Hitting 2015 sulphur targets could increase harmful carbon emissions and cause loss of 2,000 jobs - report published today

Copy_of_IMG_1712_1.jpg

A new report, published today by AMEC, shows that the targets for shipping companies to reduce their sulphur emissions by 2015, could cause adverse environmental effects and result in a loss of 2,000 maritime services jobs, and place many more industrial jobs under threat. The report is the first of its kind to examine the full impact of hitting sulphur targets.

The report, commissioned by the UK Chamber of Shipping, on behalf of several North Sea and Western Channel shipping operators, provides evidence on the impact of reducing sulphur from ships’ emissions before the current deadline of 2015. The report shows the key impacts of hitting the 2015 sulphur reduction targets would be:

  • much more freight moved by road, rather than sea – increasing carbon emissions and causing more road congestion
  • up to 2,000 jobs put at risk in maritime engineering, navigation, catering, customer services, and other areas 
  • an increase of 2.8p per litre for the cost of road diesel 
  • significant increases (up to 29% in some cases) in the cost of passenger and container route ticket prices.

The UK Chamber and the shipping operators who commissioned the report agree that there is a clear and unequivocal need to reduce sulphur emissions from shipping for both environmental and health reasons. However, the speed at which shipping operators would be required to meet reduction targets, at huge cost, without sufficient technology in place to support the changes, along with the failure to date for these targets to take account of the overall need to reduce carbon emissions has been causing ship operators great concern for some time. This report is the first of its kind to examine the full picture of the effects of the 2015 sulphur reduction targets.

The root of problem comes in the cost – financial and environmental – of low-sulphur fuel. Ships have three options:

  • use low sulphur fuel - which would cost at least $300 per tonne more than the current heavy fuel oil 
  • fit a sulphur ‘scrubber’ to their ships – the report states that this technology to reduce sulphur from heavy fuel oil on board the ship itself is not yet sufficiently proven for ship owners to fit them with confidence before the 2015 targets
  • use Liquefied Natural Gas (LNG) as fuel – feasible for new build ships but not appropriate for most of the existing UK fleet.

The cost of the meeting the 2015 target – financial and employment

For those that cannot yet use LNG, or are not willing to invest in as-yet unproven scrubber technology, the impact of the low sulphur fuel cost is huge. To cope with the major increase, operators of sea routes around the UK would need to increase ticket prices – by up to 20% for passengers and up to 29% for freight.

This will threaten the viability of some routes, forcing them to reduce or even shut down altogether. In turn, this would threaten more than 2,000 jobs – related to those routes – in the UK and Europe in maritime engineering, navigation, catering, customer services, cleaning and administration.

If vital trade routes are closed, the impact would be felt throughout the manufacturing sectors too as the cost of moving goods will increase - making the UK a less competitive and more expensive place to base internationally owned businesses.

The cost of meeting the 2015 target - environmental

Increased ticket prices for sea passage in turn could lead to a significant shift in the way freight is transported – a move to shorter sea passage and increased transport by road. Shipping is the lowest carbon form of mass transport, so a shift to greater road freight also has an environmental cost in terms of increased carbon emissions.

Similarly, both the refining process needed to create low sulphur fuel and the power needed to run on board sulphur scrubbers have their own cost in terms of carbon emissions.

David Balston, Director of Safety and Environment at the UK Chamber of Shipping, said:

“We fully support the need to reduce sulphur emissions from ships – but we are particularly concerned that many routes will become non viable and for those vessels operating on them we seek transitional arrangements, including very tight time limited exemptions to allow technology to catch up and provide a realistic alternative.

“We must protect our maritime jobs and the environment – this report shows these regulations do neither”.

“The wider impact is hard to quantify – but these regulations will make the UK less competitive, making us a less attractive country for international investors - at the worst possible time for the UK economy.