Unintended consequences of the sulphur cap

New regulations really need to be thought over carefully and exposed to the most rigorous cost-benefit analysis. It is often said that legislation concocted in haste will be inevitably regretted by its recipients and that those making regulations need always to consider "the Law of Unintended Consequences", which will often catch out those who have allowed their enthusiasm for legislation to get the better of them.

Perhaps it has been taking rather too long to build up a head of steam, but the opposition to the EU's proposed 0.1 percent sulphur cap due to take effect in 2015 within the European Emission Control Areas seems to be growing very fast. Ferry and short sea operators in particular have been doing their research and are, as a result, better equipped to forecast the consequences of this drastic reduction of sulphur content in fuel oil, due to become mandatory.

Speaking to the UK House of Commons Transport Committee recently, the UK interest group Maritime UK told MPs that the proposals are likely to increase bunker costs by nearly 90 percent and will almost certainly add some GBP3.6 billion (US$5.7 billion) per annum to the operating costs of shipping around north Europe. There have been submissions from owners' representatives and from ferry operators such as Stena, DFDS and Grimaldi, all of which anticipate that the consequences will be to see hard-won freight diverted from the ships back to the cheaper roads.

The real irony is not just that the consequences of this regulatory change will end up harming the environment far more than the growth of marine traffic would do were this sulphur cap not put in place on a regional basis. It is also significant that the ferry companies seeking another look at this unwanted change are all operators which are investing heavily in the cleanest, most environmentally sustainable new tonnage that it is possible to buy.

These are all companies that are in the vanguard of the Green shipping movement, all with plans for ever Greener tonnage. Grimaldi, for instance, plans to spend no less than €3 billion (US$4.1 billion) over the next three years in new ferries and Ro/Ro tonnage to upgrade its routes. P&O Ferries are taking delivery of two of the biggest ferries in the world for their English Channel operations, which have been designed with extraordinary thought for every practicable environmental improvement. Stena and DFDS both operate fleet being continuously modernised, with immense effort going into the reduction of harmful atmospheric emissions and the conservation of fuel. Many of these companies operate "cold ironing" systems to ensure that the ships are using shore power when in port. In short, these ships are run by people doing the very best for the environment, and the consequences of the proposed percent sulphur cap is likely to do them severe economic harm.

So far there has been little indication that the economic and even environmental consequences of the sulphur cap have been fully comprehended by the regulators, despite the efforts of shipping interests. There seems to have been a notion that the use of LNG will become widespread, or that the price and availability of low-sulphur will make this an attractive option, or that scrubbers will become cheaper to install to existing ferries. It is the "unintended consequences" of this hoped-for environmental improvement and the lack of any lasting benefit for horrendous potential costs, which are causing concern.

BIMCO – Watchkeeper

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