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BUNKER INDEX :: Price Index, News and Directory Information for the Marine Fuel Industry
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Arctic HFO ban would only cost passengers a glass of wine a day: T&E

Study says MGO switch translates to $7 in extra costs per passenger in 2018 and $5 in 2021.

Image credit: Pixabay CC0

Updated on 10 Oct 2018 12:38 GMT

A new, October-published study carried out by Transport & Environment (T&E) - a Brussels-based environmental organisation campaigning for sustainable transport - has found that the average price of a cruise passenger ticket would rise by 6 percent (equivalent to EUR 7 per passenger per day) if an Arctic ban on the use of heavy fuel oil (HFO) were currently in place.

This price increase, T&E points out, would be equal to the price of a glass of red wine sold on board the MS Rotterdam, currently priced at EUR 6.96.

If the ban enters into effect in 2021, as proposed in MEPC 72/11/1, T&E says the price increase per passenger ticket would be EUR 5 per day (assuming full costs pass through), which is almost the same as the EUR 5.22 price for a glass of white wine on the MS Rotterdam, and more than enough to cover the cost of a burger and fries, at EUR 4.31.

According to T&E, the lower additional costs in 2021 could be explained by the forecasted reduction in the price difference between high-sulphur HFO and cleaner marine gas oil (MGO) - to be used in the event of an HFO ban by the ship (MS Rotterdam) analysed in the study.

"These findings lead us to conclude that [an] Arctic HFO ban can be implemented immediately with limited impact on [the] cruise industry. Considering the luxury nature of cruise shipping, any (small) increase in ticket prices should be acceptable for cruise passengers, especially considering that these costs would serve to the protection of the pristine environment that underpins the very growth in this industry segment," T&E stressed.


In order to evaluate the possible costs of the Arctic HFO ban on specific journeys of the MS Rotterdam, the report used the methodology followed by the IMO 3rd GHG Study (2014) and ICCT GHG inventory (Olmer et al., 2017) to estimate the ship's fuel consumption. This required both the technical specifications of the vessel as well as its real operational profile over the analysed period.

The analysed operational profile of the ship spans from June 30 to August 25, 2018, with three Arctic voyages analysed during this period.

It is assumed that, under the HFO ban scenario, the MS Rotterdam would switch from HFO to MGO distillate fuel. The HFO-MGO price differential in 2018 is calculated as $230 ($430 for HFO, $660 for MGO), and it is forecast at $150 ($466 for HFO and $616 for MGO) for 2021.

Lucy Gilliam, shipping officer at T&E, said: "Arctic cruise tourism is booming, increasing the risks of oil spills and creating more pollution. The costs per passenger of a switch to cleaner fuel are tiny. It's more than worth it to reduce the risks to the unique environment that passengers are paying to see."

Gilliam added: "Cruise companies claim that an HFO ban would be a death sentence to their industry, yet the figures show that the costs passed on to passengers are trivial. Cruises to the Arctic are, by any measure, a luxury yet tickets are VAT exempt."

Last April, the IMO agreed to move forward on developing a ban on HFO from Arctic waters on the basis of an impact assessment. Currently, the IMO is inviting submissions on how to assess the impact of the HFO ban on communities and operators in the Arctic. It is set to be discussed during the 73rd Marine Environment Protection Committee meeting (MEPC 73) in London later this month.

To view the full T&E report, please click here.

Related Links:

PPR6 to develop Arctic HFO ban as nations urge 2021 implementation
Iceland mulls HFO ban options in territorial waters
NGOs hail Greenland HFO ban support
NGOs challenge Maersk to 'come clean' on Arctic fuel use

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