Maritime: Environmental Regs Pose Financial Challenges

Posted by Eric Haun
Friday, April 25, 2014
Michael Simms (photo courtesy Moore Stephens)

Moore Stephens emphasizes high cost to shipping of environmental regulatory compliance

International accountant and shipping adviser Moore Stephens said that finding enough money to remain compliant with environmental regulation is going to be a challenge for shipowners and operators over the next few years.

Moore Stephens shipping partner Michael Simms said, “The Ballast Water Management (BWM) Convention, for example, has not yet entered into force, although some countries, including the United States, have already implemented BWM regulations independently of the IMO. But it is known that BWM systems can cost between $500,000 and $5 million per vessel, depending on the system as well as on the size and design of the ship. That cost may increase as a result of demand requirements and shipyard capacity. There are also operational costs to consider of between $10,000 and $50,000 per annum per vessel.

“Meanwhile, the regulation of emissions from shipping continues apace. Emissions Control Areas (ECAs) are currently in force in the North Sea/Baltic Region and in North America, and new IMO regulations mean that, by January 1, 2015, all vessels operating within these areas will be required to meet an 0.1 percent SOx emissions limit. In addition, there are more complex calculations for 2016, when IMO NOx limits based on the vessel’s age and engine’s rated speed enter into force.”

Simms acknowledged that the true cost of regulatory compliance is still unclear. He says, “Think of a number. Any number will do, so long as it is very big. Then double it. The answer is likely to be as accurate as any supposedly informed estimates currently circulating in the shipping sector about the likely size of the industry’s bill for achieving compliance with incipient environmentally-inspired regulations governing the operation of ships.

“Individual owners and operators may plot their own path through the regulations. For some, configuring new ships for easy installation of BWM systems when the convention enters force may be a viable option. Scrubbers, meanwhile, may be the most cost-effective solution for some when addressing the SOx/NOx dilemma.

“One thing is certain, however. Shipping is going to have to find a great deal of money over the next few years simply to stay within the rules. From an accounting perspective, the challenge will be how businesses should account for the expenditure and any associated costs to determine which items should be capitalized or expensed. In practice, whist additional operational costs should be expensed, certain expenditure should be recorded as an asset. But, of course, it is only an asset if you are able to recover it. “

moorestephens.com
 

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

Finance

Wärtsilä Expects 5% Sales Growth

Wärtsilä announced its third quarter results, reporting that it sees good development in order intake and profitability. According to Wärtsilä, third quarter

Yara Reports Strong 3Q Results

Yara International ASA delivered strong third-quarter results, with record fertilizer deliveries and continued margin benefit from lower European gas price. "Yara

Lerwick Port Awards £16.5 mi Expansion Contract

Lerwick Port Authority has awarded a construction contract for the latest expansion of the harbour’s facilities in a project costing a total of £16.5 million

Environmental

IBIA Welcomes MEPC Bunker Compromise

The compromise solution on the issue of ensuring bunker quality agreed at the 67th meeting of the IMO’s Marine Environment Protection Committee (MEPC 67) has been

Interferry Applauds IMO Consideration of BWTS Exemption

Interferry has praised a decision made at last week’s meeting of the IMO Marine Environment Protection Committee (MEPC) that could exempt certain ferry operators

MEPC Makes Progress on Energy Efficiency, Emissions

The Marine Environment Protection Committee (MEPC) of the International Maritime Organization (IMO) met for its 67th session from October 13-17, 2014, at IMO Headquarters in London.

Marine Power

ABB: Remote Monitoring Link to Fuel Efficiency

Anticipating the maintenance of equipment on board ships in order to increase fuel efficiency could be a “real game changer in the future,” said Andreas Zito, chief technical officer of the V.

IBIA Welcomes MEPC Bunker Compromise

The compromise solution on the issue of ensuring bunker quality agreed at the 67th meeting of the IMO’s Marine Environment Protection Committee (MEPC 67) has been

MAN Diesel & Turbo Updates Turbocharger Safety Warning

MAN Diesel & Turbo SE has released an update to Alert Service Bulletin ASB2013/02/18 containing important safety information related to NA and NR type grey cast iron turbochargers.

Marine Equipment

Interferry Applauds IMO Consideration of BWTS Exemption

Interferry has praised a decision made at last week’s meeting of the IMO Marine Environment Protection Committee (MEPC) that could exempt certain ferry operators

MAN Diesel & Turbo Updates Turbocharger Safety Warning

MAN Diesel & Turbo SE has released an update to Alert Service Bulletin ASB2013/02/18 containing important safety information related to NA and NR type grey cast iron turbochargers.

Wärtsilä Expects 5% Sales Growth

Wärtsilä announced its third quarter results, reporting that it sees good development in order intake and profitability. According to Wärtsilä, third quarter

Ballast Water Treatment

Interferry Applauds IMO Consideration of BWTS Exemption

Interferry has praised a decision made at last week’s meeting of the IMO Marine Environment Protection Committee (MEPC) that could exempt certain ferry operators

MEPC Makes Progress on Energy Efficiency, Emissions

The Marine Environment Protection Committee (MEPC) of the International Maritime Organization (IMO) met for its 67th session from October 13-17, 2014, at IMO Headquarters in London.

Bright Outlook for BWM Convention

The Danish Maritime Authority informed that the Ballast Water Management Convention is now one step closer to ratification following last week’s meeting of United

 
 
Maritime Security Maritime Standards Naval Architecture Navigation Pipelines Port Authority Salvage Ship Electronics Ship Repair Ship Simulators
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: 0.3259 sec (3 req/sec)