IMO Emission Regulations Keen On Tier III NOx

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‘Tier III’ NOx emission standards is a new limit prescribed for new built ships sailing in NOx Emission Control Areas (NECAs).  ‘Tier III’ which is stricter than the ‘Tier II’ will come into effect from 2016.  The new limits call for investment in dedicated NOx reduction measures.

IMO’s regulations on ships’ NOx emissions involve three stages such as Tier I, Tier II and Tier III.  At present, there have been stringent calls to limit NOx in areas such as Baltic.  Unlikely, the North American and US Caribbean Sea are the only NECAs.  As the deadline approaches, reports say that owners are eager to secure a keel laying prior to 1st January 2016.  This may help them to avoid the heavy premium associated with Tier III compliance – an SCR solution reportedly costs around $1.5m for an MR tanker and up to $4m for a VLCC.

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The solutions for Tier III limits are from the technologies including Selective Catalytic Reduction (SCR) systems and relatively newer Exhaust Gas Recirculation (EGR) systems, or LNG fuel.  Clarksons Research database says that there are 306 ships with NOx technology fitted in the fleet and 79 vessels that can run on LNG fuel.  Across the world, there has been a 0.4% growth in the fleet of the vessels that can meet NOx Tier III standards.  As per the reports, there were 74 ships in 2005 and at present it has increased to 385 vessels till date.

Norway’s NOx tax and fund introduced in 2007 and 2008 respectively, have driven much of the investment in NOx reduction measures.  Nearly 63% of the NOx compliant fleet is reported to be Norwegian owned.  At present, 91 NOx Tier III compliant ships have been ordered – 81% of which are LNG capable.  It is slightly higher in proportion compared to the fleet.  Ordering has also been less consolidated and Norwegian, US and Swedish owners account for 21%, 16% and 13% of the orderbook in numerical terms respectively.

Source: Clarksons