Taming Emissions
27th April 2015 15:20 GMT

'Slow steaming is here to stay' was sounding a little less convincing at the beginning of 2015.

Crude oil prices had dropped some 60% in the previous seven months, dragging down bunker prices in their wake.

Suddenly the economic case for cutting fuel consumption by throttling back on engine power looked a lot shakier than it did in 2009.

Warren Buffett is credited with the quip: "You see who has been swimming naked when the tide goes out." He was talking about investments, of course, and how the weakness of a position can be disguised by a rising market.  It's not an exact parallel, but something of the same seems to be going on here. The truth about shipping's commitment to slow steaming on environmental grounds has been laid bare. The truth, it seems, was that the commitment was pretty shallow.

Few of the discussions about returning vessels to faster speeds have focused on environmental issues. Some maritime commentators have taken a broad, cross-industry view. They've pointed out that slow steaming addresses problems of over capacity, particularly in the the container shipping sector.  But if freight rates firm and bunker prices fall, individual shipping lines are no more capable of acting in the interests of the industry as a whole than OPEC members are of protecting the interests of their cartel. As for a collective commitment to the environment - forget it.

This isn't grounds for a self-righteous critique the shipping industry. Shipping companies are run for profit. They can't operate on good intentions. If they sacrifice profit for policy they will be eaten alive.  If it turns out that slow steaming - and the reduction in emissions it generates  -  beats an embarrassed  retreat, the lesson is clear: Protecting the environment is not something the market does by itself. International regulation is essential.

That's not to to forget the huge difference between good regulation and poor regulation. There was, and remains, industry concern about the 0.10% sulphur caps introduced in emission control areas (ECAs). There is huge concern about the proposal for a global sulphur cap of 0.50% for bunker fuel - possibly as early as 2020.

The shipping industry would be mad not to point out the problems that clumsy legislation can pose. But behind the lobbying there has to be recognition that without regulation environmental issues would be a footnote in corporate discussions.

It is always tempting to say the industry is facing tempestuous times. Oil prices have shown wild fluctuations. A major global bunker player has collapsed leaving a trail of disputed invoices that run into millions of dollars. The future of alternatives to conventional bunker fuel is in doubt. This is not, some could argue, the time to be driving forward with an environmental agenda.

It is never 'the time' to do something inconvenient and costly but regulation, ideally endorsed by the International Maritime Organization (IMO), offers the best hope of taming emissions.

Whatever happens to oil prices in 2015, the environment is too important to be left to the vagaries of the market.

This text first appeared as the 'Commentary' column in the February 2015 issue of the Bunker Bulletin, the Bunkerworld magazine.

Nick Jameson,
27th April 2015 15:20 GMT

Comments on this Blog
Heinz Otto
2nd May 2015
Dear Mr. Nick Jameson,
one of the conclusions, can be:
"To tame emissions, take sails again", so I thank you, Nick Jameson for these words:
"Whatever happens to oil prices in 2015, the environment is too important to be left to the vagaries of the market".
Please ask here for more Information and poste it in your Service:
http://www.nsrsail.eu/wp-content/uploads/2015/02/Pre-announcement-Final-Conference-Delft-SAIL-2015-02-26.pdf or here:
Heinz Otto - @windotto
agoetfme agoetfme
3rd September 2016
agoetfme agoetfme
3rd September 2016

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