Sulphur

May 2014

The International Maritime Organisation has, rightly, agreed to reduce sulphur emissions from shipping, ensuring ships only emit 0.1% sulphur in designated Sulphur Emissions Control Areas. These regulations are due to come into force on January 1 2015.

Recognising that new technology would need to be developed, and with concerns over low sulphur fuel supply, IMO said that the implementation of these regulations should have a degree of flexibility, to allow companies to transition into the new era without damaging their business.

The European Commission removed this flexibility and pragmatism – and jobs will be lost as a result.

Shipping companies have two options in order to meet the new regulations:

1) Switch to low sulphur fuel:

• according to a report by AMEC, a switch to low sulphur fuel will increase costs faced by operators by more than £300m

• the spike in demand will increase costs on the forecourt for ordinary diesel users of £700m per year, or almost 3p per litre

• in order to reduce this burden, manufacturers and other exporters will be forced to shift their mode of transport onto road instead of ship. This would put up to 3.6 million tonnes of additional freight onto UK roads, clogging up the UK’s road infrastructure

• this shift threatens shipping routes. The closure of one route has already been announced (Harwich to Esbjerg). A total of 2,000 jobs are likely to be lost across the country.

2) Fit ‘scrubbers’ to ship engines to reduce emissions:

• this technology has taken years to research and develop. It has only just reached an acceptable standard (literally within the last few months)

• for every ship to be fitted with this new technology, it could take up to two years – so the 1 January deadline is entirely unrealistic

• figures from P&O say that each multi-engine ship will cost around 12 million euros to fit with scrubbers, and the vessel will have to be out of service for 50 days

• smaller vessels will cost around 2-3 million euros, which often times is more than the value of the vessel itself.

Guy Platten, Chief Executive Officer of the UK Chamber, said:
“We support the move to reduce sulphur emissions and the introduction of tough new limits.

“But the sharp increase in demand for low sulphur fuel will see a massive spike in costs both for shipowners and potentially for ordinary diesel car users - so we need to use the new technology instead. But that technology is only now beginning to work, and could take up to two years to fit properly to all of our ships.

“Reducing sulphur is a job we agree needs doing, but it needs to be done in a pragmatic way that protects jobs as well as the environment. All we’re asking for is the EU to understand the practical realities we face and give us the time we need to comply.

“A report by AMEC recently said if we implement new regulations before the technology is ready, then 2,000 UK jobs could be lost, thousands more lorries will clog up our roads and 12 million tonnes of additional Co2 will be emitted into our atmosphere unnecessarily every year.

“We know other countries within the EU share our concerns – but they are waiting for leadership from the UK. So this is an issue in Europe where the Prime Minister can make a real difference, it is a real opportunity for him to stand up for British business in Europe and succeed. We are simply asking that he takes it.”

Download AMEC report:
Impact on Jobs and the Economy of Meeting the Requirements of MARPOL Annex VI. (PDF File 1.37 MB)

UK Chamber of Shipping press release