SHIPPING | Industry protest over planned SOx cuts

Craig Eason – LLOYD’S LIST

EUROPEAN manufacturers, shippers and shipowners have united to protest at the impending sulphur dioxide emission reduction rules set to impact Northern Europe.

They are objecting to strict rules that will make shipowners in the emission control area of Northern Europe use more expensive distillate fuels with 0.1% sulphur content from 2015, while those in other regions including the Mediterranean Sea can still use cheaper fuel oils with 4.5% content until 2012 and then 3.5% until 2020.

The group wants Members States to go to the International Maritime Organization to get the amendment to the marine pollution convention changed, saying that proper research into the impact of the rule has yet to be completed, and it will cost the region’s shippers millions of euros.

Over 50 organisations from Europe’s shipowning, shipping and manufacturing sectors have sent an open letter, seen by Lloyd’s List, to European Commission president Jose Manuel Barroso, commissioner for transport Siim Kallas and environment commissioner Janez Potocnik.

It has been written by the Swedish Confederation of Enterprises and is supported by organisations in Germany, Finland, Denmark, France, Spain, Belgium, UK, Poland, the Netherlands, Iceland and the Baltic countries.

The letter also has the support of the European Shippers Council, European Community Shipowners Association, the European Seaports Association and the European Federation of Maritime Terminal Operators, which all believe that the ECA rules will result in a significant loss of trade.

The German, Swedish, Finnish, Estonian, Lithuanian and Dutch shipowners associations are also signatories. Swedish Shipowners’ Association managing director Håkan Friberg believes there is a good chance of getting the European Union to help create a change in the deadline set at the IMO.

“When the whole industry of Europe is supporting this I think there will at last be discussions about it,” he said. “There has to be some kind of initiative from some European countries, so this will be discussed at a European level first and then they will hopefully go to the IMO, when they see this massive reaction from a lot of organisations.”

Swedish Confederation of Enterprises political and environmental advisor Inger Strömdahl said the new rules impact land-based industries, some of which are already assessing the costs of switching to using road and rail transport rather than shortsea shipping.

“We are asking the commission to open up to a good dialogue with this as we do have a huge problem with this IMO decision,” she told Lloyd’s List. “This is going to be costly. We will have to import the diesel and there will be competition with those using it on the roads.”

The Swedish Forest Industries Federation has said it expects to see a 70% increase in its members’ shipping costs, while the Confederation of Finnish Industries was reported in Lloyd’s List a year ago claiming the rule changes could cost its country’s businesses $1.6bn as shipping costs rise by 50%.

The letters’ signatories believe the decision to go ahead with the drop in sulphur emissions will lead to a negative modal back-shift from sea to road and will have a huge impact on freight costs.

“Trade-off effects are for example increased CO2 emissions and sulphur leakage. These trade-off effects are clearly contradicting commission policy such as climate policy and decreasing congestion by using shortsea shipping”the letter states.

The 0.1% limit on SOx emissions in the ECA’s was agreed in spring 2008 at the IMO’s marine environmental protection committee. The decision came as a surprise, with shipowners and other industry organisation expecting a 0.5% limit to be agreed on.

The industry group is demanding that the European Commission have an open dialogue as part of an impeding review of its own sulphur directive over the coming year, and to conduct full and proper impact assessments, which were missing prior to the IMO decision.

The underlying hope is that that the 0.1% limit could be raised to the 0.5% limit the European manufacturing and shipping industries had expected, and would also match the limit for the rest of the world which will come into force in 2020 pending a review of low sulphur fuel availability.

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