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New fuel rules cause worry in Nunavut, but not NWT

barge on the Mackenzie1
The four new vessels bring to six the number of double-hulled barges in the Marine Transportation Services fleet. NNSL file photo

Possible increases in living costs in the Arctic related to new marine fuel regulations could hit Nunavut communities, while sparing the NWT.

At issue is a regulation on low-sulphur fuel that took effect on Jan. 1 and a ban on heavy fuel oil (HFO). Transport Canada announced the federal government's support for the HFO ban on Feb. 18.

A barge on the Mackenzie River. New restrictions on marine fuel might lead to increases in living costs in Nunavut but not in the NWT, where Heavy Fuel Oil and high-sulphur fuels haven't been used for several years.
NNSL file photo

The restrictions on HFOs would reduce sulphur oxide emissions by 80 per cent, black carbon by 23 per cent and fine particulate matter by 31 per cent, according to a report Transport Canada prepared for the International Maritime Organization (IMO) last December.

But that report pointed out that low-sulphur fuels are more expensive and in the end could increase the community resupply costs by 12 per cent, or $713 per year per household in Nunavut.

According to the IMO's Polar Code, the new rules on low-sulphur fuel stipulate that all vessels operating in the Arctic must now use fuels with a maximum sulphur content of 0.5 per cent. Vessels installed with scrubbers in their exhaust systems are exempt from the rules.

The HFO ban could pile on another 11 per cent in community resupply costs and raise end user prices by $679 per household.

To put that in perspective, living cost increases could put a strain on the budgets of Inuit in Nunavut aged 15 and older who, the report says earn about $24,768 in median income compared to non-Inuit in Nunavut who earn around $84,139.

Nunavut Tunngavik Inc. passed a resolution in October of last year calling for a total ban on HFOs, and the Inuit Circumpolar Council also backed a ban.

MTS ferries never used HFOs

However, those effects might bypass the NWT since ferries operated by Marine Transportation Services (MTS) have never used HFOs, and switched from diesel to low-sulphur fuel 10 years ago, the Department of Infrastructure (INF) told News/North.
"(We do) not use heavy fuel oil for the operation of our marine vessels, including barges and tugs with Marine Transportation Services and our four vehicle/passenger ferries, nor do we supply heavy fuel oil through our fuel services division," said INF spokesperson Greg Hanna.

"Our MTS vessels have been using low-sulphur fuel since the GNWT began delivering this program following the bankruptcy of NTCL. Cost structures for deliveries and operations remain unchanged, as we (the GNWT) haven't any experience using a cheaper fuel.

"As such, we do not expect the ban to impact our operations. With that being said, we pay close attention to any decisions that can potentially increase the cost of living in the North. It is too soon to say exactly what this ban will mean for residents."

Bulk fuel sellers, such as SRP Petroleum in Norman Wells have already been selling low-sulphur fuel for some time and the IMO's new rules wouldn't have a big effect.

"The price of crude fluctuating everyday would have more of an effect than the higher cost of low-sulphur fuels," said SRP manager Alexis Peachy.

Whatever comes of the new rules, Michael McLeod, MP for the NWT said it's "high time" Canada followed through on banning HFOs because the country lags behind others who have already banned them, such as the United States, Sweden and Finland.

"We have to recognize that the HFO is one of the worst pollutants. There's a lot of risk with it," he said.

But McLeod acknowledges the problem of the rule changes leading to a rise in living costs.
"Cost is a huge issue in the Arctic. At this point we don't know how we might handle that. Industry might also have ways of absorbing the cost. There are some self-imposed bans that have come up already. The federal government might have to get involved and set up a transition fund or ... investments to reduce the cost of living in the Arctic."