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The travel industry is facing an environmental reckoning these days and cruise lines are front and center for much of that scrutiny.
While most of the conversation about the greening of the travel industry has focused on carbon emissions that cause global warming, cruising has a more urgent and surprising problem on the air pollution front.
Heavy fuel oil, or bunker fuel — the stuff that’s currently used by cruise companies all over the world — is filthy. The pollution caused by this fuel contains sulfur oxides, which have been blamed for acid rain, as many as 400,000 premature deaths from lung and cardiovascular diseases, and millions of cases of childhood asthma per year.
Underscoring this threat from the cruise industry, a recent international report found that 47 of Carnival Corp.’s ships docked in Europe, for example, polluted 10 times more sulfur than all the passenger cars in Europe. While Carnival vigorously disputed the report, the company can’t deny it has been convicted of environmental crimes multiple times in recent years.
The United Nations, through its International Maritime Organization (IMO), is taking a huge step to solve this pollution problem across all of shipping. On Jan. 1, ships will have to cut their sulfur emissions by 85 percent overnight.
Referred to simply as “IMO 2020,” the rule has been heralded by some as the most tangible achievement of the UN group’s modern history. One oil industry exec called it “the largest change that the petroleum products industry has seen over its history.”
But there is one outstanding problem. The framework that the IMO operates under may be the biggest impediment to this new global rule doing what it’s supposed to do: significantly reduce pollution.
After all, cruise lines operate under a regulatory framework that is unlike any other sector of the travel industry. Though cruisers board their ships in Miami or Southampton, once they set sail in international waters, the authorities that regulate most of what happens on board (including environmental, safety, and labor issues) are very often located in countries they’ve never visited. Governments, like those of the Bahamas and Bermuda, have enforcement muscle that pales in comparison to the United States or Europe.
The IMO is working hard “to support countries to boost their capacity for ship inspection” and it offers “technical assistance programmes to support any country which needs assistance” or training, said spokesperson Natasha Brown. The new standard does not designate its own fines or penalties, leaving that to the countries where ships are registered and where they visit.
Some critics and industry insiders say some key jurisdictions lack the resources to enforce the rule. This concern is especially pertinent for the cruise industry, in which some of the leading companies have had a lax record of environmental compliance and choose to register their ships in countries with weak enforcement powers.
The international community may have made an important global step, in theory, with this rule change that is designed to save human lives and improve public health. A closer look at the way in which it will be enforced throws the environmental oversight of the cruise industry into a brighter spotlight.
The Spirit of the Rule
As part of the International Convention for the Prevention of Pollution from Ships (referred to as MARPOL), sulfur emissions have been restricted since 2005, but this new limit is drastically lower. Shipping companies have three main ways to reduce emissions from 3.5 percent of total mass to 0.5 percent, as the new January limit requires. They can use a cleaner (and more expensive) low sulfur fuel called marine gas oil; they can opt for the alternative fuel liquefied natural gas, which has virtually no sulfur emissions but requires retrofitting existing ships or building new ones; or they can implement devices called exhaust gas cleaning systems — commonly called scrubbers — which “scrub” the dirty fuel’s emissions to reduce its sulfur levels.
When the limit goes into effect, 68 percent of the 207 vessels operated by the four largest global cruise lines — Carnival Corp., Royal Caribbean Cruises, Norwegian Cruise Lines, and MSC Cruises — will use scrubbers, according to analysis from the Miami Herald. Another 31 percent will switch to low sulfur fuel, and just 1 percent (two Carnival ships) will run on liquefied natural gas. There are plans for more liquefied gas ships in the future, including 10 currently on order for Carnival, and 26 for the industry at large, according to Cruise Lines International Association, the industry’s lobbying group.
Carnival will have the highest reliance on scrubbers, with 85 of its 102 ships using scrubbers. The next largest company, Royal Caribbean, will install the technology on 70 percent of its 63 vessels, with the rest using low sulfur fuel. In July, Carnival launched a website explaining its use of scrubber technology, referring to it as “Advanced Air Quality Systems.” In September, at Skift Global Forum in New York, Carnival CEO Arnold Donald explained why the company had chosen to implement scrubbers.
“The science on that, frankly, is that the emissions … that come from [these systems] are as good if not better than marine gas oil. So there’s no big advantage to using marine gas oil versus using effective advanced air quality systems. In fact there’s evidence to suggest that advanced air quality systems are even better. So we have them on the vast majority of our fleet. We also have ships powered by (liquefied natural gas) which is even further reduction in emissions and the cleanest burning fossil fuel.”
Not everyone is satisfied, though. Plenty of headlines and critics have characterized the industry’s embrace of scrubbers as a “cheat” or “loophole” designed to dodge the rule. It’s abundantly clear, however, that the IMO considers scrubbers a legitimate form of compliance.
The critics claim that scrubbers go against the spirit of the IMO 2020 rule — which could reasonably be characterized as an overall improvement for the environment. In that sense, critics say that using scrubbers amounts to trading one problem (air pollution) for another (ocean pollution).
It’s not that scrubbers don’t reduce sulfur emissions, said Faig Abbasov, the shipping program manager at European non-profit Transportation and Environment; it’s the method which matters.
“The latest analysis shows that scrubbers do reduce sulfur emissions and can theoretically meet 2020 standard as well as the stricter regional standards in emission control areas,” Abbasov said. “But it has unintended consequences as well.”
The most controversial of those consequences are the byproducts of scrubbers. The technology works by spraying a seawater-based mixture into the smoke stack to remove sulfur; once treated to meet certain guidelines, that wash-water can be legally discharged into the sea.
The science around what effect that legally discharged wash-water has on the marine environment is not conclusive — there are studies and literature reviews which find it minimal, as well as ones that emphatically say it’s harmful. As a result, scrubber usage has become something of a divisive issue in the maritime world. The most common variant, called open loop scrubbers, has been banned outright by some port jurisdictions like California and Singapore. The IMO itself is participating in more research on its effects — despite already giving green-light for the technology.
Another byproduct of the scrubber process known as sludge — a wet, oily mixture containing heavy metals, soot, and other pollutants and solids — is meant to be carried on board and then disposed of shoreside at approved reception facilities according to IMO guidelines. These disposal facilities, however, do not exist at every port.
Carnival spokesman Roger Frizzell said that any claim that scrubbers replace one kind of pollution with another is “a completely inaccurate assertion.”
Royal Caribbean told Skift the scrubber system it has opted to use is a hybrid model, which means it has the option to store the wash-water onboard for disposal at a shoreside facility if necessary.
Director of Environmental Stewardship Nick Rose said this decision was made to “make sure we had maximum flexibility to operate in an ever-changing regulatory world.” When it does dispose wash-water into the sea, the company’s vessels will only do so when it is more than three nautical miles from land, exceeding IMO guidelines.
A Toothless Rulemaker
As an industry that hosts roughly 30 million travelers a year, cruise lines find themselves in a unique position: the international organization that establishes the global rules it theoretically must abide by has no power whatsoever to enforce those same rules. Though the cruise industry regularly points out that it follows all international regulations, it doesn’t say that the IMO is a rulemaker with no enforcement teeth.
This is the framework that regulates all shipping companies, not just cruise lines. The power of enforcement in international waters falls to flag states, or the countries where cruise companies pay sizable registration fees to flag their vessels. A majority of cruise ships are flagged in countries like the Bahamas, Bermuda, Panama, and Malta. These countries are often called “flags of convenience,” because ship owners needn’t have any genuine link (nationality or otherwise) to them, and can choose to re-register their ships elsewhere if they wish.
That means it won’t be the IMO that ensures cruise lines cap their sulfur emissions at 0.5 percent. It will fall to these flag states, as well as the officials in the port states that cruise lines visit. When cruise ships are sitting in port or within 12 nautical miles of a port, jurisdiction shifts from the flag state to the national territory they are in; this is known as a port state’s “territorial waters.”
How effective will the likes of the Bahamas and Bermuda be at ensuring that cruise lines consistently meet that cap as they sail through international waters, as well as when they visit those their ports?
Nobody can say for sure, yet. Enforcement for scrubbers requires evaluating “continuous emissions monitoring systems” and records maintained by a vessel’s crew. For vessels using low sulfur fuel, high precision testing requires lab-testing those fuels — the results of which often come back after the vessel has left port — but handheld devices can also be used.
Remote sensing technology such as drones and “sniffer” helicopters exist in states like Denmark and can detect potential violations of the rule, as well as serve as a deterrent. Lastly, fuel purchase orders can also be reviewed. But however flag and port states do it, there are signs that more resources and expertise are needed.
“To assess non-compliance with this regulation isn’t like anything else; it requires specific technical competence,” said Roger Strevens, head of Trident Alliance, a single-issue industry group that lobbies solely for the full and effective enforcement of IMO 2020, regardless of the method ships use to meet it. “If you’ve ever been in the engine room of a vessel, you’ll see there’s a spaghetti of pipework that takes some doing to know what you’re looking at. Understanding oil record books can be similarly demanding. There’s clearly a need for specialist competence, or at least, a lot of training.”
Strevens notes that many of the countries in the world that have signed onto IMO 2020 may lack this expertise. Of just over 90 signatory countries, about 30 have prior experience of enforcing sulfur rules, he said.
Then there is the issue of sheer manpower. Jodi Munn-Barrow is the secretary general of the Caribbean Memorandum of Understanding. Common around the world, these regional groups are collections of port states that help one another enforce rules.
One of the main concerns of her organization is the lack of resources some of its member states have to enforce the rule. As she noted at a recent fuel conference reported in Ship & Bunker, at present, the Bahamas currently has just one person tasked with port state enforcement, despite the numerous cruise ships that call there each week. (The Bahamas did not respond to a request for verification.) She added that the docking fees cruise ships pay when they visit port states aren’t necessarily used to beef up maritime enforcement.
“I don’t think ships are out there trying to purposely get away with it,” Munn-Barrow told Skift. “But if the countries that are there to check on the compliance don’t have resources to do so, then it would make the environment easier for the ship to get away with it.”
Unfortunately, lack of port state resources in a country like the Bahamas is a reasonable indication that their flag state enforcement — that state which has jurisdiction in international waters — will be lacking too, said Richard Caddell, senior lecturer in international maritime law at Cardiff University in the UK. Skift reached out to the aforementioned four common flag states for cruise ships to ask them about their enforcement capacity for IMO 2020, but none of them responded.
This presents a challenge: The flag states who bear the most responsibility of enforcement for cruise lines in international waters have the least resources to do so. This is indicative of how the entire maritime law framework works, said Caddell.
“A problem you always get with the IMO is that it’s very big on technical fixes, but technical fixes are reliant upon your own individual capacity,” Caddell explained. “And a lot of the small shipping nations which lack [enforcement] capacity, nonetheless have a huge amount of tonnage on their flags,” referring to the number of ships flagged there. “And so it goes back to this whole idea of should you be accepting tonnage if you can’t enforce the law?”
There’s another issue in the cruise-heavy Caribbean, according to Munn-Barrow: about 50 percent of the Caribbean group’s 19 member states have not yet translated the international statute into their local legislation. This means while they have ratified it at the international level, they can’t yet enforce it because it’s not enshrined into their domestic law. Munn-Barrow declined to clarify which states, but many of the cruise lines’ itineraries call at the Caribbean ports of the group’s member states.
The IMO told Skift it is doing a lot to make sure member states have the capacity to enforce the rule. This includes publishing technical guidance for topics like port state control and onboard sampling techniques, as well as providing regional workshops (including in the Caribbean) focused on best practice and information sharing. Brown, the IMO’s spokesperson, added that regional databases available to members serve as “a very important mechanism for targeted inspection campaigns and for information sharing and targeting substandard ships.”
On the claim of weak enforcement, the cruise industry’s lobbying group points out that flag states are just one element of enforcement that cruise lines are beholden to. Vessel classification societies — third party companies that have the expertise to do certification and inspection on behalf of some flag states in exchange for a fee — as well as port state authorities such as the U.S. Coast Guard give ships a reason to follow international rules, Cruise Lines International Association noted.
“In effect, the international system of examinations and controls provides a powerful motivation to maintain ships in compliance,” a spokesperson said. (It should be noted that vessel classification societies cannot fine or punish non-compliant vessel owners even if they find a violation; that authority still falls to the flag state.)
Carnival’s Frizzell told Skift that “despite what the critics claim, the cruise industry is one of the most regulated industries in the world while operating under this model where we must meet local and international regulations. The IMO has a strong, successful track record of enforcement over the entire cruise industry.”
Where’s the Disincentive?
Signing onto IMO 2020 is only half the battle. For it to be effective, there needs to be an incentive not to break the rules. Just as enforcement is a sovereign issue for flag and port states, so too is setting the penalty for violating — the IMO regulation only states the penalty must be sufficient to discourage violation. Strevens said that while states like the U.S. have been good at making fines and consequences clear for visiting vessels, there are too many countries that haven’t.
It’s possible to get an idea of what consequences for violating IMO 2020 might look like by looking at some ports who already have experience in limiting the amount of sulfur ships can emit. Denmark, for example, is one of the world’s “Special Emission Control Areas” or regions that already cap sulfur at an even more stringent 0.1 percent to the IMO’s forthcoming 0.5 percent. (Parts of coastal North America and the Caribbean are also designated with this special status, too.)
Answering a question at an IMO symposium about the new sulfur cap in London in October, Clea Henrichsen, a special advisor on the environment for Denmark’s Ministry of the Environment, nervously admitted that the fines in Denmark for gross non-compliance in an emissions control area aren’t particularly high, about 200,000 Danish kroner, or $30,000.
“We don’t have very high fines, I’m sorry; we are looking into that as well.” When reached by Skift after the event, Henrichsen said Denmark is still deciding whether the fine will be in the same range for the forthcoming international sulfur cap, but confirmed it will be dependent on “the distance traveled, how much above 0.50 percent it is, [and] if the felony is repeated.”
Denmark is a good case study because, when it comes to enforcement of environmental regulation like IMO 2020, Caddell notes that port states generally have more of an incentive to go after polluters than flag states, because “if something goes wrong, it’s in your waters as a port state and you’ve got to deal with the problem.” He adds that when it comes to violations on international waters, “a lot of these things that take place at sea are incredibly difficult to prosecute.” Even though port states are technically allowed to claim jurisdiction over an international violation if the ship’s flag state fails to do so, gathering the necessary evidence of a violation on the high seas can be next to impossible.
Despite “weaknesses in the fabric of enforcement,” as Strevens described it, he said there’s reason for optimism when it comes to cruise line compliance. Once you’ve gone to the trouble and cost of installing scrubbers, “there’s just not a lot of benefit” to not using them.
He added, “The appetite from the investment community for companies who flout regulations is really, really low. You’d be fully out of your mind to cheat.”
A Record of Noncompliance
It may be reasonable to assume that large, public companies like cruise lines — which have invested money in meeting IMO 2020 — would be able to police themselves, even in cases where flag or port states don’t. But unfortunately, you don’t have to look far for examples of where the cruise industry has flouted regulations. This has happened even when there were huge consequences for doing so and the actions have resulted in terrible optics for the company.
In June, Carnival was fined $20 million for six counts of violating probation for environmental crimes. That was after they were fined $40 million in 2017, believed to be the largest environmental fine for vessel pollution in U.S. history. The initial fine was for environmental crimes — including dumping oily waste, and then covering it up — that occurred for eight years up until 2013.
The guilty pleas in June included violations including trying to interfere with oversight from court-appointed monitors, attempting to back-channel with the Coast Guard, falsification of training records, as well as additional dumping in the Bahamas. As part of Carnival’s U.S. probation for these crimes, the company is under a court-mandated environmental compliance plan. In April of this year, presiding Judge Patricia Seitz said she decided to release Carnival’s formerly-confidential year one progress report, “so the public can see what this criminal defendant is doing.”
Among many other violations in the 205-page report, the court appointed monitor reported more than 30 scrubber-related incidents during the year. Some of these were due to unexpected scrubber shutdowns — meaning heavy fuel oil was being used with its emissions un-scrubbed — which resulted in violations of air emissions requirements in Special Emission Control Areas. Incidents also concerned the discharge of scrubber wash-water into U.S. marine sanctuary areas, which was “in violation of both federal marine sanctuary regulations and Company requirements.”
In one incident, the status report notes, a P&O ship “used [heavy fuel oil] for 16 hours while transiting the Icelandic Environmental Protection Zone where sulfur max is 1.5 percent.” The report noted that this was apparently due to a misinterpretation of regulations and that the scrubber was turned on again when the crew noticed. That was not the only case; there were multiple other documented incidents of burning heavy fuel oil in protected areas across Carnival’s brands cited the report, sometimes for hours at a time.
Kendra Ulrich, senior shipping campaigner with environmental group Stand.Earth, said these incidents point to the fact that the continuous emissions monitoring systems meant to ensure scrubber usage are “not sufficient to prevent or minimize incidents where scrubber systems failed and heavy fuel oil was burned for hours in restricted areas without any pollution control equipment online.”
When asked about the above violations, Carnival’s Frizzell said that “all of the issues highlighted were self-reported, but nearly all were connected to short-term mechanical issues or training related to our early start-up deployment of the new technology on our ships, many of which were deploying the new systems for the for the first time.”
To avoid repeats of this kind of incident, Carnival’s chief ethics and compliance officer Peter Anderson — who was brought on in the wake of the June conviction — said Carnival needs “to go beyond just preventing environmental wrongdoings, by looking more broadly at all regulatory violations. Our goal is to be is to be self-governing.” He added that the company is specifically working on creating a culture where crew feel they can speak up and have the support of leadership. “This open communication goes a long way to making sure that you are aware of issues and you operate in a responsible manner. We are building systems to help us discover ways in which we prevent and learn from those incidents.”
In the summer of 2018, officials in Alaska looked into claims that that the Star Princess had dumped toxic sludge — that scrubber byproduct which is supposed to be disposed of in facilities on land — in Ketchikan, Alaska. Carnival told Skift it self-reported the incident — which it described as “accidental discharge of gray water (water from sinks and showers)” — and is fully cooperating in inquiries. The Alaska Department of Environmental Conservation told Skift the agency was “unable to confirm the source of the substance observed in the water,” and thus was “unable to assign any fault or assess any penalties.”
While Carnival has been the most egregious compliance case of late, Royal Caribbean has also seen similar fines in its history. In 1998, the company pleaded guilty and admitted that it manipulated its pipes to bypass anti-pollution mechanisms. This issue was separate from scrubbers, but a similar crime to the one Carnival was convicted for four years ago.
According to Ulrich of Stand.Earth, this record is why environmental groups such as hers are campaigning to the IMO to prohibit the use of scrubbers entirely. The history of compliance isn’t strong enough to ensure that unfiltered heavy fuel oil won’t get burned.
“Cruise ship companies, and in particular Carnival Corporation & PLC, have an abysmal track record on compliance. Carnival has a documented history of falsification of documents, lying to regulators, and conspiracy to commit criminal acts of pollution in violation of international laws and U.S. regulations,” Ulrich wrote in a statement to Skift. “It is a convicted felon as a result of this criminal conduct, and has repeatedly violated the terms of its probation including reporting and prepping for inspections to avoid findings, even after the U.S. federal courts ordered the company to stop this practice. Compounded with the repeated technical failures, it is clear that scrubbers are not sufficient to ensure IMO 2020 compliance.”
A Big Test
It’s worth noting that sulfur is just one of the many ways that the maritime industry, cruises included, needs to clean up its act when it comes to the environment.
While carbon-free shipping may just be a distant dream for now, the framework of IMO 2020 is the kind of instrument that may one day be used to drive down carbon emissions. In 2018, the IMO stated its intent to “reduce the total annual GHG emissions by at least 50 percent by 2050 compared to 2008, while, at the same time, pursuing efforts towards phasing them out entirely.” Meanwhile, CLIA members have committed to reduce the rate of carbon emissions by 40 percent by 2030 compared to 2008.
Reaching lofty and important goals demands that the IMO proves it can enforce rules. Caddell thinks the success of IMO 2020 will be dependent on a shared effort to redress some of the glaring imbalances in the system.
“It’s going to be completely contingent upon a lot of investment in the international community into assisting some of the more developing flag states — the irony being that those are sort of bigger flag states [by tonnage].”
Strevens sees this as a litmus test of sorts for the future.
“This is a very big test for the IMO community — can they effectively enforce this regulation?” Strevens said. “Because if they can’t, it sets a very unfortunate precedent for the big challenges that are still to come.”