1. Canadian Experience in Implementing the North American Emission Control Area (ECA) Mexico City, Mexico May 19, 2015

2. overview Human and Environmental Impacts of Maritime Emissions
Implementing the NA-ECA Internationally and Domestically
Stakeholder Engagement and Views
Alternative Compliance Options
Results and Enforcement
Today I will be touching briefly on the Canadian experience in implementing the North American Emission Control Area – the ECA. Specifically, with regard to:
The Human and Environmental Impacts of Maritime Emissions
Implementing the ECA Internationally and Domestically
Stakeholder Engagement and Views
Alternative Compliance Options
And finally Results and Enforcement

3. Background: addressing Marine emissions
Emissions of sulphur oxides (SOX) are a significant contributor to health impacts associated with air pollution
A key source of SOX emissions is sulphur in fuel
Other modes of transportation already subject to stringent sulphur in fuel regulations
Without mitigation, maritime shipping would represent a dominant share of transport-related SOX emissions in Canada by 2020
The emission of sulphur oxides associated with fossil fuel combustion is a key source of air pollution and the associated negative impacts on human health.
SOx emissions from maritime transportation was becoming a particular concern as other modes of transportation and industries had already been covered by stringent sulphur content of fuel rules.
The pie charts shown here indicate that in 2002 SOx emissions from maritime transportation already represented a majority share of emissions from transportation sources and without mitigation efforts was expected to grow to a massive 92% share by 2020.
2002
2020

4. Human and environmental impacts
Marine air pollutant emissions contribute to smog levels (O3 and PM2.5) in all Canadian provinces with commercial marine activities
British Columbia
Ontario
Quebec
Maritimes (East Coast)
Since the majority of the Canadian population lives within these regions, human health and environmental impacts are significant
Influence of marine emissions on summertime ozone levels (top) and sulphur deposition levels (bottom) in Canada
There are considerable environmental and health impacts associated with air pollutant emissions.
SOx and nitrogen oxides emissions, and particulate matter are known to contribute to respiratory health problems, acidification of soil and water which damages plant and animal life, and are a major cause of smog and its associated impacts on human and environmental health.
The vast majority of the Canadian population lives within regions affected by air pollutant emissions from maritime transportation, and are therefore vulnerable to the adverse health and environmental impacts associated with these pollutants.
Therefore, these realities presented us with the obvious need to implement measures to limit the marine mode’s air emissions impact on the Canadian population.

5. Implementing the NA-ECA
2006: NA-ECA first agreed between Canada and USA at Head of State level
Following criteria of Appendix III to MARPOL Annex VI:
Government of Canada modeled emissions and deposition over Canada
Assessed public health impacts based on atmospheric modeling
The aspirational goal of establishing the North American Emission Control Area was first agreed to in 2006 by our respective U.S. and Canadian heads of State as part of a wider effort to coordinate environmental legislation across different modes of transportation and industries.
The first steps along the path to implementation were exactly what bring us together here today – development of the rationale in terms of mitigating adverse human health impacts associated with air pollutant emissions.
The criteria for the analyses necessary to support application for designation of an ECA are spelled out in Appendix III to MARPOL Annex VI. These have been followed in the analyses conducted to date in support of developing the rationale for a Mexican ECA.
On this slide I’ve included a summary table of the improved public health benefits that resulted from Canadian analysis of ECA implementation. As you can see, these benefits are significant.

6. Implementing the NA-ECA
2009: ECA Proposal to Marine Environment Protection Committee (MEPC 59)
USA, Canada and France (on behalf of the islands of St. Pierre and Miquelon)
See IMODocs: MEPC 59/6/5 and MEPC 59/INF.13
USA led proposal as Canada was not yet a Party to MARPOL Annex VI
2010: MEPC 60 adopts Resolution MEPC.190(60) establishing the NA-ECA
Canada ratifies MARPOL Annex VI at same meeting
NA-ECA becomes enforceable internationally on August 1, 2012
2013:Vessel Pollution and Dangerous Chemicals Regulations amended to implement the NA-ECA in Canadian jurisdiction
These analyses were combined with those for the U.S. and the French territories of the islands of St. Pierre and Miquelon, which lie off the east coast of Canada.
The combined rationale and application for designation was presented to the 59th session of the Marine Environmental Protection Committee in 2009.
In March of the following year, at MEPC 60, the Committee approved our joint application for designation of the North American Emission Control Area, which came into force internationally 18 months later in August of 2012.
At the same meeting, Canada acceded to:
MARPOL annexes 4, 5, and 6
Antifouling Systems Convention
Ballast Water Convention
And the Liability and compensation conventions
Ratification of Annex VI allowed Canada to: have effective options to enforce the new regulations as a Port State; and, be a voting party on further measures under Annex VI, such as the Energy Efficiency Design Index (EEDI) and Ship Energy Efficiency Management Plan (SEEMP) which were adopted in 2012.
You might notice here that Canada implemented the ECA in domestic legislation in Due to prolonged negotiations with our domestic industry on alternative compliance rules for the Great Lakes System, we were a little late – 10 months late.
However, Canadian PSC efforts observed compliance with ECA in Canadian waters regardless, as vessels were still subject to their Flag State rules.

7. STAKEHOLDER ENGAGEMENT and views
Transport Canada conducted extensive consultations with marine industry stakeholders throughout policy development and implementation process
Cruise Sector
Continually operate in ECA, concern for fuel bill increase
Canada and USA worked together to evaluate alternative compliance proposals
Ports and Port Communities
Support health benefits of local ambient air quality improvement
Concern for competition between ports for trade and cruise destinations
Shipping companies have taken advantage of alternative compliance options
International Shipping
Limited time spent within ECA, general acceptance, concern for fuel availability
Canada and USA developed policies on fuel non-availability
Domestic Shipping
Internal waters of Great Lakes, concern for fuel bill increase
Canada developed alternative domestic regulatory regime – Fleet Averaging
In the process of developing and implementing the ECA, Transport Canada conducted extensive consultations with marine industry stakeholders including: the cruise sector, ports, port associations, foreign and domestic vessel operators, and fuel suppliers. These consultations started in 2006, and continue today with respect to enforcement issues.
One of the most significant lessons we’ve learned in this process is the importance of thorough stakeholder engagement since it is a matter that impacts a vast share of Canada’s inbound and outbound trade. Everyone is affected on this issue.
As a result of these engagement activities, we learned of industry concerns regarding fuel cost and fuel availability. Transport Canada has taken significant steps, both domestically and in partnership with our ECA partner countries, to provide fair and alternative means for compliance with ECA standards.
With regard to fuel availability, Canada and the United States worked together to develop a means by which incoming vessels can notify PSC if they were unable to secure compliant fuel before entry into the ECA. This reporting mechanism is called Fuel Oil Non-Availability Reports.
With regard to alternative compliance mechanisms, options include averaging the sulphur content of fuel across a company’s fleet of vessels, implementation of emission control technology, the use of liquefied natural gas, shore power, and other options that reduce both emissions and fuel costs.
These options provide flexibility for vessels to comply with the ECA standards in a way that fits the particular characteristics of their operations, while still maintaining the public health benefits of the regulations.

8. ALTERNATIVE COMPLIANCE OPTIONS
MARPOL Annex VI allows for Flag States to approve alternative compliance options:
Regulation 3 - technology trials
example: installing LNG propulsion systems
Regulation 4 - equivalent performance
example: exhaust gas scrubber installation, fleet averaging
Practicalities
While Flag State is approving entity, NA-ECA partners of the view that consultation with ECA states is key to approval
Industry and Flag States have worked effectively with NA-ECA partners to ensure smooth implementation of alternative compliance options
MARPOL Annex 6 allows for the development of alternative compliance options under Regulations 3 and 4, pertaining to technology trials and methods of achieving equivalent performance, respectively.
These alternative compliance options are subject to approval by the vessel’s Flag State. However, one lesson we learned was that Flag States were reluctant to approve any alternative compliance options that weren’t first OK’d by the ECA-sponsoring states.
In this regard, we’ve had mostly positive experiences in working with industry to develop their alternative compliance plans. Close collaboration with the United States in this regard has resulted in smooth implementation of alternative compliance options by Flag States.

9. Results and ENFORCEMENT
Regulatory impact analysis estimates ~$1billion/year in net health benefits
96% reduction of SOX emissions as of January 1, 2015 plus associated PM reductions
80% reduction of NOX emissions from newly built ships as of January 1, 2016
Alternative Compliance Mechanisms
Fleet Averaging flexibility enabling spending on fleet renewal – over 25% of domestic Laker fleet will be replaced by 2020
57 cruise ships installing sulphur scrubber systems
2 vessels installing LNG propulsion systems, several more planned
Fuel oil Non-Availability Reports (FONAR)
Procedure established by Canada and USA enabling ships to notify PSC if they were unable to source NA-ECA compliant low-sulphur fuel
Canada received 46 FONAR on Atlantic coast and 29 on the Pacific coast in 2014
PSC Enforcement Activities
1275 Port State Control inspections in 2014, 7 MARPOL Annex VI related deficiencies
Transport Canada is working with other ECA-sponsoring countries to harmonize enforcement activities
The human health impact of implementing the ECA is significant – by 2020, when our domestic carriers on the Great Lakes will be required to achieve the full ECA standards, health benefits will be nearly 1 billion dollars per year. This vastly outweighs the compliance costs borne by industry.
As previously noted, we’ve had some success in arranging for alternative compliance options that suit the realities of certain companies whose vessels spend the majority of their time operating within the ECA.
PSC inspections have also witnessed a decreasing average monthly rate of FONARs from 2013 to The availability of 1.0% fuel, which is a blended product that was necessary to meet the ECA standards from August 2012 until the end of 2014, was the primary issue.
The rate of FONARs is expected to decrease further with the 0.1% standard which came into force on January 1st of this year as it requires use of more readily available low sulphur distillate fuels.
PSC enforcement activities show that compliance with the fuel oil requirements of the ECA is nearly universal. Only 0.5% percent of inspections have shown deficiencies related to the requirements of MARPOL Annex 6.
As a result of the notable health benefits and high compliance rates, implementation of the ECA has been a great success from the Canadian perspective.
Furthermore, the lack of complaints from industry since the implementation of the ECA indicate that our extensive stakeholder engagement activities and willingness to accommodate with alternative compliance options have yielded a significant level of comfort among those most affected by the new regulatory landscape.
Let me note here, that the importance of broad, thorough and ongoing engagement with marine industry stakeholders was essential to the smooth implementation of the ECA in Canadian jurisdiction. Above all, that is the most important lesson we’ve learned in this process. And that is the number one message I would like to convey to you here today.
The analyses we’ve conducted as part of the CEC project we are discussing today suggests that the population of Mexico would also accrue significant health benefits should the decision be made to proceed with ratification of MARPOL Annex 6 and application for designation of a Mexican ECA.
Canada wholeheartedly encourages the Mexican government to continue down this path. For the health of the Mexican people. For the health of their environment.

10. questions Jeffrey Smith Policy Analyst Clean Air Policy and Analysis
Environmental Policy Directorate
Transport Canada
Thank you! ¡Gracias!