ECSA: Shipowners’ Hopes Dashed Over LNG Infrastructures

“Shipowners’ hopes for decisive action with regard to LNG refueling points have been shattered,” said Patrick Verhoeven, the European Community Shipowners’ Associations (ECSA) Secretary General.

“While the 2015 deadline for the compliance with the requirements of the EU Sulphur Directive is fast approaching and with time running out, it was our hope that the EU would break the LNG chicken and egg dilemma by deciding that major European ports will need to have LNG refueling points in place by latest 2020 so as to coincide with the 0.5% limit in sulphur content of bunker fuels in EU waters,” he added.

Member States, the European Commission and the European Parliament have agreed in the context of informal negotiations (trialogue) on a text that would considerably weaken the initial Commission proposal for a Directive on the deployment of alternative fuels infrastructure in Europe.

According to the agreement, Member States will have to ensure that “a sufficient number” of big European ports have developed LNG refueling infrastructure for maritime transport by 2025.

The EU Sulphur Directive adopted in 2012 aims at the reduction of sulphur emissions from maritime transport in the SECAs (Sulphur Emission Control Areas – Baltic Sea, North Sea and the English Channel) by rendering the recent IMO (International Maritime Organisation) rules mandatory in the EU. According to the Directive, sulphur content in marine bunker fuels will have to be reduced to 0.1% by 01 January 2015 in the existing European SECAs, and to 0.5% by 2020 in the rest of Europe.

LNG has been hailed by many as a type of fuel that, despite some drawbacks, could effectively cut down on various emissions such as CO2 and especially sulphur emissions, thus allowing shipping to comply with international norms. However, given the size of the fleet, the cost of switching to LNG and the evident lack of time, the task EU shipowners are faced with is gargantuan.

One of the concerns expressed by the shipping industry has always been that costly investments in LNG are not conceivable as long as the LNG distribution network is in its infancy and far from being complete. On the other hand, ports are not keen to invest in alternative fuel infrastructure as long as the demand from the shipping industry is weak.

By making the availability of LNG refueling points in major EU ports mandatory, the EU would have been able to break the dilemma of the chicken and egg and could have helped EU shipowners overcome an important hurdle.

“Our disappointment is all the greater not only because the 2025 deadline, as agreed between the Commission, the Council and the European Parliament, will only come five years after the 2020 deadline by which shipowners across the EU will have to switch to compliant fuel, but also because this particular Directive seemed to be the only remaining field in which the EU could effectively lend a helping hand to the shipping industry in its efforts to meet the sulphur requirements both inside and outside SECA areas. The deadline of 2025 is simply too far to have an impact. We urge the three institutional players to reconsider their position on the matter at their next trialogue meeting on 19 March, lest this become a missed opportunity to assist the shipping industry in a meaningful way,” concluded Patrick Verhoeven.

Source: ECSA, March 12, 2014