. . . or so the petroleum industry used to say, back in the 1970's. That's proving true in the maritime shipping industry right now, as major change looms next year. We don't think much about an industry that's "out of sight, out of mind" for most of us, but it has a huge impact on global pollution, and changing that is going to require major changes to the way we fuel the ships that fuel the world's economy. Forbes reports:
A United Nations mandate on the shipping industry to remove up to 85% of the sulfur content from its fuel to cut 3% of global carbon dioxide emissions could throw the industry into massive disruption.
Some analysts argue it could lead to fuel supply and demand imbalances and arbitrage opportunities that could extend crude oil price volatility.
. . .
In 2016, the United Nations’ International Maritime Organization (IMO) gave the global shipping industry four years to make sure the 90,000 vessels at sea burn 85% less sulfur by Jan. 1, 2020.
The IMO standard requires ships to produce a maximum of 0.5% in sulfur emissions rather than the present 3.5% limit.
“Implications go beyond shipping and refining. Changes will be felt in the entire commodity landscape, including petrochemicals, road fuels, and airlines,” said Aftab Saleem, KPMG’s director of its risk analytics advisory, which helps a large swath of the global shipping industry comply with the standard. “Costs are going to go up. This has huge, huge implications across the supply chain, all the way back to producers.”
. . .
Oceana says if global shipping were a country, only the U.S., China, Russia, India and Japan would emit more carbon into the atmosphere than the global shipping industry.
KPMG Global says 15 of the biggest ships emit more sulfur dioxide and nitrogen dioxide than all of the world’s cars combined, and one million cars emit as much particulate matter as one cruise ship produces.
There's more at the link.
If you're interested in global economics, it's worth reading the Forbes article in full. Consider that well over 80% of global trade moves by sea, and you'll get some idea of the impact of the current changes. They have to be paid for, so freight rates will have to be adjusted, and that in turn will influence the price of goods and services worldwide.
What's more, a major part of the world's merchant fleet (particularly that concentrated in the Third World) won't have completed the necessary mechanical and engineering changes in time for the implementation of the new standards. What's going to happen? In theory, at least, they'll be barred from most, if not all, First World ports - but there won't be enough carrying capacity for world trade without them. Pollution control is going to run headlong into economic practicality, as far as many ships are concerned.
The cost of installing fuel scrubbers is plus-or-minus $1 million per ship - and many older merchant vessels aren't worth that much. Will they be scrapped? The cost of replacing them will be far greater than the cost of a scrubber. And what about open-loop scrubbers, which take the pollution out of the funnel smoke, only to discharge it into the sea? Are we to replace air pollution with sea pollution? Many First World ports have banned open-loop scrubbers for that reason . . . but many ships are nevertheless going to be equipped with them, as the only available option in the short term. If the regulations are strictly applied, will there be enough "clean" ships to meet the new requirements? I suspect not, for at least the first few years.
This is going to get very interesting and very complicated. It'll be worth paying attention, because we're all going to feel the after-effects in our wallets.