Sulphur 2020: A shipper’s guide to the upcoming regulations
By January 2020, global fleets will be expected to comply with tighter sulphur emissions regulations, which will see the global limit drop from 3.5% to 0.5%. As the industry counts down to the big day, what do shippers need to know?
It may not surprise you to hear that the upcoming Sulphur 2020 emissions regulations have been welcomed by industry, regulators and environmental champions alike. Intended to dramatically reduce the sector’s sulphur emissions, they’ll deliver great environmental and health benefits – particularly for those leaving near coastlines and ports – and in doing so, reduce the impact on wider society.
But it’s also widely acknowledged that the regulations have significant consequences for both shipowners and their customers. We spoke to Edmund Hughes, Head of Air Pollution and Energy Efficiency at the International Maritime Organization (IMO), to find out more.
For those unfamiliar with the forthcoming regulations, could you explain what they are and how the 0.5% global sulphur cap came about?
The sulphur limit in fuel oils is part of a suite of regulations contained in MARPOL Annex VI, which are the international regulations for the prevention of air pollution from ships. When MARPOL was first adopted in 1997, it took eight years to come into force, and when it did, many member states asked for the standards to be stronger. In 2008, the IMO adopted the revised standards, which saw the strengthening of the global sulphur limit to 3.5% in 2012, and now to 0.5% in 2020. A study submitted to IMO in 2016 identified that a delay of five years in the implementation of the 0.5% sulphur limit would contribute to more than 570,000 additional premature deaths compared to the implementation from 2020.
In light of this, what do you see as the main issues for the shipping industry?
Planning. Shipowners need to think about the procurement of the compliant fuels, and start discussing their needs with their fuel oil suppliers. Underlining all of this is the need to update safety management systems on the ships. International shipping already has the International Safety Management code which sets out a safety management system for every ship. They’ll need to update their procedures on board for fuel changeover. This includes training and awareness of the handling of the compliant fuel oil.
How is the IMO ensuring successful implementation in the meantime?
The early confirmation of the 2020 date has been important, because it’s given everyone three years notice, including those outside the shipping sector. It’s been a clear signal to the oil industry to start making plans to develop compliant fuels, and start providing them to the markets.
We’ve also had a whole programme of work on consistent implementation. One element of this has been developing an implementation plan for ships. We fully expect the guidance for that plan to be approved, and that would be sent out in November. This would still give vessel owners over a year to prepare.
What level of compliance do you expect to reach 2020?
Some 96% of the global fleet are flagged by parties from MARPOL Annex VI – so the expectation is that the majority of ships will comply with the new requirement. Sometimes we get fixated on the percentage of compliant vessels, but it’s actually more about which types of ships will comply. The larger ships are the ones that have the greatest demand for compliant fuel, and therefore are the ones that will have the greatest demand to be supplied with the new fuel oil. Some smaller ships may have additional challenges to comply. I think it’s more a case of how the ships are managed and how fuel procurement is managed. But I certainly see close to full implementation and full compliance.
The sulphur regulation will result in increased freight rates – do you have any comments around that?
From my point of view, freight rates should reflect the true economic cost of shipping goods. The ‘polluter pays’ principle requires the cost of pollution to be reflected in the costs of goods and/or service.
As such, the cost of pollution from transported goods should be more accurately reflected. So, if shipping companies need to bear the cost of better quality fuel being used by ships to reduce these emissions, then the freight rate should reflect that cost.
Do you think the forthcoming global cap change is a ‘final destination’ regulation, or will it be tightened further in the future?
I don’t see the standard being tightened further at the moment. There’s quite a bit of work going on at the IMO looking at alternative fuels like LNG and methanol. In the future, I think the focus will be on potential alternative fuels and whether fuels could contain no sulphur at all.
Do you have a message to customers of the shipping industry?
It would be great if customers can support shipowners and operators to implement this requirement. They need to encourage them to plan for it because ultimately it will benefit all of society and will put the shipping industry onto a path for a sustainable future.
Finally, what would you say to the shipping industry right now?
As Winston Churchill once said: “Failing to plan is planning to fail.” I think that’s sound advice. And I think we’re trying to support the shipping sector to plan now. We’ve got another 15 months before we implement this measure, and I think that time will be valuable in terms of preparation.