June 4 - The shipping industry faces USD500 billion in additional costs as a result of impending environmental legislation, says the International Chamber of Shipping (ICS).
Speaking to delegates at the Nor-Shipping event in Olso, Norway, Masamichi Morooka, chairman of ICS, stated that the huge additional industry-wide cost would arise between 2015 and 2025 - representing USD50 billion of additional capital and operating costs per-year over the course of a decade.
"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.
According to ICS, most of these costs will arise from a switch to low sulphur distillate fuel - assuming a 0.5 percent global sulphur cap comes into effect in 2020 - in addition to a 0.1 percent sulphur requirement that is expected to be enforced in emission control areas in northwest Europe and North America in 2015. The cost of installing new ballast water treatment systems will also put significant pressure on capital costs, as will the contribution that the shipping industry might be forced to make towards the United Nations Framework Convention on Climate Change (UNFCCC) Green Climate Fund.
Low sulphur distillate fuels are significantly more expensive than current bunker fuels, "a very serious concern which is compounded by worries about the adequacy of supply and the dangers of modal shift", Morooka added.
Morooka went on to say that the environment must remain a priority for the shipping industry although a caution must be exercised before implementing sweeping regulatory changes: "Unless this is understood, there is a danger of creating real barriers to investment in our industry as we hopefully move closer to recovery," he claimed.