Tuesday, March 4, 2014

Fuel Regulation Increases Pollution, Shipping Leaders Testify

By Mark Edward Nero

An incoming maritime fuel regulation from the Environmental Protection Agency could crowd roads and increase onshore air pollution, shipping industry leaders testified before a Congressional committee in Washington DC March 4.

At issue was a new rule requiring the use of high-cost, ultra-low sulfur fuels in ships operating within the 200 nautical mile boundary of the North American Emission Control Area, or ECA. The rule was discussed during a maritime transportation regulations hearing before the US House Committee on Transportation and Infrastructure’s Subcommittee on Coast Guard and Maritime Transportation.

Shipping industry leaders, including Rod Jones, President and CEO of the CSL Group, and Bill Terry of Eagle Rock Aggregates, testified that the new rule, intended to curb harmful emissions, could actually result in the opposite effect, while increasing shipping costs and clogging roadways.

The CSL Group operates throughout the Americas and globally, specializing in short sea shipping. Eagle Rock Aggregates, based in Richmond, California, relies on short sea shipping to transport the building materials it produces, which are used for the construction of roadways and buildings.

Jones’ testimony highlighted concerns that the EPA failed to consider all sectors of the shipping industry in setting this new standard, particularly vessels engaged in short sea shipping. The EPA calculated anticipated cost increases at three percent, but focused only on trans-oceanic shipping, whose vessels travel within the ECA for only a fraction of their voyage. For short sea shipping vessels, which spend nearly all of their time within the ECA, the new fuel requirement means cost increases 10 times that of the EPA’s estimates, in turn spelling higher shipping prices and a greater reliance on less environmentally-friendly land-based shipping modes, like truck and rail.

“CSL calculated that, on average, each ship would bear about $815,000 of additional annual fuel costs,” Jones said in his written testimony. “For CSL alone, the cost could exceed 14 million dollars per year.”

In his testimony, Terry described the new rule’s widespread impacts, saying that for construction companies such as his, increased shipping costs mean higher prices for construction materials.

“The ECA will now penalize our business model that by all accounts, is eco-friendly based on the favorability of marine transportation,” he said.

Jones and Terry recommended that the EPA adjust its policy so that short sea shipping vessels are required to use the new, more expensive fuel mandated by the rule up to 50 nautical miles from shore, instead of to the ECA’s boundary of 200 nm.