Leading ocean forwarder DFDS Seaways is investing a further £34m ($53m) in scrubber technology to filter sulphur from its vessels’ exhaust gases. The latest investment covers three vessels bringing the number in its fleet using scrubbers to 12. It comes ahead of environmental regulations set by the European Commission that will come into force on January 1, 2015 limiting the sulphur content of marine fuels used in ships in northern European waters to 0.1%.
Following tests of a scrubber prototype on its vessel Ficaria Seaways over several years, DFDS has so far installed the technology on nine compatible vessels and said it will fit a further three by the end of this year. In addition, the company said it is considering fitting scrubbers to ten more vessels.
The EC regulations triggering this investment incorporate global standards agreed in 2008 under Annex VI by the International Maritime Organisation and will affect vessel movements in the Baltic Sea, North Sea and English Channel from the beginning of 2015. Those areas have been designated sulphur emission control areas (SECAs). The new limits will require significant investment from the shipping companies operating in these areas.
The concern for shortsea operators, such as DFDS, is that overall fuel prices will rise exponentially, forcing freight onto the road, creating congestion and exacerbating the environmental problems the legislation aims to reduce.
DFDS’ expenditure is an indication that operators are biting the bullet on the investment needed to comply with the regulations rather than hold out hope for any “transition measures” despite the canvassing of groups such as the Association of European Vehicle Logistics (ECG). The subject was a focus for discussions at its Spring Congress held in Dublin earlier this year.
The ECG maintains that neither the supply infrastructure, nor any viable alternatives, will be ready by the 2015 deadline. Tom Antonissen, ECG’s EU affairs manager, told Automotive Logistics this week any such measures are only likely to come after the deadline.
“Only after [the] reality in 2015 proves our predictions right will the Commission be willing to consider “transition measures” such as temporary delays, a moratorium on enforcement or more general exemptions,” suggested Antonissen, acknowledging that European member states also had an important say in such measures.
Transition measures are exactly what Niels Smedegaard, CEO at DFDS, stated are necessary for a sector that has a common interest in improving the environment while ensuring ocean transport does not become prohibitively expensive.
In an official statement Smedegaard said the sulphur regulations will make sea transport more expensive from 2015 on and this will hit the shipping companies and their customers. He stated that there was a need for swift solutions, “preferably transition rules for the many ships that are not suitable for scrubber installation, possibly through temporary exemptions, if shipping companies contribute to investments in solutions where possible.”
The European Commission is building what it calls a Sustainable Waterbourne Toolbox designed “to minimise the possible negative impacts of new environmental standards in maritime transport”. http://ec.europa.eu/transport/themes/sustainable/index_en.htm
2020 and beyond
Looking further ahead the sulphur cap for shipping outside the SECAs established in 2015 will be kept at 3.5% until 2020 but will then be reduced to 0.5%, affecting wider shortsea shipping routes in Europe in a dramatic fashion.
“Reducing sulphur levels from the current limit of 1% to 0.5% already needs big investments,” said Antonissen. “Making a ‘quantum leap’ from 1% to 0.1% is immensely costly for the whole sector, whilst significant environmental benefits between 0.5% and 0.1% will probably not stand up to a proper cost-benefit analysis,” he went on, adding that this was especially the case if the EU-propagated ‘user pays’ principle is applied. This asks the final customer (the car buyer) to pay the additional cost of more expensive maritime and road transport.”
According to Antonissen, the final customer is unlikely to be the one to foot the bill, and he estimates that logistics service providers will see their margins reduced still further, unless they find support amongst understanding OEMs.
Problems are also likely to arise given that not all vessels are suitable to accommodate scrubber technology. One reason is that they compromise vessel stability when retrofitted because they weigh 50-tonnes. Additionally, not all shipping companies have the finances to source scrubbers for the ships in their fleet that can support them. Liquid natural gas (LNG), the subject of much discussion, is only an option for new ships.