Emissions Regulations Spark Newbuild Order Rush

Lloyd's List say that any ship that is not Tier III compliant and built after next year "will quite simply be unable to trade to a U.S. port."

Craig Eason, writing for Lloyd's List (LL), says that the impending January 1, 2016 Tier III deadline, which will see tougher nitrogen oxide (NOx) emission control regulations implemented on ships travelling in the North American emission control area (ECA), has shipowners rushing to place newbuild orders, especially for containerships and tankers.

"Any ship built after next year that is not Tier III compliant will quite simply be unable to trade to a U.S. port, severely restricting any future opportunities for that asset," stated Eason, explaining that newbuild orders must be registered with the shipbuilder and the keel laid before January 1 in order to avoid the obligation of Tier III compliance.

Under the rules, new ships will be required to have either a selective catalytic reduction system or an exhaust gas recirculation system, which Eason notes are "both are costly and big."

The technology required to achieve compliance with the NOx emission regulation is also reported to boost energy consumption, making it more difficult for a vessel to meet other existing emissions regulations, specifically ship design rules aimed at reducing CO2 emissions.

The use of fuel emulsions as well as additives are reported to be being considered for alternative compliance requirements, but Eason says that uptake of any such novel solutions will be slow.

"The most immediate solution is simply to order a fleet of ships before the end of the year, make sure the shipyard registers them as ordered and has the first part of the ship, namely the keel, laid in the yard, thus avoiding the problem altogether," concluded Eason.

In September, Ship & Bunker reported that container carriers have been accelerating newbuild orders as they race to beat the January deadline.