The inside view on IMO 2020
Edmund Hughes is head of Air pollution and Energy efficiency at the International Maritime Organization and is at the heart of the IMO’s work to reduce air emissions from shipping. He spoke with with IBIA’s Director and IMO representative, Unni Einemo about the road to 2020 and beyond in this interview for IBIA’s magazine, World Bunkering, to get his view on the IMO’s preparations for the global low-sulphur regime.
UE: The 0.50% sulphur limit has become widely referred to as “IMO 2020” and it is getting a lot of press attention. When the decision to go to implement it in 2020 was taken at the Marine Environment Protection Committee (MEPC 70) in 2016, did you anticipate just how big an impact this regulation would have?
EH: Leading up to 2016 we had already had some discussions about when the review into fuel oil availability should take place because of concerns expressed both by shipping and refining industries, and that gave us a precursor to the attention being paid. First of all everyone wanted to know “will it happen” because some thought there would be a delay. Having got over that, the focus has been on the implementation which we have been working on for the past three years here at the IMO. In terms of impact this is certainly a decision that has raised global interest. IMO, while historically focused on shipping, recognises that environmental protection issues, in particular, have wide impacts on all aspects on member states such as economy, trade and social development. When making regulations this is something we have to get used to very quickly.
UE: Could IMO 2020 also have an impact on states and trade?
EH: Maybe, we will see. An expert group analysed the impacts of the ruling. Yes there will potentially be an increase in the price of fuel oil used by shipping because they will be using better quality fuels, and you pay for quality in the world. But the fact is that status quo is not acceptable politically because of the impact of ship emissions on human health and the environment, and that has its own cost which is borne by society. We have had the principle of ‘polluter pays’ since 1992 and you have to recognise that shipping is a polluter and you need to somehow mitigate that. The cost of reducing pollution is being added to the fuel and that in turn is passed on through the logistics chain. There is a potential win-win here as higher fuel cost can stimulate innovation and efficiency in the system, thereby helping another big agenda at the IMO for the past decade, which is improving the energy efficiency of shipping. Shipping has for the past 40 years had the opportunity to use a very low cost fuel and the focus has been on expansion of shipping and world trade. Having been successful in responding to demands for its services in terms of trade, it also has to recognise that it has an impact on the environment. Scrutiny of the sector is increasing and environmental issues are becoming higher profile and of greater concern to the public. Shipping cannot ignore that and has to respond.
UE: Since the decision was taken in 2016, there has been repeated speculation that it would be delayed and also attempts at slowing it down. Do you think IMO 2020 has been fully accepted now or is there still resistance to it?
EH: I think that particular issue has been well and truly put to bed, in part because of the realisation that the process of changing the regulation is so protracted, taking at least 22 months. The short window of time to table a proposal to delay has passed.
However, it has been recognised that there are issues that needed to be resolved and a huge body of work has been undertaken on the consistent implementation of the rule. One of the key aspects of that was in terms of enforcement, to address concerns from the shipping sector and industry stakeholders to make sure that a level playing field was maintained. Otherwise we would get market distortion and enforcement is a key part of that. The big challenge here was how to enforce the rule on the high seas, outside territorial waters. That’s why we got the carriage ban, which gives port state control (PSC) teeth in enforcing the rule when ships come into ports. They don’t have to prove that ships have been using non-compliant fuel, as now even having it onboard is illegal. This was the simplest and most effective tool.
UE: How do you expect the transition to 0.50%S to go – smooth or chaotic? What do you think will be the most difficult issues will be?
EH: I’m optimistic, but realistic as well. There may be some local shortages of compliant fuel oil, but if a 0.49% sulphur fuel oil is not available, maybe lower sulphur marine gasoil is. It may be more expensive, but the rule is to use a compliant fuel oil. The risk of widespread noncompliance has been reduced, because the awareness is there now and I think people are now just anxious to see the compliant fuel oils come on the market, probably during the third quarter of this year, so they can begin to stem it and gain experience with its use.
UE: Do you still see some pockets of ignorance where more preparation is needed?
EH: We’re trying to talk to as many stakeholders as possible, but you do hear anecdotes of lacking awareness, which is surprising given the level of attention it has been getting both at IMO committees, industry events and in the media – not just in shipping media but also in energy media and the wider press.
UE: IMO has finalised a comprehensive set of guidelines for consistent implementation of the 0.50% sulphur limit. Is it enough and if not, what more should have been covered?
EH: The guidelines are comprehensive, but we are seeing some questions coming up. One of them is who should ships be sending FONARs to, and what PSC officers should do with the FONAR information; who they should disseminate that information to. This is an area where we may need to help with further clarification. There is work going on regarding improving the IMO’s information system, GISIS, to try to clarify who should provide this information and what happens with the information afterwards.
UE: The guidance documents are aimed at various parties – e.g. ship operators and various authorities such as PSC and others in member states. Based on experience, to what extent do you think it will be followed and by whom?
EH: They are very important and create a “de Minimis” expectation of how the rules will be implemented and enacted. They are there for the legal authorities, whether they be the port state or flag administrations, to understand the expectations of the global community in terms of implementation of these rules. They cannot be ignored and are essentially soft law that give instructions as to how a court of law may interpret the regulation. We try to create a common understanding and interpretation to help give a legal guidance and reduce the grey areas. We have received very positive feedback from shipping companies, for example, that the IMO’s guidance for developing a ship implementation plan for the 0.50% sulphur limit is really helping.
I’d like to add that probably the most important instrument of all is the International Safety Management (ISM) Code; essentially a very good framework tying together all the various instruments that the ship has to comply with. Within the ISM Code, one of the provisions is that ships should take into account the applicable guidelines for IMO instruments.
UE: Are you worried about the level of compliance and the enforcement aspects of IMO 2020?
EH: Let’s be frank: there’s a clear economic incentive for ships not to comply, they could potentially save hundreds of thousands dollars per voyage. But now we have the carriage ban in place and increased awareness compared to when the decision was taken in 2016. An enormous amount of effort has gone into disseminating information and raising awareness and it has made a huge difference. For example, there is greater awareness of how difficult it is to come into compliance in terms of cleaning out tanks and fuel lines, and a realisation that having non-compliant fuel onboard is a logistical challenge which will end up costing the ship, which may have to pay for non-compliant fuel to be debunkered and treated as waste in some ports. Awareness is now much greater both in shipping and on the supply and refining side. Governments are also increasingly aware that penalties need to be dissuasive to be effective deterrents.
UE: There has been a lot of focus on fuel safety aspects in connection with IMO 2020 and it is now a new agenda item on this at the Maritime Safety Committee. What do you think IMO can actually do about fuel safety?
EH: We obviously have key provisions such as the SOLAS requirement on flash point and the safety committee has now asked for enhanced reporting on that when non-compliant fuel is identified. Safety is at the heart of IMO and the change from the current heavy fuel oil to middle distillate types of fuel or blends presents new risks. Those risks are manageable and relevant stakeholders, such as ship engineers and bunker suppliers, are used to managing them. One of the key things we have done is raising awareness and identifying these risks, which allow industry stakeholders themselves to get a broader understanding of the types of risks that they need to mitigate and manage. They can do that through the ISM Code onboard ships and through risk management procedures and processes for those engaging in the industry. I don’t think these risks are unmanageable, and I feel this is part of being a good shipowner; you have to manage the risks that are presented to you.
UE: But now the onus seems to be on the IMO to come up with some kind of framework for fuel safety.
EH: Yes I think you’re right, but sometimes the framework is already there and you have to think carefully before drafting more regulation which leads to a further need for verification, certificates, more paperwork etc. To me the instrument is already there through the ISM Code, in which you are required to manage the risks that are already identified. If we identify new risks, risks that were not there before, then yes you may need to look at amending provisions. One example that is being talked about a lot is incompatible fuels and while this can be difficult to manage on ships with limited capacity for segregated tanks, it is manageable and we are aware of industry now preparing its own guidance for issues like this. I’m confident that the risks that have been identified with new fuels will be manageable by well prepared and trained ships’ crew.
UE: IMO has a reporting database called GISIS and there are calls to report fuel safety issues via GISIS. How will the data be used?
EH: One part [of GISIS] is for people to see that the regulation is being implemented and monitor compliance, but there are questions about what the information should be used for. Collecting data is great but it is ultimately up the member states how it is to be analysed and used and that discussion has yet to be concluded.
UE: There are calls for the IMO to somehow get member states to control and take action against bunker suppliers if they provide fuels that are non-compliant or cause safety issues. Is there some kind of precedent for this in other areas, for example, in IMO putting in place a framework for member states to control and penalise suppliers of equipment and services to ships if those fail to meet safety or other regulatory standards?
EH: I am not aware of a precedent of the IMO to create provisions to regulate what is ultimately under the jurisdiction of national governments. Regarding who should mandate controls for provision of fuel oil to ships, the debate shows a clear division with some governments feeling it is down to individual governments to decide, while others think there should be IMO control over fuel oil standards that are verified in accordance with global procedures. The new guidelines for member states make reference to voluntary licencing schemes for bunker suppliers, but this is still under the control of local governments. The idea that IMO should somehow take over control of a global bunkering system is difficult to envisage. We don’t control individual shipping companies either. If there are real significant problems with 2020 the discussion may come back, but companies with large consumption of fuel oil have the ability to stop using suppliers that don’t meet their standards, which I’m sure we will increasingly see happening. Scrutiny is increasing and so are calls for transparency with owners demanding more information about what the fuels they are receiving.
What’s clear, however, is that it is up to contracting parties to MARPOL Annex VI to take action against those that are in breach of the regulation, whether that is ships or bunker suppliers, but it is not up to the IMO to decide what type of sanctions they impose. This is how it should be: the IMO is a specialist technical UN agency that facilitates dialogue between governments; we are not the government. Ultimately the governments have to decide for themselves what is appropriate and acceptable, and that includes deciding to what extent the regulatory framework for international shipping should step into territory that is governed by inland regulations. Bunker supply is a classic example of where inland regulations and the maritime sector interface and managing that jurisdiction is not easy.
UE: Let’s talk about scrubbers: there has been a lot of debate about the impact of washwater on the marine environment and many saying it is just moving a pollution problem from the air to the water. Could you explain a bit about how the potential impact of washwater was dealt with when the decision was taken to allow scrubbers as an equivalent means?
EH: It was a consideration, which is why there are washwater criteria in the guidelines [IMO’s EGCS Guidelines for approval of scrubbers], and they have evolved over time. Regulation 4, which deals with equivalent means, actually talks about allowing systems but not creating transboundary pollution, which is the idea that states should not just transfer pollution from one form to another or to other states. But when these criteria were agreed, there were very few scrubbers and that is changing now, so you can see why governments have suddenly decided that they want to look at this again from their own perspective.
UE: Do you expect scrubber regulations to be tightened and if so, how? Will the EGCS Guidelines be adjusted? Will the IMO make a decision to restrict discharges in some areas? Will such decisions be based on science or political pressures, or both?
EH: It is hard to tell as of right now, but we have seen some governments decide they want to evaluate these systems and the washwater and we are seeking guidance from our scientific advisors on the matter. If that advice comes back and is ignored it may be difficult, but as we know environmental protection has become more political and governments are more wary of environmental impacts. We have a new agenda item to look at this more closely, including scientific evidence and we’ll have to wait and see what the outcome is.
UE: IMO has come under fire from some quarters for working so closely with industry and perhaps being unduly or disproportionately influenced by it. Could you comment on that, and the role of NGOs at the IMO?
EH: I find this line of discussion extraordinary that the IMO, which is a specialist technical agency for a particular industry, should hold all its discussions and deliberations only with governments with no input from the industry it is meant to regulate. It is not just the industry stakeholders NGOs that have a view on it; it is the NGOs representing environmental protection groups as well. Should they also not then have a place at the table? We may see criticism for listening too intently to some of the views provided by observers but ultimately decisions are made by the member governments and they will listen and take cognisance of positions and views and sometimes they agree, sometimes they don’t agree with what the industry thinks. I think our deliberations would be denuded if we didn’t have input from the sector we are supposed to regulate. I’m sure civil servants could draft regulations but whether they could be enacted and effective is another matter. We need the industry’s input into how the regulations can be implemented effectively by industry. Arguably, you could say we have been incredibly successful because we have reduced the negative impact of the shipping sector in terms of oil spills and reduction of other incidents over the past 40 years while the sector has grown significantly. We may have identified new impacts now, such as air pollution and carbon emissions, that need to be addressed.
UE: Greenhouse gas reduction is the next big challenge that will have an impact on the bunker industry. Following the initial GHG strategy agreed at MEPC 72, which set out the vision and levels of ambition, to what extent do you think the revised strategy in 2023 will help the industry take the necessary steps to achieve the level of ambition and do you think the levels of ambition will change?
EH: The vision talks about decarbonisation in this century so if you look for it there is sufficient ambition built into the IMO’s GHG strategy already. The global community, in line with the ambitions of the Paris Agreement, now seems to be focusing on keeping global warming below 1.5C. There is no doubt shipping has to contribute to that and the IMO’s GHG strategy gives a framework to enable us to do that. The real barriers will be achieving widespread adoption of innovative technologies and also alternative zero or low carbon fuels. How we can crack that particular nut could make IMO 2020 look like a minor issue by comparison.
Take for example of LNG, which despite years of trying to introduce it as an alternative fuel for shipping to reduce harmful air pollutants still has only about 1% market penetration.
There are going to be big challenges but one thing I can promise is that this train has left the station: there is no turning back, decarbonisation in the shipping sector will happen and we now have to try and find the tools and incentives to make it happen. It is recognised that ships are a tough nut to crack because they are essentially mobile power stations using large amounts of fuel and they have to carry their own supply of fuel to get from A to B in some of the most daunting and demanding environmental conditions that can be thrown at a machine on this planet. IMO’s role as the global shipping regulator is to help create the right enabling environment.