When it comes to environmental sustainability, few industries face a more fundamental challenge than cruise ships. Cruising, after all, is an exercise in large numbers and grand expenditures. For example, a cruise on a Dream Class Carnival ship involves loading up to 3,646 passengers and 1,367 crew members onto a 1,004ft ship that weighs more than 128,000 gross tons. The cruise then takes them around the Caribbean, feeding them, laundering their clothes and pampering them. The environmental impact is similarly stunning: in 2011, Carnival consumed 25m metric tonnes of water and 3,394,214 metric tonnes of fuel, while producing 145,480 metric tonnes of sulfur dioxide and 11m tonnes of greenhouse gasses.

Yet, for all the seemingly inherent wastefulness of the cruise industry, many cruise lines are making a concerted effort to improve their waste streams, cut down on their fuel consumption and generally reduce their impact on the earth. Some of these changes have been the result of laws, others consumer pressure, but the end effect is the same: an industry that is working to improve its environmental footprint, even as some activists argue it isn’t doing enough.

Recently, the largest cruise company in the world, Carnival, docked in the spotlight when it received the New Economy’s Clean Tech Award for Best Marine Solutions Company. The award recognized Carnival’s decision to install a new exhaust filtration system on its North American ships, at an estimated cost of $180m.

The filtration system, which scrubs sulfur, nitrogen and particulate matter from exhaust, will enable the company to massively reduce its air pollution. This is a potentially industry-transforming development, and the manner in which it came about highlights both the promise and challenges facing the industry’s move toward sustainability.

First try: scrubbers scrapped

Most cruise ships are powered by bunker fuel, an extremely low-quality, high-polluting fuel blend. Carnival first experimented with scrubbers several years ago, installing a system on a Holland America ship, Tom Dow, Carnival’s vice-president for public affairs, explains. However, it took up too much space and released large amounts of polluted wastewater. Carnival scrapped the program.

Then, in 2010, the International Maritime Organization (IMO) designated a 200-mile zone around the US and Canada as an “emissions control area” and, two years later, mandated that ships traversing the areas around North America must use fuel with a sulfur content no higher than 1%. On 1 January 2015, that percentage will drop to 0.1%. To put this in context, the worldwide sulfur limit is 3.5%.

Industry-wide, the effects of this reduction will be huge. The EPA estimates that, by 2020, the ECA around the United States will prevent 5,500-14,000 premature deaths, 3,800 emergency room visits and 4.9m cases of “acute respiratory symptoms”. As the largest cruise ship company operating around the US, Carnival represents both a large part of the pollution problem and a large part of the solution.

The original ECA treaty called for companies to use low-sulfur fuel, which would reduce harmful exhaust, but would also cost significantly more. While fuel costs vary depending on where a particular ship buys its fuel, the “rule of thumb is that this will add between 70% and 100% to the cost of fuel,” Dow says. This means that using the low-sulfur fuel would effectively double the fuel cost of cruise shipping and undermine Carnival’s business model.

Because ships leaving Baltimore and Norfolk would have to spend a large amount of time in the US ECA, these ports were no longer economically attractive. The company decided to move the ships out of those cities, cutting hundreds of jobs.

Facing a choice between paying higher fuel costs and rearranging all of its cruises, Carnival sought another solution. Encouraged by the US Environmental Protection Agency, it revived its filtration program, working to develop scrubbers that could be deployed in the limited space available on ships. In 2013, the company successfully tested its first scrubber system on the cruise ship Queen Victoria and announced plans to install scrubbers on 32 ships that ply the US and Canadian ECAs, as well as 10 ships on AIDA, its German line.

It’s a significant achievement: the scrubbers will reduce sulfur and nitrogen to well within the ECA limit. Moreover, Dow notes, the filtration system also removes particulate matter, “so we’ll end up with a better outcome than we would if we just burned the more expensive compliant fuel.”

The cost of reducing pollution

However, the 42 ships due to be retrofitted represent less than half of the 101 ships currently in its fleet. The reason is simple: Carnival is not required by law to do so, and it’s not cost-effective to do it voluntarily.

This isn’t to say that Carnival will never retrofit its ships. However, its decision to do so will likely be motivated by increased regulation. As Jim Van Langen, Carnival’s vice-president for management Systems, points out, numerous countries are considering ECAs. “The US is not the only area that is environmentally or politically sensitive to these types of emissions,” he says, “so there’s a possibility that we could face similar regulatory pressures in other parts of the world.”

By 2020, in fact, the IMO plans to reduce the amount of sulfur allowed in ship fuel from 3.5% to 0.5% across the globe. If that happens, it will become cost-effective for Carnival to install scrubbers on all of its ships. While the company currently limits its scrubber program to ships that have “significant operating time” in the North American ECA, it “has intentions to roll out this program beyond those 32”, Dow says.

A larger rollout could be the key to reducing emissions, especially as the number of cruises increases. While Carnival’s ships already produce fewer greenhouse gas emissions per kilometer, thanks to the partial rollout - 298 metric tonnes in 2011, compared to 347 in 2008 - the company’s overall emissions have grown to 11m metric tonnes in 2011 from 10.3m in 2008.

In addition, exhaust is only one of many areas where the company is working to reduce its environmental footprint, Dow says. It has undertaken a wide variety of initiatives, including reducing water and power usage. It’s developing more efficient propeller and hull designs, and is experimenting with a Mitsubishi air lubrication system that, Dow claims, could cut power expenditures by 7%.

But while Carnival holds itself to a higher standard than that required by the published standards in many cases, it mostly limits itself to the legal requirements.

More regulation needed to drive change?

Those requirements may be insufficient. Marcie Keever, oceans and vessels program director for Friends of the Earth, a watchdog organization that rates cruise ships’ environmental impact, argues that the industry “has been under-regulated and unregulated for many years”.

Part of the problem is registries: cruise ships, she notes, often operate under “flags of convenience”, which means that they’re registered to countries with less stringent regulations. “I think there’s one cruise ship, of the entire worldwide fleet, that’s flagged to the United States.”

Beyond that, many regulations are voluntary. “In the US, beyond three nautical miles, you can discharge raw sewage,” she says. “The cruise industry says that they don’t discharge within 12 nautical miles, but there’s no one policing that. That’s a voluntary standard, and we have no idea if they’re following it.”

Admittedly, Carnival is only one of several cruise companies sailing the seas. And, while its grades for sewage treatment, air pollution reduction and water quality compliance vary greatly from ship to ship, Friends of the Earth gives the company an C- for environmental sustainability overall.

Some companies do better. Disney Cruise Line, for example, has advanced sewage treatment systems, docks 73% of its trips in ports that use cleaner shoreside electricity and maintains a high standard of water quality. In 2013, it became the first cruise ship line to receive an A from Friends of the Earth.

But while Disney’s work is impressive, it only operates four ships and has a 2.5% market share. Carnival, on the other hand, has between 45% and 50% market share and operates the third-largest fleet in the world, after the United States and Russian navies. In other words, while smaller companies might move the needle on environmental sustainability, Carnival’s actions drive the industry.

Unfortunately, Carnival’s history suggests that the cruise ship leviathan only moves when laws compel it to do so.