Oil price moderates negative SECA effect

Last updated 10/12/2015 9:55 AM

Low oil prices have moderated the effect of the stricter emissions rules that were introduced for shipping in Northern Europe. The so-called SECA rules were expected to make fuel a lot more expensive for the shipping companies and thereby distort competition in the transport market.

”The fact that the oil price has fallen to record low levels in 2015 is the silver lining – it would otherwise have been hard going for shipping in our latitudes. The price effect has also meant that not much has been said about SECA, both in our industry and in the overall debate”, observes Mikael Castanius, Director of the trade association, Ports of Sweden.

SECA is the EU’s sulphur directive which came into force at the turn of the year and will affect shipping in the North Sea, the Baltic Sea and the English Channel. The sulphur content in marine fuel in these waters is now set a maximum of 0.1%. This makes the emissions levels 35 times what they are for shipping in the rest of the world.

More expensive SECA fuel
The marine fuels that meet the requirements in the sulphur directive have been considerably more expensive than traditional fuel, which was expected to distort competition and increase the price of marine transport in Northern Europe.  And it is this price increase that has largely failed to appear as a result of the low oil price. In recent years the oil price has mainly been over 100 dollars per barrel. This can be compared with autumn 2015 when the price even fell below 50 dollars.

”The reverse of this development is that it has now become more difficult to market and sell alternative marine fuel, for example LNG”, says Mikael Castanius.

Successful technological development
He simultaneously emphasises that the development of new fuels and technologies has been successful and that several new solutions have been produced in recent years. Besides LNG, methanol is being tested as a marine fuel, and technologies to purify emissions in order to meet the SECA requirements – so-called scrubbers – have also been refined. Both shipping companies and other actors within shipping have thus made clear initiatives to take their environmental responsibility and reduce sulphur emissions in the region.

CMP too is now making a major investment with a link to SECA. SEK 30 million is being invested during 2015 in dredging and new jetties in the oil port in Malmö, where CMP and Statoil are together creating a hub for ships that need to refuel low-sulphur SECA fuel. 

”Another positive effect is that the discussions on new environmental rules for shipping in all waters within the EU are underway in Brussels”, says Mikael Castanius. “This is an important symbolic issue in an EU where harmonization and common conditions are said to be fundamental”.

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