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Alaska editorial: The shipping news: EPA and TOTE reach deal on emissions

Posted: August 10, 2012 - 12:03am

This editorial first appeared in the Fairbanks Daily News-Miner:

The Environmental Protection Agency and a major ocean shipper to Alaska reached an agreement last week that could save Alaskans money and reduce pollution. But several questions about the deal remain.

Alaska’s congressional delegation and the state administration raised a warning late last month about the impending cost of new pollution rules for ships hauling goods to Alaska. The EPA, they said, would require ships to start burning low-sulfur fuel Aug. 1 because the agency had extended the North American Emissions Control Area, under an international maritime treaty, to waters off Alaska.

The state of Alaska sued to block the action. It said one shipping company reported the more expensive fuel would add 8 percent to the cost of hauling goods to Alaska, a cost that presumably would be passed on to Alaskans.

That shipper, Totem Ocean Trailer Express, reached an agreement with the EPA this week. The company has obtained a waiver that will allow it to continue burning high-sulfur fuel while it converts its two ships in the Alaska trade to cheap, clean-burning liquefied natural gas within four years.

In the long run, that sounds like a fine solution, but it raises several short-term concerns.

First, what will happen to shipping rates? Converting a ship to LNG sounds like an expensive operation. Will Fairbanks residents take a financial hit from this “solution”?

Second, is this option available to other shippers? If only TOTE is able to swing the deal, other shippers still will have to burn the more expensive fuel. That likely would mean shipping prices would increase, regardless of whether TOTE starts saving money on its new fuel.

Sen. Mark Begich, D-Alaska, who said he helped bring the EPA, U.S. Coast Guard and TOTE together to come up with the waiver, was optimistic in a news release Friday.

“The permit will help protect Alaskans from increased shipping costs, expand the market for natural gas, and ultimately lead to even cleaner air than ECA requires,” he said. “TOTE’s project will be the first major use of LNG as a ship fuel in the United States, and others in the maritime industry are sure to follow the path that TOTE will be blazing. This means the effects of expanded natural gas use, more economical shipping and cleaner air will be multiplied many times over.”

Sen. Lisa Murkowski, R-Alaska, was less encouraged.

“While this deal helps one company, it does not address who will pay for the additional investments and costs required for TOTE and others to meet the new fuel standards, a total that could run into the hundreds of millions of dollars,” she said. “My fear is that the total costs of compliance will simply be passed on to Alaskans.”

The waiver appears to have potential, but the proof will be in the pricing.

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