Carbon emission rules worry cash-strapped lines

As the deadline for the reduction in carbon emissions ruling draws closer, shipping lines are calling for clarity on enforcement as they count the cost of compliance. European Union (EU) rules – stating that 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 – will come into effect on January 1 next year. Meanwhile, all ships across the globe will, by 2020, have to abide by International Maritime Organisation (IMO) rules dictating a sulphur content limit in fuels used of 0.5 percent. Mads Stensen, Maersk Line’s global adviser – sustainability, told FTW that the line supported the new EU regulation as it would reduce sulphur emissions by 90% but added that there were “significant” additional costs related to switching from the current 1.0 percent sulphur fuel to the new 0.1 percent version. “We have estimated our additional costs to be approximately US$200 million per year,” he said. Danish transportation group DFDS issued a report last month on the impact of the sulphur directive, noting that switching to marine gas oil (MGO) which has the required 0.1 percent sulphur limit on the EU routes would cost the shipping industry a total of around ¤300 billion. “As a result, the costs of shipping will increase,” said the DFDS report. But aside from the costs, there seems to be a lack of clarity on how enforcement will work as, according to a statement by the European Commission, each EU member state is responsible for deciding its own methods of enforcement, including penalties. An industry source said that many countries had yet to decide on the penalties, how to monitor the sulphur content or how frequently to check ships. The source, who wished to remain anonymous, told FTW that this created the risk that many firms would choose to simply wait to be fined or penalised rather than go to the upfront expense of changing fuels or fitting new technology to ensure compliance. Stenson noted that if the regulations were not enforced, compliant companies could face a major financial burden and would, in the worst case scenario, not be able to compete with noncompliant operators in the longrun.