November 27, 2014

Living on hope in new ECA's

In a little over a month, unless the deadline is extended, revised environmental laws drastically reducing permissible sulphur emissions- from 1.0 per cent to 0.1 per cent- come into effect in a big chunk of the Western world. Since retrofitting ships’ engine rooms with scrubbers hasn’t really caught on in a big way, it is certain that most of the industry plans to buy much more expensive low sulphur fuel for use in the new emission control areas (ECAs) to comply with the new regulations. The January 1, 2015 deadline is just a first step. Major Marpol Annex VI SOx requirements, to be met by 2020, will cost container ships- just one of the many types that are out there- a whopping 75 to 100 billion US dollars per year.

Many operators say privately that they have already made plans to pass on to their customers, after Jan 1, 2015, an ‘ECA surcharge’ to recover incremental costs, but present market conditions may make this a fraught exercise. Others say- again privately, of course- that the fines for non-compliance in Europe are not high enough and that some operators may find it cheaper to break the law and pay the fine. That kind of thinking is akin to living in a fool’s paradise methinks. States have many ways of bludgeoning operators to comply with laws, provided States want to enforce the law in the first place, of course. Higher fines, criminal prosecution and blacklisting are just three of the easily deployable weapons in their arsenal.

As if all this weren’t bad enough for the industry, a Denmark based firm- Explicit- has developed unmanned self-guided aerial drones that can fly over ships that are underway and ‘sniff out’ sulphur oxides from engine exhausts using sensors, and the transmit the data in real time. Operating in conjunction with AIS data and wind speed and direction inputs, these drones will make it easier for authorities to enforce the new ECA laws. Explicit has just received additional funding from the Danish Environmental Protection Agency, which sees “the urgent need for strong enforcement initiatives with new sulphur limits.” Sniffer technology has already been installed under the Great Belt Bridge used by ships approaching the Baltic.  

Given that environmental laws are only going to become more onerous with time and that it will become near impossible for operators to escape the consequences of non-compliance, I can only say that the industry needs to find a way to, first, become an effective part of the law making process. It then needs to find a way to pass on the usually substantial costs of new regulation on to its customers- and eventually, the end users of its product, which is the public. Shipping cannot go on as it is doing today, just hoping that regulatory implementation dates will be extended by the IMO. The piper will have to be paid eventually.


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