July 13, 2023
Ship Green or Pay the Price
New satellite technology is enabling the European Union to crack down on pollution from ships through its updated ship-source pollution prevention policy. Now, member states can penalize both intentional and accidental oil spills from marine vessels in their ocean territories.
Policies that hold shipping companies financially responsible for their negative impacts also affect others in the ecosystem. How does this affect you?
Insurance Companies will need to reevaluate regional risks involved in the maritime industry and consider applicable environmental regulations since the ship’s insurer is responsible for paying a portion of fines.
Shipping companies need to transition to alternative shipping fuels like green hydrogen and ammonia to avoid pollution fines entirely. The industry must replace older ships that have faulty bilge tanks with ships that fully meet MARPOL regulations to avoid accidental spillings.
Policymakers need to enforce regulations more evenly across the EU Member States to avoid different versions of similar policies and offer financial incentives that accelerate the transition.
The number of detected cases spiked from 2016 - 2018 as additional satellites were added to the CleanSeatNet network, enabling governments to confirm a spill within 30 minutes.
The enforcement of EU and IMO regulations has significantly contributed to reducing confirmed cases - from a maximum of 350 cases in 2017 to just 86 cases in 2022.
However, trends of confirmed cases and enforced penalties differ by region. For instance, Malta and France experience significant pollution in their waters, but despite Malta’s smaller sea territory, it experiences a disproportionate amount of pollution. France’s minimum fine is almost five times greater than the minimum fine in Malta.
Additional approaches can be seen in other Member States: Croatia penalizes shipping companies not through fines but by full expenses of damages, and Greece not only charges fines but subjects offenders to years of imprisonment. No policies were available detailing penalties in Italy despite reporting the largest number of confirmed incidents.* What drives the significant differences between these policies?
Political ties: Unlike the IRA’s methane emission fines which apply to operations within the US, activities in territorial waters are a trickier political game. Nations may be more cautious picking on vessels flagged with a competitor or key trading partner.
Flagged vessels: Nearly 16% of all European shipping vessels are flagged with the Maltese flag despite its small sea territorial size of 13.8 miles. Given Malta’s favorable tax laws and regulations, shipping companies often register their vessels under the Maltese flag. This might make Malta less incentivized to strongly enforce related policies when a majority of ships that pass through are registered in their country.
Dispersants: Some EU countries allow vessels to carry dispersants onboard. When a minor spill takes place, vessels can use the dispersant to break down the oil in regions like France and Malta. Consequently, research indicates that ships may be responsible for dumping up to 3,000 times more oil per year than detected.
The International Maritime Organization held a conference in early July 2023 where negotiators from different countries concluded that it was necessary to decrease GHG emissions. The tools to hold the industry accountable now exist, and scrutiny on the shipping industry will only increase.
Until next time,
* As required by the EU Directive 2005/35/EC, Italy has passed a penalty and infringement policy, but cannot be traced online.
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