(SINGAPORE) The shipping industry is starting to sweat over global warming after it was revealed recently that it is guilty of producing twice as much harmful emissions as the aviation sector.

Global shipping accounts for 5-7 per cent of total global carbon dioxide (CO2) emissions and 15-30 per cent of all nitrogen oxide (NOx) being belched into the atmosphere. This, when fuel usage in shipping is only about 2-4 per cent of world fossil fuels.

The culprit is the quality of 'dirty' bunker fuel used by vessels.

Two recent studies, one by oil major BP and another by the European Union (EU), suggest shipping emissions could rise by as much as 75 per cent in the next 20 years as world trade growth demands more shipping services. Currently, shipping carries 90 per cent of global trade.

A third study by the DP Group estimated that the shipping industry will emit at least 1.2 billion tonnes of CO2 every year by 2011, eclipsing the declining emissions of the aviation industry which currently emits 600 million tonnes of CO2 per year.

But this must be put into perspective, argues the managing director of the Hong Kong Shipowners' Association, Arthur Bowring. 'Sea cargo is a necessity, air cargo is a luxury,' he told BT in a phone interview.

'Without shipping, half the world would starve, half would freeze and the rest would both starve and freeze,' he said.

Mr Bowring's organisation became an unlikely environmental champion two years ago, when it proposed a one per cent global sulphur emission cap. The issue now is how to lower the emissions, how soon and what is a reasonable level.

Historically, according to Mr Bowring, the industry is 'dragged kicking and screaming into the regulatory arena and then reluctantly changes its practices'.

But this time around it appears to be different, partly because it was abundantly clear that the first steps to regulate the industry's emissions by the International Maritime Organisation (IMO) were already woefully out of date by the time they came into effect last year and this year.

These moves placed a 4.5 per cent global cap on the amount of sulphur in a ship's fuel and special SOx (sulphur oxide) Emission Control Areas (Seca) where the cap was only 1.5 per cent.

The Baltic Sea Seca became operational in May this year and the second - North Sea and English Channel - will come into effect this November.

But to put these levels into perspective, the EU, for instance, limits the sulphur content in automotive fuel to 15 parts per million, or 0.0015 per cent.

Also the global average for sulphur content in bunker fuel is only 2.8 per cent.

The problem is that the fuel used by ships is essentially the leftovers from the crude oil-refining process after gasoline and the distillate fuel oils like diesel are extracted. This leftover is known as 'residual fuel'.

It was largely seen as a win-win situation until recently, because shipowners get cheaper fuel and the oil majors get rid of their rubbish.

Current residual bunker fuel - of which nearly 200 million tonnes is used each year - is the dirtiest fuel in use and emits high levels of not just SOx and NOx, but also volatile organic compounds and particulate matter - all harmful to both human health and the environment.

'We burn crap in our ships,' acknowledges Mr Bowring who describes the residual fuel as being 'only one step up from the asphalt you put on roads'.

While a number of proposals have been tossed into the ring, they basically revolve around two broad camps.

Continuing to use residual fuel but lowering the sulphur content either during refining or on board the ship using scrubbers and other technology; or switching completely away from residual to cleaner distillate fuel like diesel.

But vested interests at every turn have made this a complicated debate.

What will become of the 'leftovers' now used as bunker fuel? Are shipowners willing to pay higher fuel costs associated with distillate fuel, now almost double that of residual fuel?

Studies have suggested, however, that if the entire shipping industry switched over to distillate fuel, the cost would only be 15-25 per cent more than current residual fuel costs.

Still, are consumers prepared to pay more?

'The bunker fuel supply industry has many stakeholders who do not view emissions regulations the same way,' according to Douglas Raitt, global FOBAS manager at Lloyd's Register.

The refining industry has estimated that US$130 billion would need to be invested to facilitate a switch to distillate fuel.

The refiners have also suggested this switch could result in the creation of an extra 120 million tonnes of CO2.

'In effect, this would suggest that we would be decreasing sulphur emissions at the expense of increasing greenhouse gasses,' said Mr Raitt. 'If true, is that a solution we want to support?'

But he is nonetheless encouraged by the debate which is slowly moving towards a consensus.

As a major refining hub, shipping and bunkering port and the sixth-largest shipping registry in the world, Singapore has much at stake in this debate.

The Maritime & Port Authority of Singapore is part of an IMO study group formed to complete, 'on an urgent basis, a comprehensive and in-depth assessment of each proposal', it said in response to BT queries.