A new study reveals that sulphur levels at Canada’s major port cities are now equal to typical urban sites as a result of ships using 0.1% sulphur fuel or scrubbers within North America’s Emissions Control Area (ECA). The cleaner air has reduced health risks, according to the findings published in Science of The Total Environment Oct. 15 (earlier online).
Health concerns and related costs (including more sick days) drove ECA’s implementation. By removing some 96% of the sulphur in coastal areas, the estimated health benefits amounted to $1.1 billion annually in Canada and $15 billion yearly in the more populous United States.
“In Canada, the primary benefit was to Greater Vancouver where air is walled by mountains,” says Paul Topping, the Chamber of Marine Commerce’s Director of Regulatory and Environmental Affairs. “However, benefits were seen across the country.”
Under ECA, sulphur content along coastal shipping routes was lowered from 3.5% to 1% in 2012, and ultimately 0.1% in 2015. Before ECA’s establishment, the harbour regions of Halifax, Quebec City, Montreal, Vancouver and Victoria had consistently been identified as areas for high levels of sulphur dioxide, a key air pollutant. As anticipated, levels decreased at all these locations over ECA’s 2010-2016 implementation.
Great Lakes shipping needed special solution
When it came to the Great Lakes, the challenge was implementing ECA in a way that wouldn’t bankrupt marine shipping customers or prompt a switch to land transportation.
“It was only after we explained the potential impacts to the Chamber of Marine Commerce, and its members joined us in relating to the government the potential economic harm, that we saw more flexibility,” says Kirk Jones, former president of the Canadian Shipowners Association (CSA). “In fact, it was the realization that we had to have our customers at the negotiating table that led to me to support the merger of the CSA with CMC.”
The 0.1 % requirement necessitated a dramatic shift within Canada. “Domestic ships were already using between 1.5% and 1.7%,” Topping recalls. “However, unlike oceangoing vessels that could switch back to heavy fuel outside the ECA, domestic ships would have to use 0.1 % constantly, which represented a huge cost increase.”
Canada was caught off guard when the U.S. Environmental Protection Agency (EPA) included the Great Lakes within the ECA, according to Topping who then worked for Transport Canada. The U.S. Congress subsequently exempted American steamships to avoid impeding American steel production.
“The American fleet already had an advantage as most of their ships used diesel fuel,” Topping explains. “Then the 13 steamships of their fleet in the Great Lakes were exempted permanently and subsequently so were all U.S. steamships in coastal waters until 2020.”
The U.S. actions put Canada’s lakers at a serious disadvantage. “Just giving companies more time to implement 0.1% was rejected because agencies feared little would be done and they’d later asked for additional time,” Topping relates.
Fleet averaging allowed Canadians to buy more eco-ships
“It was actually seeing contrasting proposals at an EPA meeting that made me think of fleet averaging – reducing sulphur by annual increments within each of the company fleets rather than requiring every vessel to comply immediately,” Topping shares. “Progress could be assured by meeting annual reduction targets.”
Canadian ship owners welcomed the approach. They were already seeking to buy 14 new ships if Canada lifted its 25% duty on foreign-built vessels. Fleet averaging would focus on achieving yearly reductions through new efficient vessels rather than running old ships on expensive diesel. A system was proposed so that reductions made ahead of schedule would be credited later when it became more difficult to achieve the lowest sulphur limits.
“Earlier implementation meant cleaner air sooner,” Jones notes. The EPA had to be convinced. “What sold the EPA was the analysis showing that, with fleet averaging, 16 new vessels would be built, with the two extra ships achieving more greenhouse gas reductions,” Topping recalls.
Kept on track with yearly reporting, ship owners were prepared for the January 2020 deadline when the 0.1% limit applied to all. “Fleet averaging was a huge success with 10 additional new vessels actually entering service, by industry putting money into new-builds rather than operating soon-to-be-retired vessels on diesel,” Topping says.
ECA approach provides lessons for carbon reductions
From 2008 to 2012, 0.1% sulphur fuel cost about $1,200 per tonne, compared to $800 for heavy fuel oil. “Fuel at the time represented 60% of a vessel’s operating budget,” Topping shares.
The price difference garnered some interest in scrubbers, but exhaust gas cleaning systems represented a major investment in brand-new technologies.
When Algoma Central launched its Equinox Class new-build program in 2010 with an order for eight vessels, the budget included $2 million per ship to install scrubbers. The company has since installed scrubbers aboard 12 vessels, including the 10 Equinox Class vessels within its fleet.
“Our expectation was that as the new rules came into effect, there would be a larger price differential that would give us a fairly quick payback,” says Peter Winkley, Algoma Central’s CFO. “Being an early adopter has cost us more in maintenance and upgrades, but we’ve still fared well with scrubbers.”
Scrubbers earned Algoma credits that permitted further fleet renewal investments. “If you encourage people to adopt new technology, they’ll likely do so,” Winkley says. “As we look at other challenges, including ballast water treatment or carbon reduction, it’s a lot easier to implement change over a period of time.”
Jones says regulators must explore possible unintended consequences. “It’s important to be open to different ways to achieve a goal.”
Topping agrees. “Before you regulate, be open to negotiation, prepared to change your narrative,” he emphasizes. “Look at issues holistically: At that time, Canadian ships were already using fuel with half the 3.5% sulphur limit and were keen to invest in new ships. Now, we want to build on that for new rules on carbon emissions.”