Emissions fear may see chemical tanker costs soar

13 February 2008 17:44  [Source: ICIS news]

By Shelley Kerr

 

LONDON (ICIS news)--Renewed pressure on lawmakers to include shipping emissions within climate change laws could result in costs rising by 30-40%, said chemical tanker market sources on Wednesday following the leaking of a UN report which shows international shipping accounts for three times the emissions of carbon dioxide (CO2) than originally thought.

                                 

In light of the report which showed that international shipping makes up 4.5% (1.12bn tonnes/year) of global emissions of CO2, environmental groups reiterated their call to include emissions from shipping in new laws on climate change.

 

“The UN study highlights the alarming growth in carbon dioxide emissions from the shipping industry.  It reinforces Friends of the Earth’s call for the government to include all the UK’s emissions - including the UK's share of emissions from international shipping and aviation - in its new climate change law,” UK-based environmental group Friends of the Earth said.

  

Several bodies within the shipping community have mooted various measures to limit the amount of emissions from ship exhausts, although the majority of focus has been placed on sulphur and particulate matter emissions.

 

One proposal put forward by the tanker industry’s own industry association, Intertanko, is to mandate the global use of marine distillate fuels, replacing the use of heavy fuel oil or residual fuel.

 

Such a move would result in significant extra costs, which would need to be passed on to the charterers and eventually end-users, chemical tanker operators said.  

 

“Distillates are up to 60% more expensive [than fuel oil]. The only thing you save on is maintenance and storage space. Overall cost increases will be at least 30-40% more and you have to claim that back from the customer,” said the bunker purchasing manager of a global chemical tanker operator.

 

“All the ships we have are designed for using fuel oil. There will also be some costs to modify the engines and fuel systems, which will be significant of course but that is a one-off cost. On the upside, we won’t need purity modifiers and heating systems and of course newbuilds will be cheaper in this respect,” the source added.

 

Leaving cost pressures aside, however, there were benefits that shipowners were willing to accept.

 

“Fuel oil is a residual, blended down with all kinds of components. In effect, they [fuel oil engines] are waste incinerators for shore-side production. If you can run on distillates you know exactly what you are burning, what your exhaust is putting in the atmosphere, whereas with fuel oil you don’t always know,” one said.

 

“If the distillate proposal were feasible it would be better for the environment but then the question is what do you do with all the fuel oil?” they added.

 

Intertanko for its part said a switch to distillate fuels would mean substantial additional costs for shipowners but added that alternatives were not cheap and neither did they provide such a significant reduction in CO2 emissions.

 

“The alternative solution is for ships to fit/retrofit scrubbers. Based on information received from ship operators, the price would be between $2 million and $10 million per ship, depending on the size and the type of the ship. Therefore, the aggregate capital cost for ship owners to install scrubbers on all existing ships would be somewhere between $200 billion and $250 billion,” it added.

By: Shelley Kerr
+44 20 8652 3214

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