Shipping emissions regulation poised to increase shipping costs
Monday, 07 October 2013 | 00:00
Despite IMO's best efforts to satisfy EU's regulators, it appears that the shipping industry is looking for a much stricter environment in the near future. Over the summer, as shipbroker Gibson points out in its latest report, EU proposed to push forward with an initiative to monitor C02 emissions from shipping. According to EU's officials, maritime transport remains the only
transport mode not included in the EU’s GHG emissions reduction commitment and currently accounts for 4% of Europe’s total.Globally, the maritime transport sector represents 3% of emissions, but this is expected to rise to 5% by 2050 despite the introduction of mandatory and operational efficiency measures such as the lower ECA permissible sulphur content levels from January 2015.
As Gibson points out, "long term, the EU aims to reduce C02 emissions by ships by up to 75%. In other words, switching over to the use of low sulphur fuels within the European ECAs may not be enough to satisfy the bureaucrats in the EU, who appear to be looking at a tougher policy. The EU wants a global approach taken to reduce shipping emissions and proposes that from 2018, large ships using EU ports should report their verified emissions. The EU has in the past acted independently from the International Maritime Organization (IMO) when it has felt that international legislation has been too slow", it noted.
So who will be affected? Gibson says that "the proposal is for EU regulation on Monitoring, Reporting and Verification (MRV) of C02 emissions from all ships greater than 5,000 grooss tonnage making voyages into, out of and between EU ports. This will be required per-voyage as well as yearly monitoring of EU emissions. ‘Companies’ will also have to provide an emissions report for their previous year’s activity. This will be in addition to the adoption of the technical efficiency measures introduced by the IMO in 2011, which were designed to deliver significant emission reductions", the shipbroker said.
Meanwhile, the US authorities also appear to be taking an increasingly stricter position with respect to their own emissions control area. As per Gibson, "recent orders placed at NASSCO shipyard for Jones Act tonnage has included two container ships and four MRs (with 4 options) which will be dual fuelled (oil & LNG). With the first delivery of these just two years away, the owners appear confident that access to LNG fuel will not be a problem in the US, even more so with the growth of domestic gas production. The debate on alternative fuels is heating up. As these environmental deadlines approach, owners have some tough decisions to make in increasingly harsh shipping markets. The only certainty is that the emission leegislation will become increasingly tougher and even more costly to implement", the report concluded.
Meanwhile, in the crude tanker markets this week, in the Middle East, Gibson noted "quite impressive VLCC volumes to start the week, started to harden sentiment, and Owners managed to establish a very slightly higher ws 37 East/ ws 24/25 West, via Cape, as a consequence . Eastern holidays then intervened, and took the gloss off, somewhat, but the owning camp will stay hopeful that the end month game plays to their favour next week. Availability, however, doesn’t look particularly challenged against the anticipated demand, and any upside looks to be very limited as things stand. Suezmaxes kept a steady, if rather modest, profile with longer runs to the east paying around 130,000 by ws 55, and western options again in the low/mid ws 30’s. Aframaxes thinned enough to allow rates to inflate to 80,000 by ws87.5+ to Singapore, and with a number of extra units being currently tied up on short term fuel oil storage contracts in Singapore, an even tighter list could develop next week", the shipbroker said.
Similarly, in the Mediterranean, "the Aframax scene remained completely over-tonnaged through the week, forcing Owners to accept as low as 80,000 by ws 60 cross Med, with no better than ws 65 available even for the shorttest voyages. Some are now ballasting away in disgust, but it’ll take a lot more defection to have any positive effect. Suezmaxes found little to shout about, and spent most of the week in survival mode.140,000 from the Black Sea stays at under ws 50 for European destinations with US$2.7 million paid from the Med to South China, and little early change anticipated", Gibson said.
Finally, in the North Sea, "Aframaxes moved through a rare purple patch, particularly in the Baltic where the 100,000 size added 10 ws points in the week to up to ws75 for Continent
discharge options.80,000 Cross UK Cont didn’t do quite so well, but did also firm to close on 80,000 by ws 87.5 Cross UKC and should stay that way into Monday, though the extended stamina remains open to question. Suezmaxes snapped up anything that crossed their path and mirrored West Africa’s bottom numbers at 135,000 by ws 40 to the States. VLCCs got the odd knock at US$3 .25 million for Fuel Oil to Singapore, though the 'arb' isn’t wide, and nobody is queuing up to book tonnage for now", the shipbroker concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide