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Industry facing half a trillion dollar bill, warns ICS chairman
The chairman of the International Chamber of Shipping (ICS) has this week claimed that the cost to shipping of impending legislation to protect the environment could cost the industry as much as half a trillion US dollars between 2015 and 2025.
Addressing delegates at the opening of the Nor-Shipping event in the Norwegian capital of Oslo on Tuesday, Masamichi Morooka said that 50 billion dollars would be needed every single year.
“As many companies struggle to survive during the difficult years ahead, we must persuade governments to avoid placing yet more straws that risk breaking the shipowner’s back – and the straws to which I refer are the impending costs of environmental legislation,” said Morooka.
The switch to low sulphur distillate fuel will incur much of this cost if the industry wide sulphur cap of 0.5 percent is given the go-ahead from 2020, which will be in addition to the 0.1 percent sulphur requirements expected to be enforced in Emission Control Areas in both North West Europe and North America from 2015. There will also be considerable costs in the installation of new ballast water treatment equipment and the possibility of even further funds needed as part of shipping’s contribution to the UNFCCC Green Climate Fund.
“The imminent switch to vastly more expensive, low sulphur distillate fuel is a very serious concern which is compounded by worries about the adequacy of supply and the dangers of modal shift,” added Morooka.
He explained that the key message that the ICS was communicating to regulators was the need for greater focus to be given to the economic sustainability of shipping, backed up by evidence of years of continuous improvement of shipping’s environmental performance.
“Many of the expensive environmental regulations that are about to enter into force were conceived in a different world, at a time when shipping markets were booming and finance for retrofitting had not dried up,” said Morooka.
In a statement, the ICS also stressed that although the protection of the environment is a major priority for the industry as a whole, the economic situation requires a degree of pragmatism in regards to enforcing environmental regulations.
“Unless this is understood, there is a danger of creating real barriers to investment in our industry as we hopefully move closer to recovery,” added Morooka.
