Shipping Associations Urge IMO Member States to Progress on Sulphur Cap Issues
The World Shipping Council (WSC), the Baltic and International Maritime Council (BIMCO), the International Chamber of Shipping (ICS), the International Association of Dry Cargo Shipowners (INTERCARGO), and the International Association of Independent Tanker Owners (INTERTANKO) issued the following joint press release on June 18, 2018:
The shipping industry – as represented by its international trade associations (BIMCO, ICS, INTERCARGO, INTERTANKO and WSC) – calls on the Member States of the International Maritime Organization (IMO) to make progress on key challenges around the global sulphur cap to avoid compromising safety or unfairly penalizing individual ships.
The trade associations have co-sponsored a number of submissions to the IMO to help smooth the implementation of the global 0.5 percent sulphur in fuel cap, in a meeting that will be held in London during the second week of July.
These submissions include papers on:
- a standard format for a ship specific implementation plan with many actions ships may need to consider for achieving compliance but also a call for a practical and pragmatic approach from IMO Member States when verifying compliance with the 0.50% global sulphur cap;
- safety implications associated with 2020 fuels and their respective challenges;
- a draft standard for reporting on fuel oil non-availability;
- proposals for amendments to MARPOL Annex VI to require sampling points for fuel oil; and,
- verification issues and control mechanism and actions.
The industry is fully committed to successful implementation of the global sulphur cap on 1 January 2020, and welcomes the significant environmental benefits this will bring, as agreed by IMO Member States and as re-confirmed by the IMO Marine Environment Protection Committee in April 2018.
Through their own proposed standard implementation plan, ship owners and ship operators are committed to do what is necessary and what is under their control to meet the standards required. But the worldwide implementation of this game-changing new regulatory regime will be far more complex than the previous introduction of sulphur Emission Control Areas for shipping not least because of the sheer magnitude of the switchover and the quantities and different types of fuel involved.
In 2015, ships trading in ECAs primarily changed to ISO 8217 distillate fuel oils. But in 2020, as well as using distillates to comply with the 0.5% sulphur cap, many ships will have to use blended fuel oils and new products which are outside of the ISO 8217 standard.
On top of the absence of global standards for many of the new blended fuels that oil refiners have promised, there are potentially serious safety issues, including those related to the use of compliant but incompatible bunkers. As an example, if bunkers turn out to be incompatible it could lead to loss of power on the ship.
No transitional period
The industry recognizes that, in a legal sense, there will be no transitional period after 1 January 2020. But something of this magnitude has never previously been attempted before on a worldwide basis. The industry will do its utmost to be fully compliant to the extent that this is under its control. But safe and successful implementation will necessitate the supply of fuels, in ports around the world, which are compatible as well as legally compliant.
With the scale of the technical challenges involved and the likelihood of teething problems, it will be important for port state control authorities to exercise a pragmatic and realistic approach to enforce compliance during the initial months of the global switch over, which will come into effect at the stroke of midnight in just 18 months’ time.
The joint statement anticipates the scheduled IMO meeting in July to further progress on preparations for the 0.5 sulphur limit and to fast-track development of guidance on ship implementation planning for 2020. The guidelines will cover:
Preparatory and transitional issues, relating to how ships can prepare for implementation, including relevant time schedules;
- Impact on fuel and machinery systems resulting from new fuel blends or fuel types;
- Verification issues and control mechanism and actions, including Port State Control and in-use fuel oil samples;
- Fuel oil non-availability: guidance, information-sharing and standard reporting format;
- Safety implications relating to the option of blending fuels;
- Other useful guidance/information that assist Member States and stakeholders, including guidance addressing quality assurance and integrity of the supply chain.
The IMO set a global limit for sulphur in fuel oil used on board ships of 0.50% m/m (mass by mass) to significantly reduce the amount of sulphur oxide emanating from ships to begin January 1, 2020. The IMO anticipates 0.5 percent limit should have major health and environmental benefits for the world, particularly for populations living close to ports and coasts.
Under the new global cap, ships need to use fuel oil on board with a sulphur content that does not exceed 0.5 percent, against the current limit of 3.5 percent, a limit that has been in effect since January 2012. “Fuel on board” includes fuel used in main and auxiliary engines and builders. At present, there are exemptions for situations involving the safety of the ship, saving life at sea, or if a ship or its equipment is damaged.
Ships can meet the 0.5 percent sulphur requirement by using low-sulphur compliant fuel oil (LSFO), marine gas oil, alternative fuels such as LNG and methanol (utilized on some short sea services), or installing an approved exhaust gas cleaning system known as “scrubbers” which clean emissions before they are released into the atmosphere.
Shipowners have seemed hesitant to install emissions scrubber systems. The digital supply chain publication, The Loadstar, reported in April 2018 that a Drewry survey of shipowners showed 66% of the respondents preparing to bunker their ships with LSFO. Only 13% of respondents planned to retro fit scrubbers to their vessels.
The International Energy Agency (IEA) noted the low investment in scrubbers and is concerned about the market’s ability to meet the potential demand for LSFO for ships without scrubbers. “It could be a huge issue in terms of a spike in prices for marine fuel and a very, very disruptive market, and that’s only 18 months away,” the IEA’s head of oil industry and market division Neil Atkinson told at an energy seminar in Oslo.
IHS Markit analysts commented in a recent press release that a period of “upheaval in global oil markets, extraordinary margins for some oil refiners, and a potential doubling of fuel costs for shippers” could result from a strict enforcement of the IMO regulations. According to a Wood Mackenzie study, global fuel costs could rise as high as $60 billion annually from 2020.
Given the potentially massive impacts to the global marketplace, it is unsurprising that the shipping industry is pushing for a pragmatic approach to fully adopting the 0.5 percent cap. The outcome of the July IMO meetings could bring a wave of sea change as the shipping industry faces a fast-approaching future with lower transport emissions.
Editors Note: Further reading of each submission to the IMO by the shipping industry can be found at www.ics-shipping.org/submissions/imo.
- Date July 3, 2018
- Tags 2018 June