A majority of the shipping industry in the Baltic Sea, the North Sea and the English Channel (SECA) have switched fuel as of January 2015 to comply with the new sulphur emission regulation. Gasoil or marine diesel are, post the implementation of the directive, predominant over the previously popular low sulphur fuel oil. As a consequence, air borne sulphur emissions has decreased drastically and several studies indicate only minor changes in green house gas (GHG) emissions as a result of the fuel switch.
This report disputes such claims and instead argues that the increase in indirect emissions of CO2 is severely underestimated, with a theoretical increase of 112 million tonnes of CO2 and statistical support for 93 million tonnes of CO2 per annum caused by the fuel switch in the European SECA region. It is important to note that this increase in overall emissions does not stand in contrast to reduced tailpipe emissions from the shipping industry.
The increase in CO2 emissions can be detected when observing refinery crude oil intake, pre and post the new regulation was implemented, that has increased as a consequence of the shipping industry demand switch from a low value to a high value oil product. Increased crude oil intake is in turn equivalent to increased emissions of CO2 if the share of oil products being stored or used for other purposes than combustion is constant.
During the period November 2012 to November 2015, fuel oil price averaged between 60% and 80%of crude oil whereas price for gasoil ranged between 110% and 180% to that of crude oil. When assessing CO2 emissions from sub products in such a system, low value products often are attributed with an unjustifiable share of CO2 emissions. When assessing effects of the fuel switch in the SECA region, where an entire industry has switched fuel over night, overlooking how a demand shift affects demand for crude oil, is a fallacy.
Shipping companies that have installed scrubbers, an exhaust gas cleaning device, can use fuel oil and still comply with the stricter sulphur regulation and therefore do not contribute to increased indirect CO2 emissions. Incentives for reducing CO2 should therefore be directed to increase the use of scrubbers in the maritime industry. Preliminary estimates suggest that reducing CO2 emissions with the use of scrubbers could have a very low or negative cost and are most likely on par with the European emission trading system.
The Full Report Can Be found Here