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2.3.1 Emission Standards

Historically, emission standards have been the most popular approach to control environmental pollution. Emission standards do create incentives for research and development in emissions control and can have a positive effect in the problem that we are discussing but are not the most effective policy measures. However, we believe that they have to be the first approach to deal with the problem of carbon dioxide emissions as it will be easier to be applied by most IMO-member states.

In public policy, a Command and Control (CAC) approach is one where the regulator mandates the behavior in law to what is thought to be socially desirable (Field & Field, 2009). As the name implies, this approach consists of a 'command', which sets a standard, and a 'control', which monitors and enforces the standard (Asafu-Adjaye, 2005). There are three main types of standards: ambient, technology and emission. In brief, ambient standards are environmental quality levels in the ambient environment, such as a city or a port, and are usually expressed as average concentration level over some period of time. On the other hand, technology standards specify the technologies or techniques that should be adopted and do not specify some end result, such as a threshold level (Field & Field, 2009). For example, the requirement that all ships should be equipped with scrubbers in order to lower SOx emissions is a technology standard. Furthermore, the regulator may specify operational measures, such as a mandatory speed reduction measure. The third type of standards is the so-called emission standards (or performance standards) and regulate the level of emissions allowed. Standards may impose a ceiling on total emissions in a period or a maximum allowable emissions rate, something that IMO has set in the case of NOx emissions.

An advantage of standards is that they are the most widely understood form of environmental policy and the most pragmatic approach in the case of environmental protection under uncertainty. Furthermore, this is the most favorite form of environmental policy for politicians since it has the lowest political cost, way lower compared to market based instruments (Hanley, Shogren, & White, 2006). On the other hand, disadvantages of standards are that the threshold is difficult to be determined and that under a CAC approach firms have no incentive to reduce emissions beyond the standards. Note also that this approach is effective only when the penalties are high and the enforcement methods are strong enough (Asafu-Adjaye, 2005; Field & Field, 2009).

In most cases, emissions standards are firstly tested as voluntary agreements and when it seems that they work then become mandatory. For example, the so called ACEA agreement was an agreement between the European Commission (EC) and the European Automobile Manufacturers Association (ACEA) that was signed in 1998 and sought to achieve an average of 140 g/km of CO2 by 2008 for new passenger vehicles sold in the EU. The ultimate target is to reach an average of 130 g/km by 2015. Being a voluntary agreement this system was a failure although some reduction was achieved. In April 2009, the European Commission published Regulation No 443/2009 which sets the average CO2 emissions for new passenger cars at 130 g CO2/km, by means of improvement in vehicle motor technology (European Parliament, 2009). This is in line with the NOx standards already being used in shipping.

Similarly, on September 15, 2009, the EPA and the US Department of Transportation's National Highway Safety Administration (NHTSA) proposed a National Program (EPA, 2010) that could reduce emissions and improve fuel economy for new cars and trucks sold in the United States according to which they propose a limit of an average CO2 emissions at approximately 155 g CO2/km (250 g CO2/mile).

The ICAO is also developing a global carbon dioxide standard for new aircraft

types, among other recommendations from the organization's committee on aviation environmental protection (CAEP). CAEP met at ICAO headquarters from 1 to 12 February 2010, in Montreal, Canada, and announced the ICAO's commitment to the development of a CO2 standard for commercial aircraft by 2013. More on aviation can be found in Chap. 13 of this book.

For the maritime mode, in 2011 the IMO has adopted the Energy Efficiency Design Index (EEDI) for new ships as an amendment of MARPOL's Annex VI. The concept behind the EEDI has been described in Sect. 1.6.1 of this book and basically EEDI tries to minimize the ratio of a ship's CO2 emissions divided by that ship's transportation work. In addition to GHGs, IMO regulates the emission of other pollutants from ship exhausts, including NOx and SOx emissions. These regulations are contained in the MARPOL Annex VI protocol, which, amongst others, designates specific geographic areas as Emission Control Areas (ECAs), where more stringent requirements apply. Section 6.2 of Chaps. 1 and 10 of this book provide more details on the issue of sulphur regulations.

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