Ahead of the 2020 sulphur cap, ship operators and oil refiners are preparing for implementation. The oil refining industry has to ensure that sufficient quantities of compliant fuel will be able to be produced. But governments need to monitor this carefully to keep the supply of compliant fuel as tight as possible, ICS says.
Because of the importance 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 meet with the demand in all regions.
However, even if significant quantities of 0.5% sulphur fuel are available in 2020, it is possible that the price may not be substantially cheaper than 0.1% fuel due to the major investment required to produce it.
As a consequence of these supply issues shipowners could take an alternative route deciding to invest in other compliance mechanisms (which are permitted by MARPOL) such as exhaust gas cleaning systems (‘scrubbers’) or the use of low sulphur fuels such as LNG. The decision to implement the 0.5% sulphur cap in 2020 may also affect decisions on whether or not older and less fuel efficient ships will be sent for early recycling.
After the MEPC decision in 2016, BIMCO, ICS and other shipping associations submitted a joint paper to IMO focusing on issues regarding the availability and implementation that will need to be resolved before 2020.
ICS noted that even though there was little evidence of deliberate noncompliance, the implementation of the global cap including ensuring uniform compliance in trades away from the major shipping lanes, is more complicated, especially if compliant fuels are in short supply and the price increases in 2020.
In summary, the implementation issues that are being addressed by IMO at the request of the shipping industry, are the following:
- Preparatory and transitional issues that may occur with the shift from the 3.5% sulphur limit to the new 0.5% limit.
- Impact on fuel and machinery systems from the use of fuel oils with a 0.5% sulphur limit.
- Verification issues and control mechanisms and actions necessary to ensure compliance and consistent implementation.
- Development of a standard format 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.
- 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.