Market News

 May 24, 2012
EU moves to sink shipping sulphur emissions

 The EU is pushing ahead with moves to clean up shipping fuel after agreeing provisional regulations to reduce vessels' sulphur emissions, one of the main sources of air pollution and acid rain.

Member states yesterday agreed draft legislation that would reduce the maximum percentage of sulphur in fuels to 0.5 per cent, down from 3.5 per cent for cargo ships and 1.5 per cent for passenger vessels. On average, fuel used by ships in EU waters contains 2.7 per cent sulphur.

Ships operating in "sulphur emission control areas", including the North Sea, the Baltic Sea and the Channel, will have to reduce content even further, from one per cent to 0.1 per cent. Non-compliance could be punished with fines from national authorities, once the rules are rubber-stamped by environment ministers and the full European Parliament.

Shipping companies have complained about the high cost of meeting the regulations, but the Commission said governments can provide investment support to help avoid losing competitiveness, subject to EU state aid rules.

The Commission has also said the estimated bill of between €2.6bn and €11bn for switching fuels or fitting exhaust filters will be far outweighed by public health savings worth up to about €30bn. This includes preventing 50,000 premature deaths a year in Europe through air pollution caused by the high sulphur content of marine fuels, according to campaign group Transport and Environment.

EU Environment Commissioner Janez Potočnik praised the Danish delegation, current holders of the rolling EU presidency, for getting the new limits accepted, although they were initially proposed by UN body the International Maritime Organisation (IMO) in 2008.

"This is excellent news for our health and the environment, especially in ports and coastal areas, as it means that an agreement with the European Parliament on the Directive on the sulphur content of marine fuels is now possible," Potočnik said in a statement.

"Without this Directive emissions from shipping would by 2020 exceed emissions from all land-based sources."

The move will raise hopes that a global market-based mechanism can be agreed to reduce shipping greenhouse gas emissions. A decade of talks have yielded a series of efficiency improvements, but critics say only measures such as a levy on fuel or emissions trading can manage the industry's predicted contribution rising from three per cent of global CO2 output to 18 per cent by 2050.