New UN Shipping Rules to Boost Climate Change, Wipe 3% Off US GDP by 2020
Guest essay by Eric Worrall
The United Nations International Maritime Organisation is in the process of introducing new marine diesel standards which economists worry will have a serious negative impact on Climate Change and the US economy.
Sulphur-emissions rules for shipping will worsen global warming
The IMO’s rules could also wipe 3% off America’s GDP
The imo will cut emissions of sulphur either by reducing its content in marine fuel from 3.5% to 0.5% from 2020 or by requiring ships to remove it from exhaust fumes. Sulphur from ships causes acid rain and air pollution, which contributes to between 212,000 and 595,000 premature deaths a year and 14m cases of childhood asthma, according to research published in Nature Communications in February.
Most shipowners will switch to pricier low-sulphur fuels. But if all ships did so in 2020, demand for them would double (see chart) and the industry’s fuel bill would rise by $60bn, roughly the entire sum spent in 2016, say analysts at Wood Mackenzie, a research firm. It would also have a dramatic impact on aviation and road transport. Ships run on a heavy residue that remains after petrol, diesel and other lighter hydrocarbons are extracted from crude oil in refining. Competition for lighter fuel that clean ships require could raise the price of diesel for lorries by 50% and for jet fuel by 30-40% in 2020, reckons Philip Verleger, an energy economist. The resulting spike in global transport costs, he says, would hit world trade and wipe a staggering 3% off America’s gdp and 1.5% off the whole world’s in 2020.
Worse still is the effect of the new rules on global warming. The Intergovernmental Panel on Climate Change, a un-backed body, says sulphur emissions have a net cooling effect because they scatter sunlight in the atmosphere. Sulphur also helps to form and thicken clouds that reflect sunlight away from the Earth.
The rationale behind the move is apparently a study published in February, which suggested cleaner burning fuel would substantially reduce childhood asthma rates, and deaths from diesel particulates.
As someone who suffers from pollution triggered asthma I am concerned about pollution.
But according to The Economist, this UN rule change will have a devastating global economic impact, especially on the USA.
Large shippers will be able to afford expensive scrubbers, but the expense will put small shippers at a serious commercial disadvantage; small shippers will be forced to either buy expensive low sulphur diesel, putting pressure on road transport and aircraft diesel supplies, or small shippers will have to pay for expensive smokestack scrubbers they can’t really afford.
Big shipping companies will potentially make an enormous profit from this UN rule change, at the expense of their smaller competitors and the rest of the global economy.
Wiping 3% off US GDP, and spiking transport fuel prices by 50% may also have a political impact on the USA, around the time of the next Presidential election.
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