New Fuel Rules Steer Europe toward Compliance Chaos

Posted By Gabby DelGatto
Friday, June 20, 2014

Northern European regulators will face a battle with many shipping companies over new EU rules aimed at cutting pollution from ship fuels as some owners are likely to find it cheaper to pay fines than to comply.

Ships are typically powered by heavy fuel oil or bunker oil, both of which produce harmful pollutants such as sulphur dioxide which can cause respiratory and heart problems.

Such fuels contain 2.5 to 3 percent sulphur on average, which is up to 3,000 times the sulphur content of road fuel in Europe, according to marine campaigners Seas at Risk.

Under EU rules from Jan. 1, 2015, all ships operating in the North Sea, Baltic Sea and English Channel will have to use a fuel with a maximum sulphur content of 0.1 percent.

Ship owners can comply by changing fuels, such as to low-sulphur marine gasoil, which can cost four times as much as high-sulphur bunker fuel.

Or they can use bunker fuel and fit a "scrubber", a technology that filters out pollutant gases before they are released into the atmosphere.

This costs as much as 3 million euros ($4 million) for a small vessel - often more than the value of the ship itself - and as much as 12 million euros for a larger ship, and it could take up to two years for every ship to be fitted.

Another option is to use liquefied natural gas (LNG), but ships would need expensive retrofitting, and there is not yet a reliable supply chain in place for LNG.

"Neither of these options (scrubbers and LNG) can easily be deployed by January 2015," the International Energy Agency said this week.

Cost of Compliance

Many shipping firms have complained about the costs of meeting the regulation, saying it will damage competitiveness and lead to job losses.

All ships worldwide, however, will be subject to a limit of 0.5 percent sulphur content in fuels by 2020 under rules by the International Maritime Organization, which are still subject to a feasibility review.

Maersk Line, the world's biggest ship container group, said switching to low-sulphur fuel under the EU rules will cost it an extra $200 million a year. P&O Ferries' fuel bill will rise by 30 million pounds ($50 million) a year, which it said it would pass onto customers.

"On longer routes fares will need to rise more than on shorter ones to cover the greater increase in fuel costs," P&O Ferries Chief Executive Helen Debbie wrote in a letter to staff, which was seen by Reuters.

There is also the risk that some firms will find it cheaper to pay fines for not complying with the limits 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.

Britain-based ferry group Red Funnel has been using low-sulphur fuel for 18 years, however, and a spokeswoman said the company has maintained its competitiveness through efficiency improvements.

Apart from the costs, there is also a lack of clarity about how enforcement will work. Each EU member state is responsible for deciding its own methods of enforcement including penalties, according to the European Commission.

Industry sources say many countries have yet to decide on the level of fines, how to monitor the sulphur content of fuel or how often to check ships.

A spokeswoman at Britain's transport ministry said the government was still in consultations on the new sulphur regime.

"Repeat offenders could potentially be subject to penalties other than fines, including the detention of their vessels until such time as compliant fuel was supplied," she said.

Britain's shipping minister, Stephen Hammond, said the government was trying to secure EU finance to compensate ship owners and ports for the higher fuel costs.

(Report by Jonathan Saul and Nina Chestney. Additional editing by Jane Baird)

Maritime Reporter July 2014 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Environmental

Japanese Technology Helps Farmers to Changes in Climate

The Japanese technology firms are using their experience in saving energy and in cloud technology to help farmers cope with changes in climate, cheaper imports and declining labor.

MARAD: Total Fuel Cycle Study for Natural Gas

The Maritime Administration (MARAD) released a study that evaluates total fuel cycle emissions for natural gas versus conventional marine fuels. Results showed

Caribbean Storm Likely to Strengthen, Veers Away from US

A low-pressure system moved over Puerto Rico on Friday and is expected to veer northeast away from the U.S. East Coast but still has an 80 percent chance of forming

Energy

Japanese Technology Helps Farmers to Changes in Climate

The Japanese technology firms are using their experience in saving energy and in cloud technology to help farmers cope with changes in climate, cheaper imports and declining labor.

Sinopec's Profit up at 32.5 billion yuan in 1H, 2014

Asia's largest refiner - China Petroleum & Chemical Corporation announced Friday night, according to international accounting standards, the first half net profit of 32.

Kuwait to Boost Oil Exports to China

Kuwait plans to increase the volume of crude oil exports to China to 500,000 barrels a day (bpd) in three years, an executive at the state-run Kuwait Petroleum Corporation (KPC) said Saturday.

Fuels & Lubes

MARAD: Total Fuel Cycle Study for Natural Gas

The Maritime Administration (MARAD) released a study that evaluates total fuel cycle emissions for natural gas versus conventional marine fuels. Results showed

LNG Transport Barge Design Approved by ABS

Conrad Shipyard, L.L.C. engaged Bristol Harbor Group, Inc. (BHGI) to develop a 3,000 cubic meter Liquefied Natural Gas (LNG) transport barge utilizing a Bristol

LNG America Selects Topside Designer for LNG Bunker Barge

LNG America has selected Taylor-Wharton to commence the front-end engineering and design work for the cryogenic topside of the company’s 3,000 cubic meter Gemini

Marine Power

Mexican Navy Delegation Visits NSSA

The U.S. Navy reported that its Norfolk Ship Support Activity (NSSA) welcomed the Mexican Navy Delegation to Building CEP-200, Naval Station Norfolk, Aug. 21 for

MN 100: Caterpillar Marine

Neumühlen 9 22763 Hamburg/Germany Tel: (713) 895-1449 Email: cat_power@cat.com Website: www.marine.cat.com Managing Director: Nigel Parkinson The Company: Caterpillar

MARAD: Total Fuel Cycle Study for Natural Gas

The Maritime Administration (MARAD) released a study that evaluates total fuel cycle emissions for natural gas versus conventional marine fuels. Results showed

LNG

MARAD: Total Fuel Cycle Study for Natural Gas

The Maritime Administration (MARAD) released a study that evaluates total fuel cycle emissions for natural gas versus conventional marine fuels. Results showed

LNG Transport Barge Design Approved by ABS

Conrad Shipyard, L.L.C. engaged Bristol Harbor Group, Inc. (BHGI) to develop a 3,000 cubic meter Liquefied Natural Gas (LNG) transport barge utilizing a Bristol

Banking on US Shale Gas Boom, Asia Petrochemical Firms Switch to LPG

Asia petrochemicals firms are building tanks and retooling plants to store and process liquefied petroleum gas imported from the United States, counting on a flood

News

Japanese Technology Helps Farmers to Changes in Climate

The Japanese technology firms are using their experience in saving energy and in cloud technology to help farmers cope with changes in climate, cheaper imports and declining labor.

Sinopec's Profit up at 32.5 billion yuan in 1H, 2014

Asia's largest refiner - China Petroleum & Chemical Corporation announced Friday night, according to international accounting standards, the first half net profit of 32.

Kuwait to Boost Oil Exports to China

Kuwait plans to increase the volume of crude oil exports to China to 500,000 barrels a day (bpd) in three years, an executive at the state-run Kuwait Petroleum Corporation (KPC) said Saturday.

 
 
Maritime Careers / Shipboard Positions Maritime Security Naval Architecture Navigation Offshore Oil Pipelines Ship Electronics Ship Simulators Sonar Winch
rss | archive | history | articles | privacy | terms and conditions | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1139 sec (9 req/sec)