A sea of polluters: Shipping industry struggles to reach 2020 emissions targets-- largest 15 ships emit as much sulfur dioxide as 760 million cars,

A sea of polluters: Shipping industry struggles to reach 2020 emissions targets
Christoph Schlautmann August 13, 2018 https://global.handelsblatt.com/companies/shipping-industry-struggles-re...

Maritime traffic is one of the worst offenders for air and water pollution, as well as CO2 emissions. The industry faces the challenge of meeting strict new regulations in less than two years' time.

The world’s largest 15 ships emit as much sulfur dioxide as 760 million cars, according to figures from the German environmental NGO Nabu. Ships account for 13 percent of all global sulfur emissions. The gas causes major ecological problems, including acid rain, soil degradation and water pollution, and lung and bronchial disorders in human beings.

In theory, maritime emissions of sulfur dioxide – as well as nitrous oxide and carbon dioxide – should soon see radical cuts. The International Maritime Organization (IMO) has imposed new upper limits on sulfur dioxide, due to take effect in two years’ time. From January 1, 2020, shipping fuel must contain no more than 0.5 percent sulfur, down from 3.5 percent at present. But most companies seem a long way from compliance.

Efforts to combat maritime pollution go back to the Marpol Convention of 1973 when countries including the United States, Brazil, China and Germany agreed to take steps toward cleaner oceans.

In the wake of a series of terrible oil spills, the main target at the time was transport safety. But today, the focus is on emissions. The vast container ships and tankers that crisscross the world’s oceans use a mixture of diesel and heavy fuel oil, which pumps out sulfur at rates far above the IMO’s new upper limit.
The tricky route to cleaner fuel

Changing this situation presents a huge challenge to the shipping industry. The key to cleaner shipping appears to lie with liquefied natural gas (LNG), which produces fewer emissions and can be cleaned more easily. But the conversion of the world’s shipping fleet to the cleaner fuel is proceeding slowly. Of the 221 in Hapag-Lloyd’s container fleet, just 17 are regarded as currently “LNG ready”: easily convertible to clean fuel use.

In addition, there are major gaps in clean-fuel infrastructure. Germany has not a single LNG terminal, the special port facility needed to import and distribute liquefied natural gas, although there are plans to develop one on the country’s North Sea coast.

If LNG is not available, shipping companies have two alternatives: They can burn marine diesel, which contains less sulfur, but is significantly more expensive. Or they can install “scrubbers” in the smokestacks of their ships, to safely remove the sulfur discharged.

Installing scrubbers takes a ship out of service for just one month, but progress has been slow so far. Last January, there were 205 ships worldwide with scrubbers installed. Now there are 510. By 2020, the figure may reach 1300. That may sound impressive, but represents just 4 percent of the 53,000-strong worldwide fleet of merchant ships.

The bottleneck in scrubber installation is already impacting market prices. According to Greek ship brokers Intermodal, rents on scrubber-equipped tankers have reached around $15,000 (€13,200) per day, while non-scrubber vessels costs are nearly $2,000 cheaper, thanks to the prospective cost of using marine diesel.

A report by Deutsche Bank suggests that scrubber installation costs – which average around $2 million per ship – will pay for themselves within two years, thanks to cheaper fuel costs. Those who fail to invest early could become uncompetitive, it suggests. All this means booming business for companies that install scrubbers. Currently, there are just 25 in the world, with a cumulative capacity of around 1,300 ships in the two years before 2020.
Scrubbers wanted

German industrial services giant Bilfinger recently took an order to refit 42 Greek ships with scrubbers. The company has long experience in installing anti-pollution devices on power plant chimneys and says the price of installation largely depends on the size of a ship’s engines.

Work on large ships could cost up to $10 million. Some unprofitable shipping lines may struggle to find that kind of money to invest. Companies from the IMO’s current “Sulphur Emission Control Areas” – pilot projects in California and in northern European sea areas with stricter limits – may have an advantage under the new conditions.

But many observers emphasize that scrubbers are only a temporary solution. They do little to reduce carbon dioxide emissions, which the IMO has committed to cut in half by 2050. Scrubbers may even slightly increase fuel consumption and with it CO2 emissions. In the long term, only LNG seems to offer real solutions.

And in the even longer term, the IMO is proposing a truly radical solution: zero shipping emissions of any kind by the end of the century.