Shipping looks likely to be forced to cut its greenhouse gas emissions – but only in the European Union, thanks to the failure of the United Nations agency the International Maritime Organisation (IMO) to agree global standards.
If the IMO does not act by the end of the year, the EU’s executive arm, the European Commission, will unveil its own proposals to cut international shipping emissions by 40% from the 2005 level by 2050. The commission wants a 60% reduction in total transport emissions and an overall EU emissions reduction of 85-90%.
“It’s not that there aren’t technical measures in the IMO,” says Mark Major, a policy officer in the commission’s climate action directorate, DG Clima. “We lack the political will to achieve them.”
Poor countries in the IMO have blocked rich countries’ proposals, such as emissions trading, a shipping levy and a market in fuel efficiency credits, as they want a global system that would not penalise them greatly.
As the big UN climate meeting in Durban starting late in November is also unlikely to produce an emissions plan for shipping, the commission expects to propose unilateral action in 2012, as part of a transport strategy roadmap. CO2 legislation – the first for shipping – could be passed in 2013 and take effect in 2017-18.
Compliance is likely to require better fuels, changes in operations and technological improvements such as better ship designs and propulsion. The controls could include a fuel levy, speed limits to reduce emissions, performance incentives and emissions trading. A report for the commission last year said that shipping should be included in the EU’s existing emissions trading scheme.
Major says that a nine-month study of market barriers to reducing emissions, commissioned from UK firm Maddox Consulting, will be completed next summer.
If the shipping sector is taking on a green tinge, it may simply be seasickness at having to cut emissions – of sulphur as well as carbon. For the Marpol Annex VI rules will by 2015 require IMO ships in the Baltic and North Seas to use fuel with a maximum 0.1% sulphur content, to reduce sulphur dioxide (SO2) emissions, as is already the case in EU ports. The limit, currently 1%, will also apply to passenger ships in other EU areas. Shipping firms claim that the 2015 deadline is impractical and too costly.
However, more pollution control will allow ports to win approval for expansion or to retain their licences, says Fer van de Laar, managing director of the International Association of Ports and Harbours (IAPH): “We think it is a good thing that these regulations are there.”
Many ports are going green with measures such as on-shore power supplies for ships (to stop dirtier generation by vessels), greener yard equipment, and sustainability clauses in leases. The Environmental Ship Index, part of the IAPH’s World Ports Climate Initiative, rewards “clean” ships with lower port dues, for example.
Although CO2 restrictions could be expensive, Major says that other sectors are paying more to reduce emissions and that fairness and economic efficiency require shipping to take its share of the pain.
Major also says that freight customers, known as shippers, bear 70-90% of ship fuel costs, perhaps indicating why shipping firms, known as carriers, have done little so far to reduce emissions.
However, shippers want to be greener, says Denis Choumert, chairman of the European Shippers’ Council (ESC), which represents more than 100,000 firms that need freight moved. “More and more of our members are looking to green their supply chain,” he says.
That view is echoed by Eelco Leemans, director of the Netherlands-based North Sea Foundation and president of the Clean Shipping Coalition. “More and more cargo owners are asking for clean transportation. Pressure is really growing,” he says. Leemans, a former seaman, also claims that sustainability motivates crews.
Angie Farrag, consulting and member services manager at the sustainability organisation BSR, which runs the Clean Cargo Working Group, says that shippers are increasingly asking for the carbon, SO2 and nitrogen oxides footprints of their cargoes.
For Philipp Niesing, risk manager of carrier Hamburg Süd, the options to cut carbon emissions are to increase ship efficiency, to improve ship operation and to increase the flow of operating information.
Efficiency is greater the larger the ship, although some routes have draught restrictions. “A small ship is incredibly fuel inefficient,” says Philip Damas, liner shipping and supply chain director of consultancy Drewry Shipping.
Operating options include slow steaming, avoiding bad weather and switching from fuel oil to diesel fuel. “I suspect that many people do not realise that speed is a substantial differentiator in CO2 emissions,” says Damas. However, mandatory slow steaming is likely to require more ships to meet deliveries, adding to costs, which would probably be passed on to shippers, says the ESC secretary general Nicolette van der Jagt. She also claims that slower deliveries could lead to more pollution as freight is offloaded earlier to roads, or not sent by ship at all.
Niesing says that efficiency improvements could include using trim and draught software, using pre-swirl stators and Schneekluth nozzles to improve propulsion, controlling pump and fan speeds, cleaning propellers (for a 1-2% increase in efficiency) and improving hull maintenance.
Using shipping containers at greater capacity would also cut emissions. Hans Tak, head of sourcing logistics at Sabic Innovative Plastics, says carriers’ largest cost is repositioning units: “Containers always appear to be in the wrong spot.” Reusing import containers for exports could help to cut costs by a fifth, he says.
Possible carbon controls could include a fuel levy, which Hamburg Süd believes would be simple but could see the money raised ending up in national projects or treasuries rather than back in the shipping sector.
Van der Jagt says that a fuel levy “would remove the accountability of the shipping industry without reducing carbon emissions,” with widespread avoidance. Past fuel price rises have not changed carriers’ behaviour, she adds.
Niesing does not reject emissions trading, but fears that it could put EU carriers at a disadvantage globally. Money could again escape the sector and financial institutions could distort the market, he adds.
He therefore favours efficiency incentives, with ships that fail to meet efficiency standards paying a fee per tonne of fuel used, based on the IMO’s Energy Efficiency Design Index, with limits perhaps being tightened over time. “That’s a very, very powerful incentive to invest in fuel efficiency measures,” he says. A scheme could support technical innovation, with potential reinvestment into the ship fleet, typically through research and development, he adds.
When it comes to sulphur emissions, the European Commission’s Joint Research Centre warned last December that, if measures were not taken, pollution over the main shipping routes would increase because of an estimated 10-20% rise in SO2 emissions in the following two years. Marine fuel oil has a very high average sulphur content of 27,000 parts per million, falling to 10,000ppm in existing sulphur emission control areas.
However, Alfons Guinier, secretary general of the European Community Shipowners’ Association (Ecsa), says that the 2015 sulphur deadline cannot be met and will hurt ship operators badly. He rejects claims that the IMO carried out an impact assessment before implementing the rule in July 2011. “They are liars. No impact assessment was made,” he told a recent ESC conference in Brussels.
Guinier says that sulphur limit will result in a 10-50% shift of freight from sea to land. Bremen-Baltic routes, for example, will see an estimated 46% loss of business, with 820,000 containers shifted to roads each year and 187 million kilometres of extra road traffic in Germany, according to a study for Ecsa by the University of Leuven in Belgium.
Guinier says that even small losses of “short sea” cargo business “can trigger a vicious cycle of capacity reduction and lower frequencies,” leading to difficulty attracting investors. Fewer ferry services could mean more road congestion, noise, CO2 emissions and accidents. “This regulation is counterproductive,” weighs in Stig Wiklund, vice-president of the logistics arm of the Finnish pulp and paper firm Stora Enso and chairman of the Swedish Shippers’ Council. “This will lead to a heavy increase in road transport in Europe and a heavy increase in CO2 emissions.” Stora Enso, for example, could also move pulp and paper mills to the southern hemisphere, he claims.
To meet the 0.1% limit, Wiklund says that the options are scrubbers, a switch to the lower-energy and more dangerous liquefied natural gas (LNG) or to ultra-low sulphur fuel – and ceasing operations in sulphur emission control areas.
Scrubbers are out, he says. They are only in the pilot stage and not suitable for all vessels, there is no way to dispose of the resulting waste, and there is not enough capacity to produce and install all of the scrubbers needed by 2015.
LNG “is an option only for new build,” adds Wiklund. Although there are LNG terminals in Europe, there is no LNG refuelling of ships, known as bunkering: “It’s not there and it’s not going to be there in 2015,” he says. LNG use would also be limited to ships on fixed routes, he adds. It is unclear whether barges, trucks or other means could be used to bunker, adds Guinier. Concerns were voiced at the ESC conference about winning safety approval for LNG use, especially when refuelling a ferry as hundreds of passengers get on or off.
Wiklund says that the only practical option is switching to ultra-low sulphur fuel: “That’s more or less all we can do.” However, he forecasts much higher costs as the fuel is expensive and in short supply, partly because of a lack of refinery capacity, and a resulting loss of “short sea” shipping business: “We shall see a modal shift to road and rail,” he says.
Wiklund wants the EU and the IMO to defer the 0.1% sulphur limit – which he terms a way of turning sulphur emissions into CO2 emissions at a cost of €1.5 billion a year. Guinier agrees, saying: “It doesn’t work.”