As the international shipping industry prepares to reduce emissions, there are many recent developments that present both obstacles and opportunities that must be explored while preparing to set sail on the challenge.
IMO Timeline and Introduction to Initial Strategy
Shipping is already the most carbon-friendly form of transportation. Despite carrying approximately 90 percent of the world’s goods, shipping only accounts for about 2.9 percent of global greenhouse gas emissions. While the maritime industry and its regulatory body, the International Maritime Organization (“IMO”), rightly are trying to reduce this number, the outsized role of shipping in the world economy and its relative impact on global emissions should be the starting point of any analysis.
A key aspect in the debate on how to decarbonize centers is between the difference in gross output as opposed to efficiency. The IMO’s strategy contains targets for both types of metrics. The current goal seeks to cut overall greenhouse gas (“GHG”) emissions by at least half by 2050 (using 2008 as a baseline). On the efficiency side, the shipping industry seeks to reduce GHG emissions per transport work by 40 percent in 2030 and 70 percent by 2050.
At a time when the world has become more aware than ever before about the vital importance of the world’s ocean shipping fleet, which carried supplies, merchandise, and much-needed personal protective equipment during the COVID-19 pandemic, an increased risk from a different threat, cyberattacks, presents a set of new challenges.
Increase in Maritime- and Energy-Related Cyber Attacks
According to Israeli cybersecurity specialist Naval Dome, since February 2020, there has been a 400-percent increase in attempted hacks on the maritime realm, coinciding with a period when the maritime industry turned to greater use of technology and working from home due to the coronavirus pandemic. Increased phishing attempts, malware, and ransomware attacks can be attributed to the changes in operations and procedures during the travel restrictions and operational hurdles encountered during the pandemic. These global challenges resulted in a move by the United States to bolster the federal government’s cybersecurity practices and contractually obligate private sector to align with such enhanced security practices. For instance, the ransomware attack on Colonial Pipeline, which controls nearly half the gasoline, jet fuel, and diesel flowing along the East Coast, prompted President Biden to sign an Executive Order (“EO”) on “Improving the Nation’s Cybersecurity (14028)” on May 12, 2021. A comprehensive overview of President Biden’s EO can be found here. On August 25, 2021, the president also held a cybersecurity summit with leading tech company and Wall Street banking executives to discuss cybersecurity concerns.
The International Maritime Organization (“IMO”), in preparing for the global 0.5 percent fuel oil sulfur limit, recently adopted an amendment to MARPOL Annex VI to support consistent implementation and enforcement of the new requirement. At the same time, the IMO rejected a proposal for an “experience building phase” during the first months of implementation. This put to rest any rumors of a delay in implementation. Meanwhile, the U.S. Coast Guard published procedures by which owners may seek authorization to operate engines that do not meet MARPOL Annex VI NOx Tier III requirements for qualified vessels.
The IMO adopted an amendment to support consistent implementation of the forthcoming 0.5 percent limit on sulfur in ships fuel oil on October 26, 2018, during the recent session of its Marine Environment Protection Committee (“MEPC 73”). This amendment, effective on March 1, 2020, prohibits the carriage of non-compliant fuel oil for use on the vessel unless the vessel is outfitted with an exhaust gas cleaning system, often referred to as a scrubber. The amendment does not alter the January 1, 2020 implementation date for the 0.5 percent sulfur limit.
Also related to MARPOL Annex VI, the U.S. Coast Guard published an enforcement Work Instruction formally addressing how the U.S. Coast Guard will enforce the Annex VI nitrogen oxides (“NOx”) Tier III standards within the North American and U.S. Caribbean Sea Emission Control Areas (“ECAs”). SeeExercise of Enforcement Discretion with Regard to MARPOL Annex VI Regulation 18.104.22.168; CVC-WI-014(1) (October 17, 2018). Because engines meeting the NOx Tier III standards were largely unavailable after the Tier III standards took effect in 2016, the U.S. Coast Guard is allowing impacted vessels to instead be certified as meeting U.S. Environmental Protection Agency (“EPA”) Clean Air Act Tier 3 requirements pursuant to 40 C.F.R. Part 1042. Once individually recognized by the U.S. Coast Guard, such engines may be used indefinitely, even after NOx Tier III compliant engines become available.