[By Gao Baiyu]
The global shipping industry is shifting to low-sulphur fuel in response to global calls for cleaner shipping . At the start of the year, the International Maritime Organization (IMO) lowered the sulphur content limit in ships’ fuel oil from 3.5 percent to 0.5 percent. Since March 1, the carrying of fuel oil not meeting the tougher standard has also been banned, all under the International Convention for the Prevention of Pollution from Ships (MARPOL). Ships fitted with a sulphur scrubber, or exhaust gas cleaning system, are still allowed to carry and use heavy fuel oil, since this apparatus can keep emissions to within the new limit. The changes are expected to see sulphur oxides emissions from global shipping drop by 77 percent, thereby reducing health issues including asthma, stroke, lung cancer, cardiovascular and pulmonary diseases.
China has been monitoring shipping within its waters for compliance with the new rules. The media has reported marine authorities in Qingdao penalizing a Korean vessel on January 3, and then a Panamanian one in Weifang on January 19.
The tougher limit will have a major impact. Cutting sulphur in fuel oil from 2.5 percent to 0.5 percent reduces emissions of sulphur oxides by 80 percent and of particulate matter by up to half, while a reduction to 0.1 percent reduces sulphur oxides by 95 percent or more, according to a 2017 report jointly published by the Natural Resources Defence Council (an environmental advocacy group) and the Transport Planning and Research Institute of China’s Ministry of Transport. Meanwhile, if very-high-sulphur heavy fuel oil were to be replaced with 0.5 percent alternatives, particulate emissions could drop by up to half.
According to a local official quoted in the Economic Daily in 2018, data from Baoshan Monitoring Station, near Shanghai’s Waigaoqiao port, showed a much larger drop in sulphur oxides than for the city as a whole.
Stricter policies laying a foundation
China did have policies on shipping emissions before the IMO’s restrictions came into force.
In 2016, the Ministry of Transport starting imposing emission control areas (ECAs) in the Pearl and Yangtze deltas and the Bohai Sea, with a staged reduction of fuel oil sulphur content to 0.5 percent. This started with some trial ports in 2016, was expanded to “key ports” in 2017, to “all ports” in 2018 and the “entire ECA” in 2019. In July 2018, a State Council three-year action plan for tackling air pollution said China would “by the end of 2019, expand ECAs to cover [all] key coastal ports.” Four months later the transport ministry announced an ECA expansion – to 12 nautical miles outside its territorial baseline along the entire coast. ECAs also expanded to important shipping routes on the Yangtze and Xi rivers (a major tributary of the Pearl River).
Those ECAs form the basis for implementing the sulphur restrictions. Freda Fung, consultant to the Natural Resources Defense Council’s Green Ports and Shipping project, told China Dialogue the ECAs had given regulators necessary experience: in collecting samples, using high-speed testing equipment, and remote sensing. Monitoring fuel oil quality became a focus for the marine authorities once those policies were put in place. Now, remote monitoring of emissions allows the use of non-compliant fuel oil to be identified from afar.
In November 2017, 13 ministries including the Ministry of Transport jointly issued guidance on ensuring supply of low-sulphur fuel for shipping, along with introducing joint supervision. The document encouraged Chinese refineries to produce low-sulphur fuel oil, called for a faster update to fuel oil standards, and boosted oversight of the sector.
Freda Fung explained oil firms have been planning production of low-sulphur fuel oil since last year. An IMO database of shipping fuel oil consumption shows compliant fuel oil had been available in many countries before the tougher rules were realised.
In January, OilChem China, a provider of energy industry statistics, calculated that global demand for low-sulphur fuel oil for shipping would be 135 million tonnes in 2020 – leaving a 40 percent supply gap.
Chinese refiners are boosting production. According to OilChem China, the country produced 76,000 tonnes of low-sulphur fuel oil in 2019, while testing techniques. Planned output for 2020 is 18.15 million tonnes. For comparison, the EU and the US produce a combined 20 million tonnes a year.
Cleaner fuel, or scrubbers?
The IMO allows for an alternative emissions-reduction method: continuing to use high-sulphur fuels but with a sulphur scrubber installed. However, the industry seems to prefer switching fuels. Only around 4,300 vessels – less than fivepercent of the total – worldwide have installed scrubbers according to data from Norwegian shipping registrar DNV GL.
Which is the better option? In 2019, Wu Huimin, a cruise liner captain with Royal Caribbean, said at a media event to discuss the restrictions, organised by green NGO Tianjin Binhai Environmental Protection Advisory Service Centre, that sulphur scrubbers are a more economical option: the switch to low-sulphur fuel will see a 100,000-tonne ship burn an extra $2,000 of fuel every hour; while a sulphur scrubber costs $1 million. So after 500 hours of sailing, the scrubber is the better deal.
But at the same event Peng Chuangsheng, deputy chief engineer with the China Waterborne Transport Research Institute, said price changes and the lifespan of a sulphur scrubber need to be taken into account, adding that low-sulphur oil is the “natural choice” for the shipping industry. He pointed out that sulphur scrubbers have an expected lifespan of five years, but due to a lack of testing, actual longevity is unknown. “If it doesn’t last for five years, and the price of low-sulphur fuel comes down, it might not earn back its cost.”
Pollution from ships creates lines of clouds that can stretch hundreds of miles (Image: NASA Earth Observatory)
Freda Fung told China Dialogue that the Ministry of Transport’s implementation of the sulphur restrictions prevents ships from dumping wash water from sulphur scrubbers in an ECA. Scrubbers also take up space that could be used for cargo.
Low-sulphur fuel – expensive, for now
Although low-sulphur fuel has become the shipping industry’s main choice, it remains pricey – $200-250 more expensive per tonne than 3.5 percent sulphur fuel.
Nature Fields, an NGO working on port air pollution, said in an article on its WeChat account that research shows this increases the cost of each trip through an ECA by 100,000 euros (about 770,000 yuan). According to Nature Fields, this may make shipping firms more inclined to pay fines than use the pricier fuel.
Commenting on this at the media event, Peng Chuangsheng said low-sulphur fuel will become cheaper as it is more widely used, while high-sulphur fuel will get more expensive as production and demand drops, shrinking the gap between the two. Freda Fung told China Dialogue that the shipping industry has always had a surcharge system, whereby shipping firms pass on increased fuel costs to cargo owners. The major firms raised those surcharges in anticipation of the new restrictions and are not themselves bearing all the extra cost, making the switch easier.
Recent sharp drops in crude oil future prices have also affected low-sulphur fuel prices. According to the JOC Group, a shipping information and services provider, the cost of very low-sulphur fuel in Singapore has collapsed by 70 percent since early January, from $740 a tonne on January 8 to $218 on April 21. Rotterdam has seen a similar fall: 67 percent since early January.
Freda Fung also said price isn’t the only factor shipping firms consider when deciding to comply with an ECA. Breaches would mean reputational damage, fines and other economic losses. In China, ships found breaching ECA rules will be singled out by regulators for particular scrutiny and are more likely to be boarded for checks. This means more time at anchor and so delays to schedules and damaged reputations. Overseas, vessels may end up on blacklists, perhaps even publicly, again damaging reputations. Fung stressed: “Strict enforcement, oversight and transparency are crucial to encouraging the use of compliant fuel oil.”
Monitoring still weak, fines should be higher
If the restrictions are to be effective, strict enforcement by the marine authorities is needed.
Currently, officials in large ports around the world are boarding ships to check emissions. Data collected by the Tianjin Binhai Environmental Protection Advisory Service Centre shows that in 2018 over 20,000 routine checks were made at Tianjin’s port – but in 80 percent of those checks no vessels were boarded. The huge number of vessels and complex itineraries is a major challenge for marine law enforcement officials.
Freda Fung agreed. She said that monitoring and oversight capacity in the three areas where ECA trials were run in 2016 – the Yangtze and Pearl deltas and the Bohai Sea – is in place, but in smaller port areas more staff are needed.
Responding to this, Li Mingjun, senior engineer with the environmental resources bureau of the Ministry of Transport’s Planning Research Institute, said at the media event that a big data analysis of records could find the companies and vessels with a history of breaches, and identify the routes and refuelling points more likely to see illegal behavior. This would allow the authorities to make early decisions about which vessels should be checked.
Technology has a greater deterrent effect
Ma Dong, project manager with the policy and research standards office at the Ministry of Ecology and Environment’s Vehicular Emissions Control Centre, added that technology will be needed in the future – throwing staff at the problem is not enough. He pointed out that Hong Kong University of Science and Technology has a team researching automated monitoring, while remote sensing is being researched in Shanghai. “Technology has a greater deterrent effect,” he said, “and we should tell the industry that we can monitor them, and make sure they don’t take chances.”
Ma also hopes to see joint enforcement across regions. Even within China, integration across regions would help sharing of information and methods. Internationally, more exchange and cooperation across the Belt and Road Initiative countries would help China share enforcement data, such as breaches, with international regulators, thereby reducing enforcement costs.
Another issue is that low fines may be reducing the impact of law enforcement. Currently, fines in China are imposed according to Article 106 of the Air Pollution Law – which only allows for relatively small fines, of between 10,000 ($1,400) and 100,000 ($14,000) yuan.
In practice, fines have stayed at the lower end of that range. A study by Clean Air Asia and Nature Fields found that fines issued in China were far below the maximum allowed. Of 261 fines issued in 2016-2017, the average fine for using non-compliant fuel was only 15,000 yuan. Cheng HuiHui, senior researcher with Clean Air Asia pointed out there is no link between the size of the fine and the quality of the fuel: In Shenzhen, two vessels were given fines of 10,000 yuan – despite the fact that one was using fuel with 37 times the permitted quantities of sulphur, and the other only 2.4 times. This reduces the deterrent effect of the restrictions. They therefore called for the upper limit on fines to be removed.
Gao Baiyu is a researcher on China Dialogue’s Beijing editorial team. She has a master’s degree in computational journalism from Syracuse University.
This article appears courtesy of China Dialogue Ocean and may be found in its original form here.
A massive fire broke out at the Port of Beirut on Thursday, incinerating a warehouse full of tires and oil within the port’s free zone. The same area was heavily damaged in the ammonium nitrate explosion that leveled the central port area and the adjacent waterfront on August 4. According to Lebanon’s civil defense agency, […]
Over the course of the past five days, the Australian Maritime Safety Authority arranged a medical intervention for an injured aboard a freighter in the Indian Ocean. On Saturday evening, the Spliethoff tweendecker Dolfijngracht called for assistance while under way about 1,000 nauical miles off the coast of Western Australia. A crewmember had sustained serious […]
The naval forces of the US and Bahrain recently staged a joint force training exercise which showcased the interoperability between coalition warships operating I the Arabian Gulf. Coalition Task Force Sentinel executed combined exercise Sentinel Shield supporting Sentry and Sentinel patrols in the coalition’s area of operations. The guided-missile destroyer USS John Paul Jones and […]
The U-Freight Group (UFL), with its considerable involvement in eCommerce logistics, says that the latest statistics showing that global e-commerce sales hit $25.6 trillion in 2018 are a further vindication of its decision to enter this sector of the international freight market several years ago. The latest available estimates, up 8% from 2017, were recently […]
DSV Belgium has solid experience in the transport of pharmaceutical products for different customers. With a pharma hub based at Brussels Airport a lot of experience and know-how has been built up over the years. Last weekend, the forwarder handled one hundred million mouth masks, an important milestone for its Belgian organisation that has put […]
The UK government’s new post-Brexit tariff regime will result in both winners and losers. The new regime is set to replace the European Union’s Common External Tariff from the end of the Brexit Transition Period on December 31, 2020. The UK’s commitment to the ongoing Brexit process and ending the UK’s transition from EU membership […]
The National Transportation Safety Board (NTSB) has released a Marine Accident Brief about an accident that occurred on April 15, 2019, involving the towing vessel DeJeanne Maria which struck the end of a submerged dredge pipeline while pushing two spud barges to the Gulf of Mexico. The incident occurred on the Mississippi River in Pass […]
With close to 100 daily cargo flights operated to a destination network spanning more than 65 cities across six continents, Emirates SkyCargo is delivering essential supplies and commodities to people around the world. The air cargo carrier is currently operating 11 Boeing 777 freighter aircraft, each with a capacity to transport about 100 tonnes of […]
Astral Aviation has increased its intra-African network with cargo freighters during the pandemic. While there has been a reduction in capacity to, from, and within Africa, which has been caused by a stoppage of passenger flights and limited frequencies on freighter aircraft, Astral Aviation continues to operate cargo freighters from its Nairobi hub to 13 destinations […]
Best known as a leading passenger airport serving Germany’s most populated federal state North Rhine-Westphalia, Düsseldorf has become transformed into a vital distribution point, during the COVID 19 pandemic, for medical equipment and other life-saving goods, mostly from China. Gerton Hulsman, managing director of cargo operations, reports that the handling teams are working hard to […]
Global commercial aviation charter company Albion Aviation Group is reporting that it is seeing a considerable uptake in its professional cargo broker training courses from the current global pandemic crisis and surge in charter demand. “We have completed a number webinar courses for a whole of host of companies, looking to manage their own cargo […]
Operators can continue to use pilots and other crew members who have unable to comply with certain training, recent experience, testing, and checking requirements due to the COVID-19 outbreak in support of essential operations. Additionally, this Special Federal Aviation Regulation (SFAR) provides regulatory relief to certain persons and pilot schools unable to meet duration and […]
Emirates SkyCargo has expanded its weekly scheduled cargo flight operations to cover 75 destinations across six continents. Through its wider reach, Emirates SkyCargo is able to transport essential commodities and other urgently needed cargo more rapidly across the world, allowing exporters and importers across markets to benefit from direct access to widebody cargo capacity. Some […]
Callan Marine is serving as the prime contractor to the Texas Department of Transportation for a maintenance dredging project located at the Bolivar Ferry Terminal, in Galveston, Texas. Work began in May and is estimated to be complete in late July 2020. The project consists of the removal of 600,000 cubic yards of material and […]
Network Airline Management and TAAG Angola Airlines are pleased to announce the renewal of their long-term freighter aircraft contract by an additional 12 months, sealing an ongoing partnership for the foreseeable future. Operating a regular weekly scheduled service from Liege, Belgium, to the capital of Angola, Luanda, Network Airline Management provides a Boeing 747-400F aircraft […]
Qatar Airways Cargo transported 56 SkyCell containers with vaccines from one of the largest vaccine manufacturers worldwide on its scheduled freighter and belly-hold cargo flights for its customer, CEVA Logistics. The 54-tonne shipment consisting of pneumococcal and varicella vaccines were flown from Brussels to Mumbai via the carrier’s hub in Doha on two separate flights. […]