Racing to be green: more hurdles for ships / FOCUS

Genoa - Ever more stringent standards on emissions, but not all countries are equipped for such controls.

di Alberto Quarati

Genoa - Beginning January 1st, 2015, ships navigating the Baltic Sea and the North Sea will have to follow strict guidelines on their smokestacks emissions. Specifically, the limit on the concentration of sulphur in emissions will be capped at 0.1%. This provision is contained in the MARPOL Convention, which is effectively the international standard regulating protection of marine environment. The Convention, updated by amendments through the years by the UN’s International Maritime Organization (IMO), is the most important regulatory body of the shipping industry. The new limits will be phased in gradually in the Emission Control Areas (ECAs): the Baltic and North Sea are in the first stage. The Mediterranean is also an ECA, and, starting 2020, the limit will be 0.5%.The EU Parliament, however, is preparing the ground, to lower it further, bringing it in step with the 0.1% limit. In the meantime, according to maritime research firm Drewery, many shipping companies might start to opt for southern European ports, as they ponder the necessary costs to comply with the standard. But, if recent comments by George Assimakopoulos, keen observer of the sector, at the Posidonia Maritime Fair in Athens are anything to go by, shipping here will be in a similar predicament as the one North Europe’s shipping is undergoing now.

Basically, it boils down to whether we can really be sure that come 2020 -regardless of prevailing political positions on the matter - non-EU countries will follow the standards on 0.5% or 0.1% limits. Again, the risk here is market distortion. Only days ago, the alarm was sounded by the International Chamber of Shipping, the world’s largest shipowners association: many countries don’t have the means to verify adherence to the new standards. The danger, again, is a distortion in the market. This is just the latest manifestation of the shipowners’ impatience with the new levels that, while dictating (first in 1997, amended last in 2011) the goal, they don’t provide directions on how to get there. Currently, technology can provide solutions, but at a high cost: shipowners seem intent on trying not to be left alone shouldering the bill. Mandating a 0.1% limit, from this point of view, seems nonsensical. However, on careful scrutiny, the regulation does reveal its underlying logic: to force a sector with good liquidity to adopt technical innovations, which in turn will support naval engineering and its related industries. As Mr. Simonelli, writing for The MediTelegraph, reminded us: the ways to comply with stricter limits are threefold.

One, extra-refined fuels: high production and market costs, and not enough supply to meet demand. Two, use of LNG: the distribution network of which in ports is sketchy, at best. Three, use of special filters: the so-called scrubbers. Companies have already announced surcharges to cover the costs of these green technologies. Danish ferry company DFDS will raise rates by 15%. MAERSK Line - the largest container shipping line in the world - has brought out an ECA surcharge of between $30-130 per 40-foot container. The Ocean Three Alliance, made up of UASC, CMA-CGM and China Shipping, have already announced that from next year, because of ECA, fuel costs will jump 50%. The world’s second largest shipping line, MSC, has instead decided on a $165 surcharge per 20-foot, loaded, container.