A shipping company with Alaska roots will apparently be the nation's first such company to burn large amounts of liquefied natural gas, as part of a trailblazing agreement that allows Totem Ocean Trailer Express to avoid new requirements that it burn low-sulfur fuel.
The company's deal with the Environmental Protection Agency and the U.S. Coast Guard gives it four years to convert the engines on its two large Alaska-bound vessels to run on liquid natural gas, according to statements from Alaska's senators.
The agreement gives TOTE a conditional waiver to a newly implemented program that requires large ships to burn low-sulfur fuel in the so-called Emission Control Area 200 miles off America's coasts. The new rules set out by the EPA went into effect on Wednesday.
The higher standard is meant to greatly reduce ship emissions. Worldwide, air pollution from shipping is said to contribute to tens of thousands of deaths annually and millions of cases of respiratory problems. For example, U.S. ships in 2008 emitted 3.6 million tons of nitrogen oxides, the same amount of pollution issued by 200 million cars, according to a report by Norwegian company Det Norske Veritas.
Alaska leaders have protested the new rule, saying that because Canada also has such requirements, Alaska-bound ships would be forced to pay for the more expensive, low-sulfur fuel during their entire journey to the Far North. Oceangoing cruise lines and shipping companies such as TOTE also fought the change.
Most of the goods sold at Alaska stores arrive by ocean to the Port of Anchorage, and increased costs from the program will be passed onto Alaskans, opponents warned. The higher expenses will boost a cost of living that is already among the highest in the nation, particularly in scores of remote villages. Sen. Lisa Murkowski even called on rural Alaskans to send pictures of grocery store prices that are already exorbitant. One person sent in a photo of a $9 gallon of milk in a Northwest Alaska village. Murkowski showed some of the pictures during a recent Senate floor speech.
Concerned over higher prices, the state also sued the Coast Guard, the Environmental Protection Agency, and others to stop it.
Because the waiver will allow TOTE to burn the cheaper natural gas, it alleviates concerns the company had over "significantly higher" costs of low-sulfur fuel, TOTE said.
TOTE officials did not immediately return phone calls on Friday. The company has shipped freight between Tacoma, Wash., and Anchorage since 1976, after getting its start in Alaska in the early days of the Prudhoe Bay oil boom. A subsidiary of Saltchuk Resources of Seattle, TOTE is based in Tacoma.
There's another benefit to using liquefied natural gas, which is still rarely used in the world's maritime fleet but is expected to become more common in the future.
In addition to protecting Alaskans from increased shipping costs and expanding the market for natural gas, it will "ultimately lead to even cleaner air than ECA requires," said Sen. Mark Begich, D-Alaska, in a written statement sent Friday.
Begich was central to bringing the parties together and promoting the use of the new fuel, said John Parrott, TOTE's president, in the release.
In an earlier statement on its web site, TOTE said using liquid natural gas could be the best long-term compromise because it would lower emissions and eventually, expenses. But it said that converting the ships would take five years and be expensive up front, costing between $42 million and $45 million.
Who will pay for the conversion? None of the statements describing the deal delved into that question.
The conversion will reduce the amount of sulfur by more than double that proposed under the Emissions Control Area, said the statement from TOTE. There will also be "significant reductions" in particulate matter, nitrogen oxides and carbon dioxide, which will make the ships among the cleanest in the world, the statement said.
TOTE's use of liquefied natural gas will nearly eliminate harmful emissions of sulfur dioxide and particulate matter and significantly reduce nitrogen oxide emissions, the EPA said in a statement.
Also important is that the agreement includes shoreside infrastructure in Puget Sound that will be used to deliver that natural gas, TOTE said. That could lead other transportation companies to also adopt the new fuel.
"The project will extend environmental benefits throughout the region by breaking through supply barriers that have constrained the growth of LNG in the transportation industries," TOTE said.
In a statement sent Friday, Sen. Lisa Murkowski also kept up her attack on the new standard, according to a statement.
“The deal helps one company, but doesn't address who will pay for TOTE's additional investments and other costs that will stem from the new fuel standards,” Murkowski said. “Those costs could run into the hundreds of millions of dollars, and Alaskans at the end of the line could end up footing the bill.”
Murkowski has asked EPA to work on a waiver with shipping companies doing business in Alaska, she said. She also charged that while the EPA was a key supporter of including Alaska waters in the Emissions Control Area, the agency did not collect air quality data in Alaska to justify the need for the stricter fuel requirements.
She's asked for air-quality monitoring in Alaska and has called for a "pilot project" that would help cruise ships and freight haulers meet the new standard at lower costs. That project involves "averaging" emissions. For example, a cruise ship's time in port, when it's emitting nothing because it's drawing power from a city's electrical grid, could essentially be applied as a credit during part of its ocean voyage.
Murkowski sent a letter to President Obama on Tuesday, laying out her arguments and urging him to engage his administration to find a way around the increased shipping costs that will come with the rule.
Contact Alex DeMarban at alex(at)alaskadispatch.com