11-04-2018

Compliance to the IMO 2020 rule to be ‘quite high’ post-2020 despite concerns: MECL MD

Compliance to the International Maritime Organization’s global sulfur cap rule will likely be ‘quite high,’ with the level expected to settle around 85%-90% in the initial years after 2020, Marine and Energy Consulting Limited Managing Director Robin Meech said at an S&P Global Platts event last week.

Less than two years remain for the regulation to be implemented, but there have been widespread industry concerns about the extent of compliance to this rule due to the magnitude of the change and the costs involved.

“The introduction of the 0.5% global sulfur cap is the most significant change since the introduction of liquid bunkers. Some 60% of the bunkers will have to switch from [high sulfur fuel oil] to 0.5% sulfur overnight,” Meech said at the Platts 2nd Annual Bunkering and Storage Asia Conference in Singapore.

Specifications, stability and compatibility issues are also going to dominate the 2020 bunker and regulatory landscape, Meech said.

“We’re going to see new fuels and we’re certainly working with laboratories and technicians,” he said.

The bunker industry is fairly resilient and will adapt to this change, Meech said.

Around 90% of global marine trade goes through ports in countries that are signatories to Annex VI and over 95% of bunkers are purchased by flags that are signatories to Annex VI, Meech said, adding that this was positive for compliance.

MARPOL Annex VI, first adopted in 1997, limits the main air pollutants contained in ships exhaust gas including sulfur oxides and nitrous oxides, and prohibits deliberate emissions of ozone depleting substances. It also regulates shipboard incineration, and the emissions of volatile organic compounds from tankers.

Compliance should also improve as suppliers respond to demand, he said.

Meech estimates that global bunker fuel demand will be a little over 300 million mt in 2020, with the majority to be met by 0.1%-0.5% sulfur bunker fuel oil, of which the predominant portion was expected to come from distillates.

Scrubbers remained a financially attractive option, particularly for larger vessels and for newbuilds, and were going to see an uptake, Meech said. He estimated that scrubbed fuels could account for over 30% of total bunker demand by 2035.

Cold ironing — the process of providing shore-side electrical power to a ship at berth while its main and auxiliary engines are turned off — could also be increasingly used, he said.

As far as compliance was concerned, IMO was already addressing it by putting forth a proposal on a ban of carriage of non-compliant fuels on ships without the requisite abatement technology, Meech said.

Compliance would also be spurred by shipper pressure, increased public awareness, growing enforcement, and imposing larger fines and penalties, Meech said.

The loss of important charterers, increasing delays in inspection as well as eventual exclusion from key ports could also prompt shipowners to fast track towards compliance, he said.

There is also a need to improve bunkering standards in many ports by introducing unified standards, accurate measurement and survey systems, and more training for seafarers and port officers, he added.

In this direction, the existing emission control areas and the methods adopted there could provide cues, Meech said.

The US, for example, uses a sliding scale based on the tons of non-compliant fuel consumed in their ECA whereby the higher the sulfur level the larger the fine, Meech said, adding that this model could also be emulated at a global level.

In Denmark, the ECA is intensely monitored through drones and other airborne surveillance, stationary sniffing devices on bridges as well as fuel sampling, he said.

Source: Platts

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