessary to conform to the proposed emission levels could mean higher operating costs.

Beyond that, according to CLIA and the cruise industry, it is not clear that there are enough refineries producing the necessary quantity of that fuel.

ECAMAPAccording to the proposed rule, by 2015 the sulfur level allowed in fuel burned in the ECA would be less than a quarter of what it is now.

"The U.S. and Canada made assumptions about the availability of distillate fuel," said Michael Crye, CLIA’s executive vice president of technical and regulatory affairs. "Is there the refining capability … to provide that volume of fuel by 2015? That’s a question that we have."

The cost of that fuel, which at current rates is twice the price of the bunker fuel the ships use now, would also weigh heavily on operators’ minds as they choose where to place their cruise ships.

The EPA said in the petition that the additional cost of conforming to the new fuel standards would be $7 per passenger, per day. CLIA, however, believes it would "closer to $15," Crye said.

Rich Pruitt, director of environmental programs for Royal Caribbean Cruises Ltd., said that if the proposal passes, many U.S. and Canadian ports that have invested in cruise facilities could lose traffic.

"I don’t believe that a robust analysis of the impact on destinations was done," Pruitt said. "If you read the application, it only assigns costs to ship-owners.

"All you have to do is look at Alaska with the head tax and the downturn in tourism there and how owners are now removing ships to find more profitable deployment. … If the cost of fuel goes up 100%, you can imagine how that changes the profitability of any cruise."

Both Pruitt and Crye said that RCCL and the cruise industry at large support the ultimate goal of an ECA, to reduce any negative health and environmental impacts from shipping.

"If there is a scientific basis for doing this protection, obviously we want to do that," Pruitt said.

Crye agreed, but also argued that rather than force the transportation industry in general to buy the distilled fuel, it should have incentives to develop technology that could ultimately bring emission levels lower than what is being mandated.

"When it comes to the environment or security, what it costs is not as important as doing the right thing," he said. "What’s important is to maintain incentives in the regulations for technological solutions."

He suggested the industry be able to use credits for developing and using green technologies like plugging into clean shore power sources while in port (so-called "cold ironing") or using exhaust gas scrubbers.

Environmental groups say that only regulation will prompt the industry to stop using what the Environmental Defense Fund called "some of the dirtiest fuel on earth."

"The diesel air pollution from ocean-going ships has been underregulated," the group said in a report, adding that an ECA would put into place standards more comparable to those of "other diesel sources."

Pruitt added that the ECA plan is not well known among the affected ports. He recently asked a group of port officials in Saguenay, Canada, if they knew about the ruling. Only two hands went up.

"There is a big information gap that we see which was certainly demonstrated by that audience," Pruitt said, adding that many members of U.S. Congress with whom he spoke were also unaware that the proposal was going forward.

He attributed that to the process that this particular proposal goes through. As part of the Clean Air Act, the ruling only needs IMO approval before going to public comment, considered a precursor to establishing a regulation. It does not need congressional review.

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