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IMO 2020: Countdown to compliance

The UK Chamber is helping its members prepare for the IMO’s global sulphur cap in 2020, a new regulation that could be highly disruptive without the right guidance.

Time is running short and just months remain before the IMO’s global limit on the sulphur content of marine fuel comes into force on 1st January 2020.

The global sulphur cap will enforce a limit of 0.50% m/m in marine fuel used by vessels trading internationally.

IMO 2020 is being called a once-in-a-generation disruptor to shipping’s commercial environment.

The world’s merchant fleet numbers over 52,000 vessels, of which most trade across international borders and will be subject to the global cap.

The new regulation will change the face of the shipping industry – it will have a positive impact on the environment and on air quality, but could have a disruptive effect on operations if shipowners do not prepare effectively.

The UK Chamber knows shipowners need certainty in order to implement and make decisions that will achieve compliance with the 2020 regulation.

Our continuing mission is to help our members achieve certainty and reduce their exposure to the unknown.

But there are still a number of pending issues and the industry is still awaiting publication of key guidance from international agencies that will help mitigate any risks.

As far as we are concerned there are four key areas that need to be addressed before the 2020 deadline:

  • How the regulation will be consistently enforced globally,
  • Education on how new compliant fuel should be handled,
  • How shipowners can report compliance issues to competent authorities,
  • Mitigation of any safety issues related to switching to low-sulphur fuel.

The IMO is developing guidelines to support the consistent implementation of the sulphur cap in 2020, plus guidelines to help port state control enforce the regulation consistently around the world and therefore maintain a level playing field for vessel operators.

The organisation is also working on a fuel oil non availability template (FONAR), which would be submitted by shipowners to port state control (PSC) in the event that compliant fuel cannot be obtained.

The FONAR provides documentation to prove that every effort to obtain compliant fuel has been pursued prior to a decision to bunker with non-compliant fuel.

Discussions continue as to exactly what should be included in the standard FONAR reporting format and the IMO expects to publish its guidance in mid-2019.

As part of this process, certain questions still remain to be answered. For instance, what happens to any non-compliant fuel remaining onboard after a ship, having already provided a FONAR, arrives at a port where compliant fuel is available?

We will be keeping our members abreast of developments and distributing the guidance after its publication.

Switching from conventional heavy fuel oil to low-sulphur compliant fuel comes with potential safety risks attached too.

There is precedent for these safety fears. Incidents such as loss of propulsion and fires were reported onboard certain vessels that transitioned to using low-sulphur fuel after the North American emissions control area (ECA) came into effect in August 2012, for instance.

To help mitigate against safety risks incurred by the transition, the International Organization for Standardization (ISO) is developing supplementary advice on the handling of new fuels. The guidance will be published in mid-2019.

In addition, a joint industry project is writing guidance on new compliant fuel oils, possible safety issues and crew training.

The IMO has not yet addressed fuel safety concerns but the upcoming meeting of its Maritime Safety Committee (MSC) in June will do just that. It may be late but it’s a necessary step to ensure proper, safe regulation.

Improving the safety of vessels and their crews is a big part of the UK Chamber’s work, so we look forward to circulating these guidelines among our members and advising on how best to implement them.

There are other, more complex unknowns to deal with too. It is not yet certain whether there will be sufficient supply of IMO-compliant marine fuel to meet the increased demand that will begin to be seen from the fourth quarter of this year onwards, as owners prepare their vessels to be compliant on 1st January.

The quality of these new marine fuels also needs to be assured. Price volatility is a concern too and the tight supply of compliant fuel is expected to force prices upwards, possibly by hundreds of dollars per tonne.

Scrubbers could be another option to achieve compliance with the 2020 regulation, but the exhaust gas cleaning systems still prove controversial.

The war on open-loop scrubbers, for instance, seems to be based more on commercial pressures than on scientific evidence.

Arguments also continue over whether fitting scrubbers is the purview of the owner or the charterer.

The Chamber is reserving judgement. We support any review of wash discharge standards if necessary, but any review should be based on scientific evidence and done through IMO’s appropriate technical bodies.

At the end the day, choosing to run on compliant fuel or fit scrubbers is a commercial decision, especially given that bunkers are the largest operational expense for a ship.

Our job here at the UK Chamber is to ensure our members have all the necessary advice and guidance to be able to make the right commercial decisions, plan and then implement them. We are here to provide you with advice and clarity on these complex issues.

To help with the planning process, on 18th June the Chamber will be holding a joint event with the International Bunker Industry Association (IBIA) to provide further clarity on all these pending issues.

Our advice to shipowners is simple: plan ahead now, don’t “wait and see” – and we’re here to help you.
Source: UK Chamber of Shipping

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