THE voyage costs of a typical very large crude carrier (VLCC) would be 166 per cent higher because of the UN's International Maritime Organisation (IMO) proposed emissions charge, according to oil experts writing in the American Journal of Transportation.
'It's not exact math, but even if only 20 per cent were applied, a VLCC voyage would have cost up to US$1.5 million more. Given today's VLCC rates, a 30-day voyage only costs about $900,000, said James Morgan and James Campbell, both directors of Houston's Opportune LLP's Process & Technology practice.
This has been brought about by the most recent wave of change from a proposal to the IMO from Trafigura introducing a carbon levy of between $250 per tonne and $300/tonne of CO2 equivalent on shipping fuels.
'What would the impact of this proposal be to the oil industry if this carbon levy were instituted?' they ask. 'According to Reuters, the shipping industry was responsible for over one billion tonnes of CO2 emissions. Based on the United Nations Conference on Trade and Development, crude oil accounts for 17 per cent of maritime cargo,' the experts said.
'This would imply that crude oil shipping is responsible for 179,520,000 tonnes of CO2 emissions. In 2018, 1.886 billion tonnes, or 13,824 million barrels (bbls) of crude oil, were transported via ships.
'Considering the proposal has an undefined benchmark at which the levy would be applied, it's not exact math, but even if only 20 per cent were applied, a VLCC voyage would have cost up to $1.5 million more. Given today's VLCC rates, a 30-day voyage only costs about $900,000,' they said.
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'It's not exact math, but even if only 20 per cent were applied, a VLCC voyage would have cost up to US$1.5 million more. Given today's VLCC rates, a 30-day voyage only costs about $900,000, said James Morgan and James Campbell, both directors of Houston's Opportune LLP's Process & Technology practice.
This has been brought about by the most recent wave of change from a proposal to the IMO from Trafigura introducing a carbon levy of between $250 per tonne and $300/tonne of CO2 equivalent on shipping fuels.
'What would the impact of this proposal be to the oil industry if this carbon levy were instituted?' they ask. 'According to Reuters, the shipping industry was responsible for over one billion tonnes of CO2 emissions. Based on the United Nations Conference on Trade and Development, crude oil accounts for 17 per cent of maritime cargo,' the experts said.
'This would imply that crude oil shipping is responsible for 179,520,000 tonnes of CO2 emissions. In 2018, 1.886 billion tonnes, or 13,824 million barrels (bbls) of crude oil, were transported via ships.
'Considering the proposal has an undefined benchmark at which the levy would be applied, it's not exact math, but even if only 20 per cent were applied, a VLCC voyage would have cost up to $1.5 million more. Given today's VLCC rates, a 30-day voyage only costs about $900,000,' they said.
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