Bunker suppliers are particularly interested in a viable Emissions Trading Scheme (ETS) that would be acceptable to both the EC and the shipping industry.

The fundamental principles of an ETS would involve agreeing a ceiling for emissions within the designated region which puts a limit on the overall level of permissable sulphur emissions.

This would eliminate the need to impose a limit on the sulphur contents of the fuel. The value of the ceiling or 'cap' is that it would ensure sustainable emissions reduction and environmental improvement, whereas the advantages of targetting sulphur levels would be eroded over time as the volume of shipping increased.

Within the cap there would need to be ships operating below permissable emissions levels generating credits and those operating above them who would need to purchase these surplus credits. Typically, ships in surplus may be those which work permanently within the controlled region and for which it would be economically viable to fit clean technologies. It is estimated that on board clean-up technologies might cost $70 to reduce each tonne of SOx emission compared to $500 to achieve a similar reduction using low sulphur fuel.

Of relevance to ports, an ETS would reduce or remove the need to create additional bunkering infrastructure which itself would have an environmental impact.

A requirement to supply large volumes of low sulphur fuel would necessitate additional storage tanks and delivery facilities in ports where planning permission and/or available land may not be available.

ETS would be an enabling mechanism, with the actual trade in emission credits made directly and privately between operators, overseen by a regulatory body.

Last week's London seminar was a step towards all stakeholders understanding and agreeing principles which may lead to a suitable model and means of operation. Reference was made to the Clean Air Canada philosophy, which claims that, 'whilst trading in itself does not reduce emissions, it increases industry's flexibility to achieve emissions objectives in a more cost-effective way'.

MJ Information No: 17132