The sulphur limits in ECAs will significantly change the cost base in our industry.
In March 2010, the IMO adopted a joint proposal from the US, Canada and France to establish a North American Emission Control Area (ECA) that will be enforced starting in August 2012. In the new area extending 200 nautical miles out from the US and Canadian coastlines, the limit on sulphur content of fuel oil used by large commercial ships will be 1 percent. On 1 January 2015, the sulphur content limit drops to 0.10 percent.
“These new regulations mean that ships will have to change the type of fuel they use at the ECA boundaries,” says Melanie Moore, VP Environment for Wallenius Wilhelmsen Logistics (WWL). “For the regulations in 2012, this will mainly involve carrying a higher volume of low-sulphur fuel, but in 2015 the limit drops 90 percent, and this means a total switch of fuels from heavy fuel oil (HFO) to marine gas oil (MGO).”
Two other Emission Control Areas are already in force, one for the Baltic Sea (2006) and another for the North Sea (2007), which includes the English Channel. The North American ECA (2012) will cover the entire US and Canadian coasts, as well as the area around Hawaii. Acc-ording to the IMO – a United Nations agency responsible for shipping safety and preventing marine pollution by ships – the new regulations will reduce sulphur dioxides (SOx), nitrogen oxides (NOx) and particulate matter (PM) emitted into the air by 90 percent by 2015.
The emission regulations in ECAs are significantly stricter than in other areas. For example, current IMO regulations state that the global limit for sulphur content of fuel for ocean-going ships is 4.5 percent. The IMO, however, will lower this limit to 3.5 percent by 2012, and 0.5 percent by 2020.
“The sulphur limits in ECAs will significantly change the cost base in our industry,” says Moore. “Based on historical trends, the MGO fuel required in 2015 costs about 60 percent more than the current HFO fuel. There are also technical installations and operational practices that will need to be managed.”
Just how much more the new fuel will cost in the future is uncertain, and obtaining the appropriate volume and quality of the fuel will also be an issue. “What we do know is that preparing ourselves and our customers well in advance of these impacts will reduce the risk of supply chain disruption,” Moore says. “This is not a regulation you want to deal with in the final hours.”
The North American ECA is just one of several new regulations being imposed in the shipping industry. The IMO, for example, is currently considering a US proposal to create an ECA for the Caribbean, and it is also expected by 2015 to introduce a cost on CO2 emissions for the shipping industry.
WWL LEADS THE WAY
Although current regulations limit sulphur content in fuel for ocean-going ships to 4.5 percent, WWL has kept the sulphur content of its fuel below 1.5 percent for more than six years in a row. From 2000 to 2009, the company reduced its sulphur dioxide emissions by 135,000 tonnes.