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shipping emissions

Emissions Rules Set to Increase Shipping Costs

shipping emissionsA European Union proposal to regulate ships’ carbon emissions will likely increase shipping costs, reports Hellenic Shipping News.

Maritime transport is the only transport mode not included in the EU’s greenhouse gas emissions reduction targets, the trade publication says. Shipping is responsible for 4 percent of Europe’s total GHGs and globally the sector represents 3 percent of GHG emissions, it says.

But despite rules to limit sulfur content in fuel that take effect in 2015, total maritime transport GHGs are expected to rise to 5 percent by 2020. Under the new International Maritime Organization regulations, ships in some Emissions Control Areas (ECAs) must cut their fuel sulfur content from 1 percent to 0.1 percent as of January 2015. Additional regulations that take effect a year later will require new vessels to cut their nitrogen oxide emissions.

Hellenic Shipping News quotes shipbroker Gibson’s latest report that says low-sulfur fuels won’t be enough to limit EU shipping emissions and from 2018 forward, the EU wants to require large ships using EU ports to verify their emissions.

The stricter proposal, according to Gibson says, “ is for EU regulation on monitoring, reporting and verification (MRV) of C02 emissions from all ships greater than 5,000 gross tonnage making voyages into, out of and between EU ports. This will be required per-voyage as well as yearly monitoring of EU emissions.” It also says the new carbon emissions rules would require companies to provide an annual emissions report.

Meanwhile the IMO sulfur rules will likely drive some shipping companies out of business and force others to close routes in 2015, Niels Smedegaard, chief executive of Danish shipping firm DFDS, tells Reuters.

He says replacement fuels cost about 40 percent more than traditional fuels and most of DFDS’ 50 ships are deployed in ECAs. DFDS spends around 1.8 billion Danish crowns ($320 million) on fuel annually, Smedegaard tells Reuters. The company has invested 400 million ($71 million) installing scrubbers in eight of its ships to remove sulfur from exhaust gases.

In the US, the IMO regulations on engine exhaust coupled with relatively low natural gas prices are leading commercial maritime firms including Harvey Gulf International Marine and Sea Star Line to power their fleets using liquified natural gas — which burns cleaner and costs about half the amount of traditional marine fuel, reports the Wall Street Journal.

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