The clock is ticking towards the 0.5% sulphur cap and although this is about to become effective globally in less than 18 months from today, the route to compliance remains challenging. Earlier in 2018, SAFETY4SEA launched a survey reflecting trends with respect to industry’s readiness to comply with the 0.5% sulphur cap. Key points and data analysis were presented at the 2018 GREEN4SEA Conference in March.
Is the industry ready?
Faced with a decision with huge cost implications, shipowners are considering all options on how to tackle sulphur emissions. According to findings from an ExxonMobil survey, conducted in 2017, the majority of stakeholders do not believe the marine industry is ready for the 2020 sulphur cap implementation. The results revealed an ongoing sense of confusion and lack of preparedness, with 70% of respondents saying that they do not believe the industry will meet the requirements until the deadline.
Moreover, a survey conducted by consulting company KBC found that the majority of refiners don’t have a back-up plan to cope with the Sulphur requirements effective from 2020, as only 15 per cent of oil refiners know how they are going to handle it.
Nonetheless, any possible delay to Sulphur Cap implementation – resembling to BWMC when at MEPC71 a deferral was argued – has been ruled out by industry’s associations.
Latest updates on industry’s preparations
IMO’s Sub-Committee on Pollution Prevention and Response, held from 9 to 13 July, addressed various issues regarding the implementation of the Sulphur cap. Namely, IMO’s Working Group (ISWG) agreed that the sulphur content of fuel oil test method ISO 8754, should be included in Regulation 2 of MARPOL Annex VI.
During PRR Sub-Committee, Marshall Islands raised safety concerns by submitting a paper to the ISWG on the implementation of the 2020 global sulphur cap under MARPOL Annex VI. This submission aims to help the ISWG create guidelines to implement the regulation 14.1.3 of MARPOL Annex VI. RMI’s submission provides technical information about safety implications and challenges regarding new fuel oil blends compliant with the new 0.50% sulphur fuel oil standard. It also touches upon operational and technical measures to address risks during fuel switching, tank cleaning and fuel system arrangements. The submission was co-sponsored by the Republic of Liberia, BIMCO, ICSINTERCARGO, INTERTANKO and WSC.
Addressing the challenges toward 2020 sulphur cap in an exclusive interview with SAFETY4SEA at Posidonia 2018, Mr Nicholas Makar, Regulatory Affairs Advisor of the Marshall Islands Registry, commented that in any regulation, an appropriate balance between safety and environmental protection measures is needed; the 2020 fuel sulphur cap is a good example of this.
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In addition, the Sub-Committee discussed regulatory changes regarding sulphur verification for samples taken from ships’ fuel systems. These are not covered by appendix VI to MARPOL Annex VI which deals with the sulphur verification procedure for the sample provided to the ship at the time of delivery. The majority was in favor of dealing with this aspect by amending appendix VI on the sulphur verification method so that it can be applied to both MARPOL and in-use samples, and to simplify appendix VI so that verification of compliance can be achieved by testing at just one laboratory.
Moreover, according to IBIA, confusion about whether the ISO 8217 marine fuel quality standard covers fuel blends produced to meet the 0.50% sulphur limit has been cleared up. The concerns were related to safety issues, however a statement made by ISO said the 0.50% fuel oils “will be fully capable of being categorised within the existing ISO 8217 standard.”
Nevertheless, IBIA said that a number of issues still remain unresolved. Namely, matters like how PSCs will enforce sulphur limits and deal with unavailability of fuels, as well as a standard reporting format for fuel oil non-availability, have not be clarified.
Commenting on the occasion, the President of the Union of Greek Shipowners, Theodore Veniamis noted that the IMO supports a realistic approach, and addresses potential variables which could impact ships’ compliance.
ISO 8217 covers 0.5% sulphur fuels
Following concerns among the industry’s stakeholders that ISO 8217 would not encompass future 0.5% fuels, ISO made a statement to clarify that new blends of bunker fuels will fit within the related fuel standard. Namely, the organization confirmed that the General requirements of ISO 8217:2017 along with the characteristics included in Table 1 and 2 of ISO 8217: 2017 cover 2020 0.50% max Sulphur fuels in the same way as they cover today’s fuels including the 0.10% max, in an effort to reassure the industry that there would be not any significant safety issues if fuels become unstable or damage machinery.
Tips for switching to low sulphur fuel
Ahead of the new regulation, ExxonMobil has published best practice tips to help operators switch to low sulphur fuels, while maintaining a vessel’s safe operation. In order to achieve a smooth switch, operators need to consider four key aspects.
- Firstly, establish best practice: Operators should buy fuel that meets the latest ISO 8217:2017 specification and buy it from reputable fuel suppliers.
- Secondly, test for cat fines: 0.5% sulphur fuels could contain high levels of cat fines which could damage the engine.
- Thirdly, check for compatibility: There is a risk that two compliant fuels will not be compatible, causing sludge. The fuels should be ideally tested in a laboratory.
- Finally, monitor for sludge: If sludge starts to form, ensure there is no further fuel blending before any action is taken, as this may worsen the problem.
LNG vs Scubbers
In the meantime, a new study for Transport & Environment by the UMAS consultancy found that LNG does not guarantee compliance with 2020 sulphur cap. Specifically, the study said that creating LNG infrastructure for shipping in Europe would cost $22 billion and deliver a 6% reduction in ship GHG emissions by 2050. The downside is that these emissions savings would likely be cancelled out by the growth of maritime trade. The study also highlighted that if current investments in LNG infrastructure require a large LNG market, but the sector ultimately chooses zero-emission technologies, then many LNG assets will likely become stranded by 2050.
On the other hand, scrubber uptake is rapidly accelerating with the number of ships with EGCS installed or on order standing at 983 as of 31 May 2018, according to a survey by EGCSA. Namely, 63% of all ships have either been or will be retrofitted with scrubbers, while 37% are new building installations. What is more, 988 of the 1561 individual scrubber towers installed or on order are for open loop scrubbing; confirming it as the most popular EGCS. In addition, nearly 60% of all retrofits and newbuilding installation works take place in Asian yards, with this number increasing to nearly 85% of newbuilding installations.
Challenges ahead
Industry bodies and stakeholders should work hard to address key challenges:
- Fuel availability in 2020 (refining capacity);
- Fuel safety onboard ships;
- Fuel price (achieve cost-effective compliance);
- Global enforcement outside ECAs ;
- PSC and violation penalties / Global enforcement regime;
- Fuel quality and compliance with ISO 8217 standard;
- Uncertainty on the cost of existing fuels in 2020 and market impact towards the next 10 years;
- Upfront investment vs long term savings for operators given the lack of certainty;
- Operational complexity of the fuels and technologies to comply with requirements;
- Possible changes in the regulatory landscape.
Actions required
Surely, operators need to consider the available options and work closely with trusted fuel and lubricant suppliers to make sure that come 2020 they can navigate the changes. In addition, industry regulators need to tackle with the lack of uniform monitoring and enforcement/penalty policies in EU in conjunction with a wide North European ECA. For that reason, industry could take advantage of the remaining time and shed light to gray areas that may inherent compliance once the legislation comes into place.
