Pollution: the race to clean up the shipping industry

Hamish Norton, Transportation Officer at Star Bulk Carriers (USA), is as well prepared as possible. Over the past year, his company has started installing exhaust gas treatment plants on 100 ships – almost all of its fleet – to meet the new environmental rules that will change the industry.

"It's certainly a pretty disturbing event," said Norton, adding that it would cost the company $ 170 million to install such scrubbers on its ships, which carry products such as bauxite and ore. of iron. "It's huge, especially since profitability has not been excellent."

Maritime transport is the engine of the world economy and 90% of trade is
maritime. But it is also one of the most polluting industries in the world. Last year, more than 90,000 vessels crossed the oceans, burning nearly 2 billion barrels of the heaviest fuel oil made from the dirtiest residues of a barrel of crude oil and carrying oil. and gas, chemicals, metals and other goods.

The ships release into the air large amounts of pollutants, mainly in the form of sulfur dioxide, nitrogen oxides and particulates, which are steadily increasing and endanger the health especially along the main shipping routes. They also generate between 2% and 3% of the world's total greenhouse gas emissions, such as carbon dioxide, contributing to global warming and extreme weather effects.

"The impact of these fuels on health is not a scandal, it is simply that the people affected are generally people living along the coasts of developing countries and ports in Asia, rather than people living on the coast. western capitals, "says a shipping consultant.

From 2020, shipowners will have to clean up their responsibilities as part of ambitious plans to reduce the industry's greenhouse gas emissions by at least 50% by 2050 compared to 2008. In January, a sulfur cap will be adopted and carbon emissions treated later. While industries such as road transport, electric power and even aviation have made progress in the environment, shipping is one of the last bastions of the old world fossil fuel order.

The fuel for marine transportation contains sulfur concentrations more than 3,500 times higher than those of the diesel that sparked the scandal of emissions testing at the automaker Volkswagen. The International Maritime Organization, a UN agency, has been working for 12 years to reach agreement on the introduction of measures to limit the sulfur content of fuels from 3.5% to 0.5% from 2020. The Paris climate agreement sets targets, but the most stringent of global environmental regulations imposed for decades.

Analysts at S & P Global Platts believe the rule change could cost the global economy $ 1 billion over five years. Environmentalists say that the impact of ship pollution on the world is much more expensive.

After long dragging, shipping companies, oil traders, refiners and energy players prepare. Most shipowners will switch to low-sulfur fuel oil, while others, such as Norton, install exhaust scrubbers to remove sulfur from emissions from their ships. While some systems store waste on board until they can be treated ashore, others dump it into the ocean.

One of Star Bulk's largest ships – the Star Leo – has just had a washer installed. She makes 90-day trips from Brazil to China, carrying iron ore, raw material used for making steel. The bulk carrier bypbades the Cape of Good Hope, then the Strait of Malacca to ports on the east coast of China, along the most polluted highways in the world by tankers.

"Do you care more about the quality of your air or water? Do you want to breathe clean or unexpanded fumes? "Mr. Norton said he explained the dilemma, he said, to shipowners who always think about the costs first and cover themselves with fluctuations in fuel prices.

While there remains a little more than six months before the entry into force of the sulfur plug, large uncertainties remain. Are companies ready to undergo major changes in fuel demand? Will governments enforce the rule and shipowners comply? And will it be enough to reduce air pollution and the contribution of shipping to global warming?

"After sulfur, regulators will tackle carbon, that's part of the plan. But for now, there are very few ways to significantly reduce carbon emissions, "says Norton. "No company will ask for stricter regulations."

The maritime sector has worked for decades as a vast system of waste disposal for the oil industry. When refineries became more sophisticated, producing for example gasoline for better cars, the worst parts of the barrel were found in the engines of the ships.

Exhaust gases transformed into toxic particles that pollute the coastal regions. Pollutants enter land beyond busy shipping routes, causing serious respiratory diseases and other health risks, polluting lakes and streams, and damaging crops, particularly in Southeast Asia, say climate activists.

A 2018 study led by James Corbett found that ship-source pollution caused about 14 million cases of asthma in children and 400,000 premature deaths a year – from lung cancer to cardiovascular disease. This represents more than 1,000 deaths per day, although other estimates are lower. Research has shown that the use of low-sulfur fuels could reduce the number of deaths attributed to shipping by more than a third.

Mr. Corbett has calculated that 200 of the largest ships produce as much sulfur as all cars in the world. The International Council on Clean Transport has found that while road vehicles account for 64% of transport-related pollution-related deaths, ships at sea still account for 16%.

Some health experts believe that the new rules do not go far enough: "A fuel containing less sulfur can generate more particles, even if their mbad is reduced," says Dr. Matthew Loxham of the University Southampton, specialist in air pollution. . The small particles that stay in the air, he says, [still] have health consequences ".

The debate over who is responsible for cleaning up the global shipping industry has been a long one and ambiguity has been used by some to avoid accepting their role as polluter. Is it the oil companies that produce the fuel, the shipowners who burn it in their ships, the sellers of the products held on these ships or the buyers of the goods?

And then there is the regional responsibility. Unlike environmental rules applicable to other sectors that can be governed at the national level, the IMO has to negotiate with 174 member countries. Sign of its complexity, the judgment on sulfur comes into force only 12 years after the conclusion of an agreement on a draft regulation and decades after the most harmful effects of these emissions.

"We can not go as far as our members want," said Edmund Hughes, head of air pollution at the IMO. While Germany, France, the United Kingdom and Sweden have been among the countries pushing for reforms, others, such as Saudi Arabia – which produces crude to more high sulfur content – they are opposed to it. "You must have a political agreement," said Hughes. "It's not always understood by those who want us to go faster."

Despite several years of notice With regard to the sulfur plug, there is concern that some companies are poorly prepared. Others are waiting to make a good decision. International energy companies such as BP and Royal Dutch Shell have upgraded their refineries to make the most of the change in legislation. Analysts estimate that their refining revenues could double in 2020. Light crude oil producers such as the United States and Nigeria will also benefit.

Transportation groups, including AP Moller-Maersk, Mitsui OSK and Euronav, are among the most exposed to higher fuel costs. Maersk, the world's largest container company, estimates that the IMO's decision to 2020 will result in a $ 2 billion increase in annual fuel costs as it moves from oil with high sulfur content in marine gas oil, nearly 50% more expensive. Although he was a skeptical scrubber, he has also committed to modernizing some ships, but fears a shortage of high quality fuels.

According to Wood Mackenzie, there are scrubbers for more than 2,000 ships on order. But this remains modest compared to the tens of thousands of other ships in the world, which means that the majority chooses or is forced to change fuel type.

This could put pressure on low-sulfur fuels and reduce the amount available for trucks and planes, causing prices to soar. Concern over rising prices in a re-election bid has even prompted the administration of US President Donald Trump to seek to delay the implementation of the rules with little success, officials said .

"For the first year, the situation will be tense," said the International Energy Agency in a recent report, adding that diesel benchmark prices could jump 20%, thus taking a heavy blow to ordinary users at the pump, at least in the short term. term. Others are much more optimistic. The IMO says that there is more than enough supply of low sulfur products.

Compliance is another area of ​​concern that depends on the ability of governments to monitor and enforce adoption. Analysts at Goldman Sachs say the compliance rate will be around 80% next year, but it is unlikely to reach 100% by 2024.

"It will be illegal for a ship to have non-compliant fuel on board," says Alan Gelder of Wood Mackenzie. "But not all ports have the ability to test the quality of marine fuels and not all countries have ratified this IMO regulation in their national legislation."

In the longer term, there is a concern that the hundreds of millions of dollars spent on purchasing new fuels and modernizing ships with scrubbers to meet the sulfur cap will ultimately not reduce the industry's contribution to reducing carbon emissions.

As for the washers themselves, questions arise as to the longevity of these investments. Although Dr. Norton stated that the scientists had not yet concluded that open-loop scrubber wash water was harmful when released to the sea, he acknowledged that further studies were needed. Some ports, such as those in Singapore and the United Arab Emirates, have banned this type of cleaning system. Most shippers expect these purifiers to become less popular as regulators increase their oversight.

In the meantime, shipowners are exploring new ways to reduce pollution and air emissions. A group of French and Greek companies want to impose a speed limit on ships. "Slow steam" immediately reduces emissions as ships consume less fuel; it also has the side effect of reducing production capacity in a market where an overabundance of ships has resulted in lower freight rates.

At a meeting of the IMO Marine Environmental Protection Committee in London this month, he decided to consider reducing the slow rotation speed as a short-term measure and speed up the requirements. in terms of energy efficiency for new container ships and cruise ships. These could reduce CO2 emissions by 750 million tonnes – or 2% – between 2022 and 2050, according to the ICCT.

Others are investigating the replacement of fuel, which has had a mixed reception. "Even if all ships go gas, that's just not enough," says Hiroki Sato, vice president of Japan's JERA, the world's largest buyer of liquefied natural gas. According to him, such a measure would reduce emissions of sulfur dioxide and nitrogen oxides, but would only help to reduce CO2 levels by 20%. "IMO needs to be careful," about aggressive regulation when alternatives are not yet present, he said.

Some go a lot further. As commercial vessels last at least 25 to 30 years, proponents of clean navigation claim that companies must build the next generation of ships to achieve IMO 2050 target. Electric-powered ferries operate on a smaller scale, while wind-powered propulsion – essentially sails – is making a comeback. Hydrogen technologies are also under study.

Maersk has invested $ 1 billion and hired more than 50 engineers each year to develop cleaner technologies. The company has even proposed industry-wide R & D costs.

Although some companies are considering stricter regulations on carbon emissions, Norton said most did not look beyond the first five years of the new rules: Is not yet a problem of shipowners. "

"There is no mandate for regulators," adds Star Bulk's president. "Frankly, no one has had a problem yet."