MARPOL Annex VI discussed in the International Bunker Conference

Speakers discussed the impact of the revision of MARPOL Annex VI, which was recently approved by the Marine Environment Protection Committee of the International Maritime Organisation (IMO). Peter Bjerregaard, Director of the Danish Shipowners Association, said progress on MARPOL Annex VI “gives hope” that there was finally a way forward in providing a regulatory framework. While the IMO has often been criticised for moving too slowly, Bjerregaard pointed it was in fact often “moving faster than its members” which were, disappointingly, dragging their feet on ratifying new IMO regulations. His major concern about the effect of MARPOL Annex VI was the increase in fuel costs as cleaner fuels were phased in, saying: “I hope the consumer will be willing to pay” for the cleaner air. The debate about shipping’s contribution to carbon dioxide (CO2) emissions, however, was a “totally different ball-game”, said Bjerregaard. “For the next decade, there were no realistic alternatives to fossil fuels, so how shipping – which is growing – would be able to use less, rather than more fuel in the future to reduce its overall CO2 output”. Shipping is much more energy efficient than all other modes of transport, he stressed. But it was difficult to see how shipping could contribute to meaningful reductions in global CO2 emissions compared to aviation and road transport, which through growth are forecast to increase their CO2 contribution more than shipping. Brian Elliott, senior policy advisor to the UK’s Maritime and Coastguard Agency (MCA), agreed with Bjerregaard that shipping was energy efficient, but said the sector must nevertheless make improvements. ”The UK’s position is that there must be mandatory greenhouse gas (GHG) measures for ships and that they must be flag-neutral, practical and achievable, and should not lead to a modal shift, nor cause an increase in CO2 output somewhere else. Improved fuel efficiency would benefit not just the environment, but would also be good for shipping companies’ bottom line”, Elliott observed. He said the UK would prefer a global regime for controlling GHG emissions from ships, through the IMO, and without it, regional action would soon be inevitable. Elliott also updated delegates on the status of UK legislation, saying laws to enforce MARPOL Annex VI are ready in draft form and due for consultation. Consultation of a draft for implementing the European Commission’s sulphur content in liquid fuels will take place after MARPOL Annex VI legislation has been approved. The ‘goal-based’ approach was also very much welcomed by the oil industry, although Linda K. Wright, Global Director at ExxonMobil Marine Fuels, warned that there was no guarantee that sufficient fuels would be available in time to meet new lower sulphur standards for shipping. Speaking from a supplier’s and refiner’s perspective, Wright reiterated oil industry misgivings about the significant investment cost and CO2 penalty associated with producing more low-sulphur fuels. There are also limitations with regards to construction capacity, and the fact that refineries will look for the best business solutions. Looking at the implications of the new sulphur emission control area (SECA) limits, she said the drop from 1.50% sulphur to 1.00% in existing SECAs from 2010 was achievable without major refinery investments. If, however, more SECAs are introduced, supply of sufficient 1.00% sulphur fuel oil would become challenging. Wright estimated fuel demand for ships operating in the current SECAs at around 15 million metric tonnes (mt) annually. “Where is all that gas oil going to come from?” she asked, pointing out that Europe would see a huge distillate shortfall that would have to be addressed either though imports or large, long range investments in refining capacity. With regards to global sulphur limits, the drop to a 3.50% limit in 2012 is not seen as a major problem. But the proposed 2020, or possibly 2025, introduction of a 0.50% global sulphur cap is an unprecedented single stop change in fuel requirements. It will signify a monumental challenge for the supply side. Next year The International Bunker Conference will celebrate its 30th anniversary in Oslo 22-24 April.