apsn APSN NETWORKING FOR STRONGER PORT INDUSTRY AND BETTER COMMUNITY

NEWS

Return

Container shipping needs clarity on IMO low-sulfur rule enforcement

Published on Tuesday,30 May 2017

With little doubt that a new global sulfur emissions rule will take effect in 2020, the container shipping industry needs assurances of how it will be enforced and soon. Without such guarantees, carriers spending billions of dollars to meet the International Maritime Organization’s (IMO's) rule will be unfairly disadvantaged by competitors who do not meet it. The environmental benefits sought would not be realized, either.  

Enforcement of the rule limiting bunker fuel sulfur emissions to 0.5 percent, down from the current 3.5 percent threshold, will depend on the 53 member states of the IMO that in 2008 approved the staggered plan for reducing emissions. Last year’s run-up to the IMO’s Safety of Life at Sea (SOLAS) amendment requiring verified gross mass declaration showed the scattershot approach of various members and raised questions about just how much the rule will be reinforced, particularly in less developed countries.  

“The single most critical open question at the IMO is how to establish a level playing field that is backed up by credible enforcement,” said John Butler, president and CEO of the World Shipping Council (WSC), whose members control 90 percent of global container ship capacity. “This is the subject of active discussion, and the industry continues to work with the IMO to determine the most effective way for the IMO to accomplish this.”  

The sharp difference in what carriers will have to pay for lower-sulfur fuel makes it tempting to skirt the new rule. The price of the current fuel most used, IFO 380, has risen steadily since August, now more than $300 per metric ton, according Bunkerworld, which tracks bunker fuel prices around the world. IHS Markit forecasts the new low-sulfur fuel will cost between $500 and $650 per metric ton by 2020.  

“Whatever the final numbers turn out to be, there is consensus that this is the most expensive environmental regulation ever placed on the shipping industry,” affecting all links and users of the containerized supply chain, Butler said. Forecasts of the annual cost of meeting the rule, approved under Marpol Annex VI, range from $5 billion to as much as $100 billion.  

There was some hope that the IMO would extend the rule start to 2025 if it found that there would not be enough low-sulfur bunker fuel available. It was decided in October 2016, however, that the 2020 timetable would be kept. Narrowing further the chances of more breathing room, Edmund Hughes, the IMO’s head of air pollution and energy efficiency, severely downplayed the odds of a delay in an interview with S&P Global Platts, an energy and commodities information provider.  

Stephen Jew, a senior consultant at IHS Markit, expects low-sulfur bunker fuel will be available at major refining and bunkering hubs. The IMO and its subcommittee on pollution, prevention, and response is still determining how to address non-low sulfur bunker fuel availability for remote locations, such as South Indonesia and parts of Africa, he said. Refineries and bunker blenders also need to decide on the formulation of the 0.5 percent bunker fuel, as there is a range of potential recipes, with concerns over asphaltene precipitation, fuel stability, and ignition properties. There will need to be an adamant collaboration among refineries, shipping and engine manufacturers, blenders, standards groups, and other stakeholders.  

Whether carriers meet the rule by investing in scrubbers, converting to liquefied natural gas, burning low-sulfur fuel, or some combination, the bill will be high. Estimating it will cost $2 billion to meet the rule, Maersk Line said it is seeking alternative fuels rather than betting on scrubbers. The top global carrier said that although scrubbers look cheaper at first, there is the additional cost of devoting specialized personnel for the heavy maintenance required to keep them humming.  

Not only is the upkeep high for a “relatively mitigated health and environmental result,” but scrubber adoption enables the use of cheaper fuels that “may ruin the broader business case for enhancing energy efficiency,” a Maersk spokesperson told The Journal of Commerce.  

“This significant extra cost underlines the importance of robust enforcement to secure a level playing field in the industry,” Maersk said.  

A coalition — involving WSC, the Baltic and International Maritime Council, the International Bunker Industry Association, and the International Chamber of Shipping — is urging the IMO to consider how member states will check if ships in their waters are burning the low-sulfur fuel or have a certified system for reducing the emissions and what action they will take. The coalition is also asking the IMO to consider creating a format for reporting when the new fuel is not available and create a verification process for when low-sulfur fuel is delivered to ship.  

The run-up to the new SOLAS rule lacked guidance on how each member state would implement the container weighing rule, creating an environment where verified gross mass declarations are rarely checked and safety concerns remain at the marine terminal and on the sea. It is time for the industry to demand more clarity on IMO sulfur rule enforcement or risk going down a similar path.


Sources: http://www.joc.com/regulation-policy/transportation-regulations/us-transportation-regulations/container-shipping-needs-clarity-imo-low-sulfur-rule-enforcement_20170530.html

TOP