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Thursday, October 18, 2018

OECD Report on non-compliance with environmental regulations

This is the second report in the series, the first of which was released in 1996 and focused on non-compliance with safety regulations.

Six major points are made in the report that explain the competitive advantage which 10-15% of the world fleet derive from not complying with international environmental regulations. Savings from not using reception facilities in the first instance are not considered to be substantial. However, avoidance of equipment maintenance means that waste cannot be so easily or effectively treated on board and hence on-shore waste facility costs increase. The report draws attention to the fact that older, poorly maintained vessels would incur greater costs in the long term particularly having regard to the relatively low cost of timely maintenance and repair costs.

Further attention is given to the use of penalties for non-compliance with a recommendation that fines be increased to a proportionate level against the costs avoided through non-compliance. Fuel quality problems are also seen as a major issue for the industry with a recommendation that ships should be supplied with better quality fuel to reduce sludge storage and disposal costs.

What is significant in the report is the emphasis on all aspects of environmental legislation, in particular all the issues currently being regulated by the IMO and also those issues which are under regulatory development. In the latter case the report stresses the likely increase in environmental compliance of up to three times greater than the current rate. This is seen as a reason for being especially vigilant of substandard practices as the non-complying operator will be able to derive an even greater commercial advantage in the future.

A full copy of the report can be viewed here.

Contact: Tim Wilkins