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CARBON TAX ON BUNKER FUEL
IMO is looking at a global levy (tax) on marine fuels. Do you think this is

a really good idea
an unfortunate necessity
a bad idea
a really bad idea

Marine Log

July 29, 2008

CARB tries again

The California Air Resources Board is again trying to unilaterally regulate emissions from ships--this time by specifying what fuels they may burn.

An earlier attempt by CARB to regulate vessel engine emissions was thrown out by a court suit brought by the I Pacific Merchant Shipping Association, which represents oceangoing carriers and terminal operators.

Be that as it may, the new measure requires ocean-going vessels within 24 nautical miles of California's coastline to use lower-sulfur marine distillates in their main and auxiliary engines and auxiliary boilers, rather than heavy-fuel oil.

Those opposed to the new regulation say that, at most, California could attempt to regulate to the three mile limit of state waters.

So where does that 24 mile limit come from?

Believe it or not, Al Gore.

Back on September 22, 1999 the then Vice President announced that the United States was "strengthening its ability to enforce environmental, customs and immigration laws at sea by expanding a critical enforcement zone to include waters within 24 nautical miles of the U.S. coast" by formally extending the U.S. contiguous zone from 12 to 24 miles, doubling the area within which the Coast Guard and other federal authorities can board foreign vessels and take other actions to enforce U.S. law."

(Although Al Gore made the public pronouncement, President Clinton signed the actual proclamation).

Whether this extension of the federal contiguous zone gives a state any extension of its waters will no doubt be part of the arguments in the inevitable challenges to the new CARB regs.

"This regulation will save lives," says Air Resources Board Chairman Mary Nichols, who an seems unfazed by the probability of more court battles. An environmental lawyer, she was a Clinton era Assistant Administrator at the U.S. EPA.

This is her second stint at CARB. She was appointed Chairman in July 2007--returning 30 years after serving as the Chairman under Governor Jerry Brown from 1978 to 1983

"At ports and all along the California coast we will see cleaner air and better health," she says.

According to a briefing from law firm K&L Gates the new regulations will be implemented in two phases:

Starting July 1, 2009, ships would be required to use diesel oil with a sulfur limit of 0.5 percent; and

On January 1, 2012, the sulfur limit would be reduced to 0.1 percent, a level that would cut soot by 83 percent, sulfur oxides by 95 percent, and nitrogen oxides by 6 percent.

The K&L Gates briefing (one of whose authors is James A. Sartucci, former Legislative Director for Trent Lott) notes that the International Maritime Organization currently allows fuel that contains 4.5 percent sulfur. IMO negotiators will meet in October to consider new sulfur limits. The proposed amendment to current IMO regulations would establish a progressive reduction of sulfur levels in heavy bunker fuels, starting with a reduction to 3.5 percent sulfur by January 1, 2012, with a final global cap of 0.5 percent sulfur effective January 1, 2020, if feasible, as well as more stringent Tier II and Tier III nitrogen oxide emissions standards for marine engines.

Shipowners have asked CARB to defer any action until international rules are implemented. In a compromise, CARB voted July 24, 2008 to allow its executive director to suspend California's regulation "if and when the IMO or the federal government adopts a rule as effective as California's."

At the federal level, Sen. Barbara Boxer (D-CA), has introduced legislation that would reduce air pollution from ships and other marine vessels and would specifically target pollution from transoceanic vessels. Her bill would require the U.S. Environmental Protection Agency to limit the sulfur content to 1,000 parts per million (0.1 percent) in main and auxiliary engines for both domestic and foreign flagged vessels using U.S. ports beginning in 2010.

Rep. Hilda Solis (D-CA-32) has introduced a companion bill (H.R. 2548) in the House, which is still awaiting consideration by the House Energy & Commerce Committee. Sen. Boxer's bill is currently awaiting consideration by the full Senate.

CARB's new regulation will have a global impact, as 43 percent of all marine freight imported into the United States moves through the ports of Los Angeles and Long Beach. CARB has estimated that the new rules will save Californians at least $6 billion a year in health-related expenses and will cost the shipping industry between $140 million and $360 million a year.

According to CARB, a typical cargo ship would pay approximately $30,000 more in fuel costs for each visit to a California port, or about $6 per container shipped from Asia. CARB has said the increased fuel costs amount to 0.1 cent per pair of sneakers.

Noncompliance with the new regulations will result in fines. Vessels using fuel over the sulfur limit would pay a fee beginning at $45,500 for each visit, with a maximum of $227,500 on the fifth visit.

Environmentalists and community groups praised CARB's adoption of the new regulations, but shipowners oppose the limits, saying that California lacks jurisdiction to regulate beyond the 3-mile limit of state waters. They also contend that low-sulfur fuel is in short supply, particularly in Asian ports.

Representatives of the U.S. Navy have also expressed concern that under the new regulations, vessels would be more likely to travel through their offshore testing and training range. CARB staff have pledged to work with Navy officials to address their concerns.


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