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Friday, April 19, 2019

Maritime Logistics Professional

New emissions curbing law makes little sense

Posted to Far East Maritime (by on November 28, 2013

Shipping lines are facing a new threat from European regulators in the form of legislation that will exert control over their operations.

The various studies into the effects of shipping emissions are blunt and unequivocal: Fuel emissions cost lives. Ship engines burn the sludge that settles to the bottom of the oil refining tank, and even though using the fuel to power the world’s vessels is the most efficient way to dispose of it, the fuel is still dirty and bad for human consumption.

But the shipping industry knows this and for the last few years has been vigorously trying to find ways to lower its emissions. The recession brought a sharp drop in world trade and to survive the carriers were forced into changing the way they operate. Oil's high price meant the measures that were implemented were all aimed at reducing fuel consumption.  Slow steaming is now standard on all trade lanes, alliances and partnerships have been formed to streamline services and vast numbers of new fuel-efficient ships have steamed into service or filled orderbooks.

Apart from the odd spike, shipping line profits have mostly been in the red since 2009. Too much capacity, high fuel prices and weak demand have taken their toll and any line making a profit this year should throw a huge party for its staff.

But there is another threat on the horizon where an old adversary stands waving plans to legislate something that will regulate a vessels’ fuel usage. To curb greenhouse emissions by the shipping industry, the European Commission plans to legislate a draft rule it introduced in June that calls for mandatory provision of data on a vessels’ fuel type, its fuel efficiency and the total weight of its cargo and fuel, known as its payload.

Basically, the EC wants shipping to follow its controversial emissions trading scheme that it imposed on airlines, where planes that produce more CO2 emissions must buy credits from those that produce less.

Yes, shipping emissions need to be curbed, but surely the decision on how much fuel a vessel used and how fast it is being sailed is best left to the shipping company. It is difficult enough to operate a ship at a profit in the current depressed trade environment without having the EC running your business. Since when did the European Commission become a ship operator, anyway?

The proposed regulation will demand continual fuel savings from carriers under threat of punitive action, but Hong Kong Shipowners’ Association chief Arthur Bowring raised a salient point. “It is possible to drive a car more efficiently, but how do you drive it to increase efficiency by a set amount each year?” It would provide dimishing returns, surely.

In cargo security, authorities around the world – and when I say world, I mean predominantly the US – have gradually come to the realization that the most effective security measures being implemented are always done in consultation with the industry they are seeking to secure.

This is something the EC could learn. Environment protection rules inevitably cost companies money and recouping the costs is difficult. Corporate Social Responsibility is great, but it isn't cheap. No one is disputing the need to curb ship emissions. Lives literally depend on it. But more than 95 percent of world trade moves by ship, and any measures that could threaten the cross-continent carriage of goods should be resisted.

So far shipping has been exempted from the US’s emissions strategy because it is complicated identifying which party should bear the cost of emissions. A Drewry consultant said there may be 20 consignees for each vessel while in aviation the airline was clearly responsible.

Fortunately there is still time. The EU draft will only come into force in July 2015 and the first reporting period for carriers will begin in January 2018.

The cost of non-compliance will be huge, so instead of pushing through the legislation with a follow-or-be-damned order, why not work with the industry to find the best possible solution. Doesn’t that make more sense?