The proposal would cut the maximum permissible sulphur content of fuels to 0.1 percent from 1.5 percent from 2015 in sensitive areas such as the Baltic Sea and the Channel, and to 0.5 percent from 4.5 percent from 2020 in all other areas.

"This proposal is an important step forward in reducing emissions from the fast-growing maritime transport sector," EU Environment Commissioner Janez Potocnik said in a statement.

As well as slashing sulphur dioxide emissions, the proposal would cut fine particle emissions from ships by up to 80 percent, the Commission said.

The proposals incorporate global standards agreed at the International Maritime Organization (IMO) into EU law, and must now be jointly approved by EU governments and the European Parliament.

The expected cost to the shipping industry of the new standards is between 2.6 billion and 11 billion euros ($3.7 - 15.6 billion), which the EU executive said would be far outweighed by public health savings, of up to 34 billion euros.

Ships will be allowed to use "equivalent technologies" such as exhaust gas cleaning systems as an alternative to using low sulphur fuels, the statement said.

Ships traditionally use heavy fuel oil with a sulphur content of up to 5 percent for propulsion, compared to an EU limit of 0.001 percent in road fuels.

Sulphur dioxide emissions cause acid rain and generate fine dust, which can cause respiratory and cardiovascular disease in humans.

Without action to reduce them, sulphur dioxide emissions from shipping would exeed those from all land-based sources by 2020, the Commission said.

Copyright Reuters, 2011