In its latest Annual Review, ICS explores the implementation challenges of the 2020 Global Sulphur Cap and refers to all important issues that have been considered by IMO and are going to be discussed thoroughly at the forthcoming MEPC 71.
Following IMO’s decision on MEPC 70, the global cap is expected to be implemented on January 2020 setting aside an option to postpone until 2025. ICS acknowledges this decision is highly significant because the cost of compliant low sulphur fuel is currently about 50% more than the cost of residual fuel, and in response to the greatly increased demand that will now arise in 2020 this differential may increase considerably.
There is huge discussion going around in the industry about the fuel price and availability at the time of implementation. However, now that the 2020 date has been decided, ship operators and oil refiners need to prepare for implementation.
‘’The oil refining industry in particular will need to take important decisions to ensure that sufficient quantities of compliant fuel will indeed be produced. But governments need to monitor this carefully, since it may be in the refiners’ commercial interest to keep the supply of compliant fuel as tight as possible’’ ICS comments.
However, it is anticipated that due to the massive scale and global nature of the switch, oil refiners may be very hard pressed to supply sufficient quantities of 0.5% sulphur fuel, produced specifically for marine use, to satisfy demand in all regions from day one.
ICS highlights that it is vital for IMO Member States to start addressing issues associated with compliance as the implementation date approaches.
After the MEPC decision in 2016, BIMCO, ICS and other shipping associations submitted a joint paper to IMO highlighting those fuel availability and implementation issues that will need to be resolved before 2020.
‘’The industry paper was well received by governments at an IMO Sub-Committee meeting in January, and work will continue on these critical issues at the MEPC meeting in July 2017 with a view to being completed by 2019.’’ ICS stated.
Therefore, the implementation issues that have been addressed by IMO and are subject to further discussion are the following:
- Preparatory and transitional issues that may arise with the shift from the 3.5% sulphur limit to the new 0.5% limit
- Impact on fuel and machinery systems resulting from the use of fuel oils with a 0.5% sulphur limit
- Verification issues and control mechanisms and actions that are necessary to ensure compliance and consistent implementation
- Development of a standard format (a standardised system) for reporting fuel oil non-availability that may be used to provide evidence if a ship is unable to obtain complaint fuel oil
- Development of guidance to assist Member States and stakeholders in assessing the sulphur content of fuel oil delivered for use on board ship, based on the means available for verification that fuels supplied to ships meet the specified sulphur limit as stated on the bunker delivery note
- Requesting ISO to consider the framework of ISO 8217 to maintain consistency between the relevant ISO standards on marine fuels and the implementation of the sulphur cap
- Any consequential regulatory amendments and/or guidelines necessary to address emerging issues.