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

Environmental

Steven Palazzo Visits HII, Newport

Huntington Ingalls Industries today hosted Rep. Steven Palazzo, R-Miss., for a tour of the company's Newport News Shipbuilding division. Palazzo represents the fourth district of Mississippi,

Environmental Groups: IMO Polar Code Too Weak

The International Maritime Organization (IMO) today adopted the Polar Code aimed at regulating shipping in Polar Regions. Several environmental groups have criticized

Bouchard Vessels Honored by SCA

Forty-three Bouchard Transportation Co., Inc. vessels have been honored by The Chamber of Shipping America (CSA) with Certificates of Environmental Achievement.

Marine Power

Sea Star Line: Equipment Replacement Plan on Track

Company Receives New Refrigerated Containers and Places Order for New Genset Equipment   Sea Star Line, LLC began receiving the first of its new 100 40’ and 45’

Pair of ASD Tugboats Delivered to Keppel-Smit

The ASD tugs KST Passion and KST Pride were were delivered to their owner, Keppel-Smit Towage Pte. Ltd of Singapore in October 2014. The two vessels are the first

Shell Launches Naturelle Stern Tube Fluid

Shell has launched its new range of Environmentally Acceptable Lubricants (EALs), including Shell Naturelle S4 Stern Tube Fluid 100.   The Shell Naturelle range

LNG

HHI to Build FSRU for Höegh LNG

A new Floating Storage and Regasification Unit (FSRU) will be built by the Korean shipbuilding Company Hyundai Heavy Industries (HHI). This FSRU will be the fifth

BG Group's Queensland Curtis LNG to Ship First Cargo

BG Group is set to ship the first cargo of liquefied natural gas from its flagship gas project Queensland Curtis LNG on Dec. 20, a source familiar with the matter told Reuters.

Europe Stockpiling Low Cost, Surplus LNG

Demand from top Asian buyers drops sharply; Asian, European gas price spreads converge. Europe set to becoming dumping ground for LNG. Europe is set to become

News

USCG Assist Duck Hunters Near Harrington Beach Park

The Coast Guard and the Port Washington and Cedar Grove Fire Departments came to the assistance of two duck hunters on Lake Michigan Friday. The names of those involved are not being released.

Sapurakencana Wins 3 Petronas Oil blocks

SapuraKencana Petroleum Berhad today announced that it has entered into Sale and Purchase Agreements to acquire the entire interest of PETRONAS in 3 blocks offshore

Kemp Succeeds Semple at Wood Group

Wood Group announced following changes to its senior management team. Alan Semple, chief financial officer (CFO) has advised the board that he intends to

 
 
Maritime Careers / Shipboard Positions Maritime Security Naval Architecture Navigation Pipelines Port Authority Ship Electronics Ship Repair Ship Simulators Shipbuilding / Vessel Construction
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: 0.1258 sec (8 req/sec)