The European Parliament has confirmed today that the EU will adopt stricter regulations on sulphur limits in shipping fuels by 2015 and that it will not apply a five-year extension, as had been debated last week during negotiations between the Parliament, European Council and European Commission.

The news will come as a disappointment to shipping operators working in Europe, including short sea ro-ro lines, who have argued that the subsequent rise in bunker costs will lead to substantial modal shift from shipping to land transport. The Council and Parliament have agreed to bring legislation in line with the sulphur limits agreed by the International Maritime Organisation (IMO) in 2008, which call for 0.5% limits by 2015. The EU is planning to go further however, by removing a possible five-year extension to 2020.

Furthermore, the EU will also apply a stricter limit of 0.1% sulphur by 2015 in its so-called ‘special control areas’ (SECAs), which includes the Baltic Sea, North Sea and the English Channel.

The EU had agreed to implement the legislation earlier this year, but has faced resistance from industry together with some member states who claim that the limits are too strict for industry to cope. Last week, during a ‘trialogue’ meeting of the European Council, Parliament and Commission, the Council pushed for a five-year extension to 2020 for limits of 0.5%.

Speaking at last week’s ECG Assembly in Copenhagen, Anna Rosbach (pictured), a conservative Danish MEP and member of the committee for transport and tourism, revealed there had been a rift in the negotiations over the extension, with the Council in favour, supported as well by the current Danish presidency of the Council of Europe.

Rosbach admitted that she had scant details as further negotiations would be pending over the past week. It would appear that the appeals for an extension were not met.

A modal backshift is possible
Shipping lines have argued that meeting the 0.1% limit will either be impossible, or drastically expensive. Also speaking at the ECG Assembly, Peder Gellert, executive vice president at DFDS Seaways, predicted that the measures would lead to no less than a “significant modal backshift” of cargo moving by short sea transport to land-based transport, such as road, which may be more harmful to the environment than shipping.

“The price difference for low sulphur fuel is about $300-$400 more per tonne compared with bunker costs today, which are already around $650-$700 per tonne,” said Gellert.

He added that the European industry was unprepared to meet the restrictions, outling several possible options for how operators might meet the limits. A switch to liquid natural gas would meet the requirements, for example, but would require completely new ships as current fleets cannot be retrofitted to use LNG.

Another option would be to install scrubbers on-board that could remove sulphur from current bunker. Each scrubber takes about eight months to arrive, costs several million euros, and weighs around 50 tonnes, which means that they would not be suitable for some smaller ro-ro vessels.

Gellert, in an example of the decisions faced across the European shipping sector, admitted that DFDS must now choose between three alternatives: a do nothing,  ‘wait and see’ approach in hopes that the regulations are delayed; an ‘all in’ strategy, in which the company becomes the first to fit its entire fleet with scrubbers; or a “middle road” approach whereby 5-7 vessels are fitted with scrubbers.

Gellert admitted that the risks of fitting its entire fleet with scrubbers now was that the technology would be out of date in the next few years. He estimated the cost of fitting the entire fleet at around €155m ($197m).“Our board will probably choose the ‘middle road’ strategy,” he said, which he estimated to cost around €30m.

Gellert, together with the ECG, called for the European Commission and Parliament for help in meeting these limits. “We will do our part, but you must do yours,” he said.

A delay appears unlikely
Magda Kopczynska, from the DG Move unit at the European Commission, told delegates that the worst approach they could take was one of ‘wait and see’, as the chances for any delay or changes to the regulations were very small. 

“This regulation is coming and we have to deal with it. The IMO came up with these guidelines in 2008, and we have to create a European framework to deal with them,” she said. “It was the IMO that initiated this process, not the EU.”

Rosbach pointed out that the restrictions could meet further resistance by member states in Southern Europe–although the stricter limits adopted by the EU by 2015 apply mainly to northern Europe. Indeed, several member states, including Germany, the Netherlands, Belgium, France and the UK, have already ratified the stricter limits and are obliged to abide by it.

According to a European Parliament release, the Parliament has requested that next year’s air quality policy review will examine the possibility to extend the limits further. Rather than mandating a 0.1% limit to ships in port, the regulation could cover the territorial seas of all member states (i.e. within 12 nautical miles from the coast).