Burdens on the operational costs of coastal and short sea shipping are brought to our country by environmental regulations. Charges that sooner or later will have an impact on the prices of tickets and products sold on ships.
And if for the EU Emissions Trading Scheme, which came into force this year, and for FuelEU, which will come into force in 2025, our country obtained an exemption until the end of 2029 (for coastal shipping), the it doesn’t even happen. of yet another strange-sounding term: “ECA emission control zone”, with which the Mediterranean was designated.
Essentially, this means that all ships traveling in the Mediterranean Sea from May 2025 will have to use fuel with a sulfur content of up to 0.1%.
Its price, according to the “N” shipowners, is today around US$140 more expensive than that of VLSFO, which has a sulfur content of 0.5% and whose price in the port of Piraeus is an average of US$650 per ton. , approx.
With regard to Greek navigation, the use of ULSFO will be mandatory for all conventional ships that do not have scrubbers installed, which are systems that “clean” sulfur, but are not installed on more than six ships in Greek navigation.
The regulations do not cover speedboats, which use diesel, which already has a content of 0.1%.
The ECA areas
At the same time, the cost of short-sea ships serving the needs of the country’s regions is expected to increase. Especially with regard to the short sea fleet, it is very old – on average – and it is difficult to invest in scrubbers.
These are the areas where the strictest controls and conditions are imposed to reduce air pollution from ships. These conditions concern the control of the above-mentioned pollutants and their requirements and geographical limits are established in Annex VI of MARPOL 1997.
There are currently four Emission Control Areas (ECAs): the Baltic Sea, the North Sea, the North American Emission Control Area and the American Caribbean coast.
All Emission Control Areas are subject to increased requirements for sulfur oxides, but only U.S. Emission Control Areas have increased requirements for nitrogen oxides, or NOx.
VLSFO
Current fuel demand in the Mediterranean is estimated at approximately 21.5 million tonnes, with >50% consisting of 0.5% VLSFO.
In May next year, demand for VLSFO in the region is expected to decline. According to data from Marine and Energy Consulting Ltd, demand for VLSFO could fall to around 6 million tonnes/year, with a shift to 0.1% MGO and ULSFO. In theory, demand for HSFO should remain stable.
Cost
However, with some cleaning systems unable to “clean” HSFO down to 0.1%, it remains to be seen how many shipowners will be forced to switch to other types, the Gibsons point out.
Consequently, ships operating in the area will face higher costs unless they utilize a cleaning system.
Year-to-date, Gibraltar 0.1% MGO has averaged $798/t, compared to $590/t for VLSFO (+35%).
Fuel demand in the region will also be affected (albeit to a lesser extent) by the upcoming FuelEU legislation, which mandates a 2% reduction in greenhouse gas (GHG) intensity from 1 January 2025.
Although the initial impact will be small, some demand will shift from conventional fuels to greener alternatives, the Gibsons conclude.
ECA of the Mediterranean Sea from 01/05/2025
From 1 May 2025, the entire Mediterranean Sea will become an ECA, with the maximum sulfur content of ships’ fuels reduced from 0.5% to 0.1%, unless they are equipped with a scrubber capable of to reduce sulfur dioxide emissions to this level.
Following previous ECA and IMO2020 imports, refineries and fuel suppliers have demonstrated that they can adapt to necessary changes in demand, however, there will be impacts, both on fuel prices and commodity flows within and outside the region , Gibson notes in an analysis.