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IMO votes to halve vessel emissions


The International Maritime Organization has voted to cut vessel emissions by at least 50% of 2008 levels. The decision has major implications for the global fleet and cargo transport


Environment issues are rarely out of the headlines, with all transport modes that use fossil fuels attracting attention about the pollution they cause. Particular concerns have been expressed about the number of people living in cities who die prematurely from pollution caused by diesel emissions. In maritime cities, similar concerns have been raised about the impact of emissions from ships burning heavy diesel oil. Toxic nitrogen dioxide emissions around major


ports and sea routes in the UK are four times higher than previously suggested. Long-term exposure to pollutants like nitrogen and sulphur oxides (NOx and SOx) can contribute to a range of health problems, from asthma to cancer, and have been linked with the deaths of around 40,000 people in the UK annually. Maritime is a far greater source of pollution in


Britain than estimates made in 2014 suggested, with about 10% of the country’s NOx emissions coming from ships. Global estimates suggest ships are responsible for 15% of NOx and 8% of sulphur gas worldwide. International shipping also produces around 3% of human greenhouse


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gas emissions – roughly double that of aviation. The International Maritime Organization (IMO),


after considerable debate and the opposition of several members including Saudi Arabia, Brazil and the USA, voted on 13 April 2018 to cut total vessel emissions by at least 50% of the 2008 levels by 2050. At this point it is worth remembering that


approximately 60,000 cargo vessels are registered throughout the world. In addition to the decision of 13 April, the IMO had previously voted, effective from 1 January 2020, for a 0.5% sulphur cap on oil burnt on board vessels, a reduction from the 3.5% currently allowed.


Options In effect this means that from 1 January 2020, ships not powered by liquid natural gas (LNG) must use either more expensive low sulphur fuel oil (LSFO) or be fitted with an exhaust gas cleaning system (known as scrubbers) in order to continue to burn heavy fuel oils (HFO). So far, only 250 ships in the world merchant fleet have been fitted with scrubbers. The current cost of


retrofitting a containership with such a system is between $5 million and $10 million, but with LSFO being approximately $230 per tonne more expensive, the capital expense could be recovered in approximately one year. However, there is very real concern regarding the cost of HFO, which many believe will increase as demand for it falls. A survey of shipowners reveals that two thirds


are preparing to bunker their ships and use LSFO. A total 66% of respondents indicated that they would use LSFO, whilst only 13% were intending to retrofit scrubbers and only 8% are considering LNG as an option. Taking into account yard capacity and product availability, it is estimated that only 2,000 vessels could be fitted with scrubbers by the 2020 deadline.


Rate concerns There are concerns that box freight rates could rise due to these low sulphur requirements. Some observers feel that the increase could be by as much as 30%, but others argue that this is an over-estimation. However, all agree that carriers will seek to recoup the increased cost of carriage and pass it on to their customers. Looking forward to newbuilds, a survey run by


Drewry indicated that 21% of shipowners are considering ordering scrubber-installed ships and 24% are considering LNG-ready vessels, but the highest number of owners, 37%, still prefer LSFO. This is a highly complex situation which will


impact refining costs, bunkering charges and ultimately the cost of moving cargo around the world. However, there has been little dissent from the view that it is a price worth paying in order to reduce emissions and bring wider environmental benefits.


July 2018


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