Finnish Shipowners’ Association MD asks if fuel costs after 2020 could lead to reduction in carriage
At this week’s International Chamber of Shipping conference, held in London at the British Library, the managing director of the Finnish Shipowners’ Association, Olof Widen, raised the possibility that measures to reduce the sulphur content of fuel could raise the costs of transporting goods around the world so much that globalisation went into reverse. He gave a pessimistic view of the effects of increasingly strict sulphur regulations.
Speaking on Thursday (13.09.12), he made the point on a speech on Compliance with Low Sulphur Fuel – Problems in the Baltic and North Sea ECAs. He observed that while bunkers have been a low value by-product, in 2015 there could be strong competition for light products between shipping and road transport.
He asked there was any move to converting refineries for distillates production or for heavy fuel desulphurisation installations? The answer was: “No”.
He said that ensuring the global availability of 0.5% sulphur fuel in 2020/2025 seemed to be the oil industry’s main concern because of the magnitude of volume and investments required. He noted that estimates of the amount required in 2020/2025 range from 380m to 400m tonnes.
Mr Widen’s main concern, however, was the impact of the 1 January 2015 reduction of the ECA Sulphur Limit, from 1.0% to 0.10%. He ran through the alternatives open to owners, non of which were attractive. Changing fuel from fuel oil to diesel would be expensive. Using LNG. The option of switching to LNG was limited by a lack of bunkering infrastructure. The of use of bio fuel was possibility but availability was “very marginal”. Mr Widens was also not optimistic about exhaust gas cleaning, noting that ongoing pilot projects with scrubber installations were having problems, especially regarding wash water in the brackish waters of the Baltic.
Based on this downbeat assessment Mr Widens he said that s hips complying with the new regulations will have an interesting market situation in the ECA:s from 2015 and beyond. He then asked, and left open, three questions: Will ships trading in the North European ECA:s 2015-2020 have an advantage on the global market when the 0.5% is coming into force? Will the price difference between diesel and fuel oil diminish in 2015-2020? Will there be a reversed globalisation after 2020?
Source: World Bunkering