Low-sulfur fuel shortages a challenge for cruise lines

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Lines testing 'scrubbers'

One alternative to switching to low-sulfur fuels would be for the cruise industry to install seawater scrubbers on ships.

“It’s essentially installing a shower inside the stack of the ship, so that when the emissions from the engines go up the stack, they literally get washed; the impurities get washed out, and much cleaner exhaust is released,” said Jamie Sweeting, vice president of environmental stewardship for Royal Caribbean Cruises Ltd.

Scrubbers can knock out more than 90% of sulfur particles, according to some estimates.

There are two types of scrubbers, he noted. One is called a “closed-loop scrubber,” which recycles the water and uses it over and over. The other is an “open-loop scrubber,” which purifies the water before it’s released back into the ocean.

A closed-loop scrubber would be used, he said, while a ship is close to land; an open-loop would be used when a ship is out at sea.

Royal Caribbean International is testing two scrubbers, one on the Independence of the Seas and one on the Liberty of the Seas.

“These are multimillion-dollar investments,” Sweeting said. Moreover, he said, they are experimental and not ready for prime time.

“It’s not like buying a toaster oven from Walmart,” he said.

Holland America Line also has tested a scrubber system.

HAL several years ago agreed to conduct a grant-funded feasibility project on the Zaandam in a joint experiment with the Environmental Protection Agency and the Puget Sound Clean Air Agency.

The data compiled from the project is still being studied, line spokesman Erik Elvejord said, adding that there were “some challenges with the data early on, so we are continuing with it. It’s a ways off from commercial application.”

— Donna Tunney 

New maritime fuel emission rules being imposed by the U.S. and Canadian governments have the cruise industry on edge.

The rules, part of the North American Emission Control Area (ECA), which extends 200 nautical miles from the U.S. and Canadian coasts, require a progressively steep reduction in the amount of sulfur dioxide cruise ships can emit from their diesel engines over the next eight years.

A major challenge in complying with the rules is the scarcity of low-sulfur fuels, coupled with higher costs. These issues have led to “very intense conversations” between cruise executives and the federal Environmental Protection Agency (EPA), according to Adam Goldstein, president and CEO of Royal Caribbean International.

Time is not on the cruise lines’ side; the rules begin to take effect Aug. 1. They will require cruise ships to reduce sulfur emissions to 10,000 parts per million (1% of the fuel’s volume) in August; to 1,000 parts per million (0.1% of volume) in 2015, and then to 500 parts per million (0.05%) in 2020.

According to the EPA, the high-sulfur bunker fuel currently used by most cruise ships and other commercial vessels can emit 35,000 parts per million, amounting to about 3.5% of the fuel’s volume.

Earlier this month, during Cruise Shipping Miami’s State of the Industry panel, Goldstein said he had met with EPA officials before the conference and believed that the officials “came away with a better understanding of how cruise lines make decisions.”

_Adam Goldstein“There are so many homeports and ports [of call] in the U.S. and Canada, it cannot be assumed we will be able to find the fuels we will need,” he said.

Royal Caribbean, Goldstein said, is “trying to source” for low-sulfur fuel in the ports where its ships need to load fuel, but “in several cases, it’s not clear we’re going to be able to access that fuel.”

Royal Caribbean later said the line was most concerned about low-sulfur fuel availability in Seattle and Vancouver, which are key embarkation ports for Alaska sailings.

The cruise lines have been dealing with emissions control since the EPA approved the new rules in 2010. Last year, it created a U.S.-Caribbean ECA zone, which will affect the U.S. Virgin Islands and Puerto Rico starting Jan. 1, 2014.

Stein Kruse, president and CEO of Holland America Line, said he was slated to meet with the EPA last week. Echoing Goldstein’s concerns at Cruise Shipping Miami, Kruse suggested that port locations where low-sulfur fuel is not readily available could find themselves losing cruise business.

“We have tried to convey to the EPA and to the Canadians that we make [deployment] decisions far out,” Kruse said. “We’re now looking at 2014 and 2015 deployments. The emissions control area is quite significant.”

He added: “We’re a for-profit industry. We have assets that can move, so the consequences for smaller ports could be devastating.”

The ports, however, appear to have little recourse if local or regional fuel providers don’t distribute low-sulfur fuel.

“We have no relationship with the fuel brokers,” said Peter McGraw, a spokesman for the port of Seattle. “Nor do we sell fuel. There’s not a whole lot we have to do with it.”

Meredith Martino, a spokeswoman for the American Association of Port Authorities, said she’s heard concerns from members about low-sulfur fuel availability, but since the cruise lines contract independently for fuel, there’s little her association can do.

Steve Cernak, CEO and director of Fort Lauderdale’s Port Everglades and a former port director at Galveston and at the Port Authority of New York and New Jersey, said he’s just now “getting up to speed” on the issue of low-sulfur fuel.

“Phase one, with 10,000 parts per million, is not as troublesome as when you get out to 2015,” he said. “At those markers, it gets to be really restrictive, and my understanding right now is that there is a problem on the supply side.”

Cernak added: “Everybody wants to be environmentally sensitive, and what I think the cruise industry would like to see is the ability to work together and come up with alternatives. This is not a one-size-fits-all situation.”

Jamie Sweeting, vice president of environmental stewardship for Royal Caribbean Cruises Ltd., the parent of Royal Caribbean International, Celebrity Cruises and Azamara Club Cruises, noted that the industry already meets emission standards when operating in the ECA in the North Sea and Baltic region by using 1% low-sulfur fuel.

But in that region, he said, “It’s not a problem because the largest supply in the world comes through St. Petersburg. It is readily available in that region. But come 2015, when the regulation drops to 0.1%, that will be the big challenge. Suppliers are telling us there isn’t enough demand from the industry to require them to create this product. So you’re going to be faced with a very difficult situation.”

Just as troubling, he said, is the fact that the North America ECA regulators have not clearly stated whether cruise ships can burn “the next best fuel” if the 1% grade isn’t available this summer.

“If they say no ... that we must burn at 1% or under, it means that we’d have to start burning 0.1%,” Sweeting said. “We’d be forced to meet the 2015 requirement three years early, and that fuel will be 50% to 100% more expensive than what we use now” — if it’s available at all.

“It could bring us to a price point that our customers are not going to be willing to pay,” Sweeting said.

Steve CernakCernak said he believes “it’s possible that ships won’t go to as many places as they do now. I think maybe there’s been a rush to implement.”

“The EPA has its studies, which it hangs its hat on, and the cruise lines have other studies about how to calculate emissions,” Cernak said. 

The two sides’ studies don’t always agree.

According to the EPA, emissions of sulfur dioxides create sulfate particles, which are “a significant threat to public health and marine and terrestrial ecosystems.”

Low-sulfur fuel, according to the EPA, also reduces nitrogen dioxide. In 2020, the agency contends, emissions from ships complying with the ECA are expected to be reduced annually by 320,000 tons of nitrogen dioxide and 920,000 tons of sulfur dioxide. Those reductions would mean 23% less nitrous oxide and 86% less sulfur dioxide by 2020 than would be produced without the ECA.

The EPA states that it expects most ships to use “fuel switching” technology, meaning that engines would switch to low-sulfur fuel when a ship enters the ECA.

“In most cases, ships already have the capability to store two or more fuels,” the agency stated. But it added, “Some vessels may need to be modified.”

Follow Donna Tunney on Twitter @dttravelweekly. 

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