A recent article in The Times of Malta stated that, in 2017, road vehicles generated 3.4 tonnes of toxic sulphur oxides (SOx) compared to 502.8 tonnes from the 83 cruise ships that visited the island.
According to the campaign group Transport & Environment (T & E), the reason for the extremely high emissions are due to overly lax standards in respect of marine fuel quality and engine emissions, made worse by the large size of marine engines and the time spent in port.
"Luxury cruise ships are floating cities powered by some of the dirtiest fuel possible", according to T&E's shipping policy manager, Faig Abbasov. Of course, apart from cruise ships, there is also a larger number of maritime vessels entering our ports carrying transhipment cargo. One can appreciate that maritime transport is the backbone of international trade and yet, unfortunately, it is also a source of pollution, with adverse impacts on human health and ecosystems.
Over the centuries, the Mediterranean Sea has been host to the world's busiest shipping lanes and it is believed to be the second busiest cruising region in the world, after the Caribbean. Facts show that ship movements, which often occur close to the densely populated coasts of the Mediterranean countries, result in emissions of toxic gases and particulate matter (PM) from fuel combustion, including SOx.
This is a major concern to the port authorities but, thanks to measures instigated by the International Maritime Organization (IMO), next year there will be tougher rules curtailing sulphur emissions from all ships. The IMO is an agency established by the United Nations to promote maritime safety which currently has 167 member states and three associate members.
This new regulation is hailed as the biggest shake-up for the oil and shipping industries in decades. In a nutshell, starting from 1 January 2020, the IMO will ban ships from using fuel with a sulphur content above 0.5 per cent, compared to the current 3.5 per cent.
The clock is ticking ahead of dramatic changes to the fuel that global shipping fleets are allowed to burn. Although the new regulations will dramatically reduce sulphur levels in bunker fuel, it is a harbinger of some repercussions for oil prices next year. The rule can be circumvented by owners who decide to fit ships with elaborate and bulky sulphur-cleaning devices known as 'scrubbers'. By using this option, they will be allowed to continue burning high-sulphur fuel.
Apart from the use of low sulphur fuel of 0.5 per cent, there is still an issue regarding whether jurisdictions and ports will eventually restrict the use of certain types of scrubbers, due to uncertainty regarding the effects of the waste water that is pumped into the sea. One of the main risks associated with expensive scrubber fittings is that not all of them will be accepted worldwide and that, in the future, new regulations might come into effect to prevent scrubbers qualifying as an alternative measure.
So far, 10 environmental groups have called on the IMO to impose an immediate ban on the use of scrubbers and it is most likely that, next year, ship owners will opt for other sources of cleaner fuel such as liquefied natural gas (LNG). Failure to comply with the global regulations will result in fines or vessels being detained, which could affect vital requirements such as insurance cover.
Readers may be surprised to learn that, citing a study by the IMO, it is expected that over 570,000 premature deaths will be prevented between 2020 and 2025 by the introduction of tighter fuel guidelines. As an island with a growing amount of heavy maritime traffic, there is no hiding the fact that exposure to such pollutants is linked to lung cancer, cardiovascular illnesses and asthma.
Environmentalists warn us that ecosystems suffer from the deposition of SO4 particles which, in turn, increase the acidification of surface water and soil. It is proven that sulphate also takes a toll on human-made buildings and infrastructure, including our vulnerable world heritage sites such as the Valletta bastions and fortifications.
In the worst case scenario, the island may suffer from low visibility when acute concentrations culminate in the air. It is accepted that SO4 increases haze and reduces visibility and in the atmosphere, it can lead to acid rain, which can harm crops, trees and aquatic species and contributes to the gradual acidification of the Mediterranean Sea.
Taking action to protect our growing cruise liner tourist industry and - even more important, to sustain a healthy living environment - it is a Godsend that the IMO has finally mandated that pollution from ships must be reduced. In fact, experts advise that such IMO initiatives in taking bold action to curb air pollution are compelling.
They could not have come a moment too soon. As an island with a beautiful clear sea, we must also protect our aquatic systems. A recent study shows that widespread reductions in wet and dry SOx and PM depositions have a positive impact on aquatic systems. Naturally such controls come at a cost to ship owners which will, eventually, be passed on to consumers by way of higher freight tariffs on cargo.
To give some perspective on the impact of this measure, it is interesting to note that, in 2017, the marine sector consumed 3.8 million barrels of fuel oil a day. It is, in fact, such a heavy user that it accounts for half the global demand for fuel oil. From an economic perspective, one can easily deduce that these IMO sulphur regulations have the potential to be highly disruptive to the pricing and availability of compliant fuels.
As stated above, one contemplates that the costs of ocean-going freight will increase, as the marine sector is forced to buy low sulphur fuel. It is widely expected that, next year, there will be a growing demand for middle distillates which could result in upward price pressure on fuels such as diesel and jet fuel.
Most ships will switch to using low sulphur fuel such as LNG to comply with the regulations. However, changing to such fuels will cause the industry a few issues because vessels running on LNG will need larger storage tanks which will leave less space for cargo in containers. Rumour has it that a future increase in demand for LNG fuels may be as high as 50 per cent.
In conclusion, one hails the IMO for its zeal in cutting sulphur emissions which, in the case of Malta as a busy port destination, will reap high dividends to the community. Naturally, this rule will result in more controls being introduced in ports and harbours on the part of our maritime authorities, who are obliged to oversee the necessary vigilance over maritime traffic next year.
George M. Mangion is a senior partner of an audit and consultancy firm, and has over 25 years' experience in accounting, taxation, financial and consultancy services.
He can be contacted at [email protected] or on +356 21493041.