Northern European regulators are expecting to battle with shipping lines over new European Union (EU) rules aimed at cutting pollution from ship fuels, in the belief that some owners may find it cheaper to pay fines rather than comply, according to Reuters.
The new rules, which come into force in next January (2015), will require all ships operating in the North Sea, Baltic Sea and English Channel to use fuel with a maximum sulphur content of 0.1%; typically heavy fuel or bunker oils contain 2.5% to 3% sulphur on average, up to 3,000 times that of road fuel in Europe, according to marine campaigners Seas at Risk.
Shipping lines can comply by changing to low-sulphur marine gasoil, although this can cost four times as much as high-sulphur bunker fuel; another option is liquefied natural gas (LNG) although ships would need retrofitting and, as yet, there is not yet a reliable supply chain in place for LNG at many ports worldwide. Alternatively they can continue to use conventional fuel oils with the addition of scrubbers to ‘clean’ emissions.
Neither of these options (LNG or scrubbers) can easily be deployed by January 2015, the International Energy Agency has warned, with many shipping lines complaining at the costs of meeting the regulation, saying that it will damage competitiveness and lead to job losses. Maersk Line estimates that switching to low-sulphur fuel will cost it an extra US$200m a year
Reuters believes that some shipping lines will find it cheaper to pay fines for not complying with the limits rather than pay upfront capital costs to change fuels or fit technology. “The potential for not following the regulations is there, because you can save a lot of money. It is so significant that over time companies in compliance may not even be able to compete with companies who are not in compliance,” said Mads Stensen, global adviser on sustainability at Maersk Line.
Apart from the costs, there is also a lack of clarity about how enforcement will work, as each EU member state is responsible for deciding its own methods of enforcement, including penalties.
Industry sources say many countries have yet to decide how to monitor the sulphur content of fuel, or how often to check ships and the level of fines. In the UK, the transport ministry responsible for shipping is still “in consultations” on the new regime. The country’s Parliamentary Under-Secretary of State for Transport, Stephen Hammond MP, has said that his government is trying to secure EU finance to compensate ship owners and ports for the higher fuel costs.
Whatever the outcome on the EU rules, under new IMO rules, all ships worldwide will need to meet the reduced limit of 0.5% sulphur content in fuels by 2020, although these are still subject to a feasibility review.