After three years of discussions, predictions and preparations following MEPC 70 in 2016, the January 1st implementation date for the sulphur cap is almost upon the shipping industry.
According to the International Maritime Organisation’s Head of Air Pollution and Energy Efficiency, Dr Edmund Hughes, the industry’s efforts to ready itself for the new regulation have largely paid off. Most stakeholders are now confident that the industry will be ready to comply by the new year.
But the IMO still has work to do to ensure that the industry is fully equipped to deal with the operational implications of the sulphur cap – including compatibility issues with low sulphur fuels, the use of Fuel Oil Non-Availability Reports, and what to expect during the two months leading up to the Carriage Ban coming into force on March 1st.
Dr Hughes will be speaking about the IMO’s ongoing work to ensure consistent implementation of the sulphur cap at the Operating Under the Sulphur Cap seminar on September 10th. Ahead of the event, we caught up with him to learn more about some of the issues that will come up for discussion.
Q: What does the IMO’s work look like in the final months leading up to the implementation of the sulphur cap?
Dr Edmund Hughes: At MEPC74 in May we finalised several sets of instruments to support consistent implantation of the rule. Now we’re focusing on dissemination action to highlight those instruments. We’re attending meetings, workshops and conferences to try to explain what we’ve done, why we’ve done it and what information is out there.
I was in China last week, and I was able to provide insight into some of the aspects of the implementation guidance that we have prepared. We’re trying to do as much as we can in terms of providing information and highlighting the efforts that we have been making.
Post-MEPC we had a round table discussion with the industry to see how they felt things were going, and the feedback has been fairly positive in terms of the level of preparation. We understand that there are still concerns about some aspects of the rule, but we’re hoping that these will recede as the fuels come to market over the next quarter. People will be able to see them, use them, and check them, and hopefully that will improve confidence.
Q: What are the main questions and concerns that you’re hearing in the meetings that you are attending?
Dr Hughes: There’s still a question mark about availability – some people are still concerned that there won’t be sufficient fuel available, but we’re fairly confident that there will be. There’s also concern about fuel compatibility from a safety perspective, and that’s something that the guidance seeks to try to support and help companies to prepare for. We recognise that there is going to have to be ongoing management of that risk as part of the safety management procedures on the ship.
There is also a concern about enforcement and making sure that a level playing field is maintained. Again, we are trying to help people to understand that there are some tools available to Port State Controls to enable them to enforce these rules.
There are some concerns, but there is definitely less uncertainty now than there was two years ago, and that is down to a lot of the efforts we have been making here at the IMO.
Also, the industry has done a lot of preparation work. The International Chamber of Shipping have produced their own guidance, and we’ve also got guidance coming out as part of a joint industry project between OCIMF, IBIA and various other industry players, which is more focused on the fuel safety aspects. They’re also talking about developing an online learning tool for seafarers.
In addition, we have the International Organisation for Standardisation preparing the publicly available specifications. There’s a quite a bit of work that has been going on not only to understand, but to shine a light on some of the issues. By doing that you improve people’s understanding, and that’s important.
Q: Looking at the fuel availability picture, we’ve started to see some stockpiling of low sulphur fuel in ports. Is that in line with your expectations, and do you think fuel supplies will be ready in time?
Dr Hughes: Yes. We’re pretty confident, because we know how much effort the fuel supply sector has been putting in to preparations. They’re going to want to be able to sell the product, and they’re spending an awful lot of time, effort and investment to get compliant fuel ready for the ships. It’s not in their interest to have it not be available.
We’re very confident on the basis of the announcements made – the expected announcements that we’ll be getting in the next quarter, but also the ones we’ve already heard – that there will be sufficient fuel available.
It should also be recalled that we’re not only talking about heavy fuel oil below 0.50%. If a ship arrives in a port and there is no 0.50% heavy fuel oil, but there’s marine gasoil, then they’re going to have to bunker marine gasoil.
In fact, the analysis that we’ve seen from some bodies such as the IEA suggests that MGO may be quite a significant component of fuel oil consumption. The availability question was a huge source of uncertainty even when performed the study back in 2016.
There were a lot of assumptions made, and arguably some of those assumptions have actually proven to be quite close to reality in terms of things like the uptake of scrubbers. That gives us confidence that there will be sufficient fuel.
There are geopolitical issues that could also have an impact, as well as factors like diesel becoming a less popular fuel in certain markets. These are the sorts of things which we couldn’t have foreseen at the time, but they all add into the equation.
The bottom line is that we’re confident from an IMO perspective because of what we hear from the various stakeholders, and that’s what we draw our conclusions from.
Q: One of the other areas of concern that has been talked about is the implementation of Fuel Oil Non-Availability Reporting. Are there any issues remaining about debunkering high sulphur fuel oil for vessels using FONARs?
Dr Hughes: You’re right, and as part of the guidelines that were issued we now have a pro-forma for the FONAR. We also issued a guidance to Port State Controls on contingency measures for addressing non-compliant fuel oil. That’s quite an important guidance, because it sets out a serious of actions that Port State Controls might be able to take if they encounter a vessel with non-compliant fuel oil.
But it has to be emphasised that Port State Controls have ultimate jurisdiction over the matter, and it’s their prerogative as to what exactly they decide to do with the ship. If fuel oil is not available, they’ll decide whether they want the ship to come into compliance.
The provisions in MARPOL VI, which have been there since its revision, give ships the opportunity to present evidence. We do ask for the authority to take that into account, but there’s no obligation on those authorities to not require the ship to come into compliance.
Q: How does the IMO see its role post January 1st – is there anything the organisation can do to assist Port State Authorities with identifying non-compliant vessels and enforcing the rules?
Dr Hughes: Obviously we don’t have a role in jurisdiction and in terms of enforcement – that’s not what we do. But in the margins of the Triple I Code sub-committee that we held in July we had a meeting with the Port State Authorities to discuss the matter and gain their views. At the end of the day, though, it is their prerogative to do what they want.
In terms of communication, what to do with FONARs is one of the key issues. We’ve already identified that we need to clarify who the FONAR ought to be sent to in the Port State Authority. That’s currently under discussion, and will ideally be resolved prior to the 1st of January 2020.
It’s also apparently under discussion as part of the correspondence group on improving regulation 18 on MARPOL VI, which covers fuel oil availability, and notifications made by the administration and the authorities.
Improving the communication flow is key, not only in terms of where fuel is available, but also in terms of what happens when a ship is found not to be compliant. Those sorts of things are under further consideration, and it may be the case that we need to do something before 1st of January 2020, although that’s not probably going to be likely because we don’t have an MEPC meeting prior to that.
But you never know, the Assembly might decide to do something as well - that’s the other major meeting that’s going to happen at the IMO before December. At the highest level of the organisation they may want to reiterate some of the issues through some sort of resolution. We don’t know at the moment, because that could be submitted the day before the assembly.
Q: Indonesia has indicated that its domestic fleet will not comply with the sulphur cap when vessels travel in its own waters. What pressure can the IMO exert in a situation like that?
Dr Hughes: Firstly, we haven’t received any formal notification from Indonesia about this, and frankly it’s difficult to comment without their formal notification. However, what we have received is a correspondence made by the local media on the matter, and it would suggest that there is a slight ambiguity.
It seems to me that they’re suggesting that the decision is about ships coming into compliance when the fuels are available – so it doesn’t say that they’re going to be given a blanket exemption or anything.
It’s difficult to comment because we haven’t had any formal notification. Certainly it isn’t for the IMO Secretariat to tell the Indonesian government what to do. But for us, the MARPOL rules apply to all ships. That’s obviously in the articles of the convention. And certainly we would wish that all vessels comply with the requirements.
Q: The official implementation date for the sulphur cap is January 1st, but the carriage ban will come into force on March 1st. What do you think is going to change over that two-month period?
Dr Hughes: Vessels need to comply on the 1st of January, that’s the requirement. They can conceivably carry non-compliant fuel oil for a further two months, which gives them a two-month period to enable them to dispose of it.
We don’t want to see many ships navigating around with loads of non-compliant fuel on board post 1st of January 2020, but obviously for operational reasons some may have to. Call it serendipity – the delay arguably gives them a two-month period to do something with that fuel oil, without being in breach of the carriage requirement.
We’ve said – not just to ship operators and owners, but also to the Port State Controls – we’ve said to use it as a period of opportunity. There’s an opportunity for Port State Controls to inspect, check and do some analysis. Not necessarily enforce, obviously, because the carriage ban will not yet be in force.
There’s an opportunity for everybody during that two-month period. Ships are required to comply on 1st January 2020, but it gives two months for authorities to go on board ships and see what they’re doing, how they’re complying and whether there are any issues.
I think most ships will probably not want to have any non-compliant fuel on board if they can help it. Because then they have to worry about when they’re going to debunker the fuel, when they’re going to clean the tanks and lines and things like that. They could also be limited in terms of fuel storage capacity.
Preparation is a message we’ve been sending out very clearly. We issued the ship implementation planning guidance back in October last year, which we understand has been implemented by many in the industry, and that’s something we’ve been encouraging people to do.
Don’t wait, get prepared – because the sooner you prepare the sooner you’ll be ready for this new rule. And that’s the correct approach to take.
Q: What will the IMO’s priorities be for marine emissions regulations following the successful implementation of the Sulphur Cap?
Dr Hughes: Obviously the carbon agenda is very much front and centre now. The sulphur cap will hopefully be fully implemented after the 1st of January, and we don’t expect too many problems. If there are any issues that arise, then we obviously need to look at those and address those in the two MEPCs next year.
The focus will now increasingly be on carbon, and certainly part of that agenda will be looking at alternative fuels. Those alternative fuels are potentially not only zero-carbon, but also have zero sulphur content, and that will help us to address other air pollutants.
That will be the next step. The main focus will be moving on to look potentially at things like operational energy efficiency for existing ships, and other measures too – like national action plans. The IMO 2020 rule will pale into insignificance compared to dealing with the carbon problem.
This will require essentially changing the fleet’s entire fuel supply. Certainly, over the next ten to fifteen years we’ve got to start having ships that are zero carbon, and making sure that we achieve our ambitions. That’s really the next stage.
I think the positive thing about the IMO 2020 rules is not only that they have raised a lot of discussion about shipping fuels and how ships should comply with the various requirements, but they’ve also driven discussion about the whole issue of improving the quality of fuels and why that’s important for the carbon agenda. I think it’s an important stepping stone towards a zero-carbon future.
*This transcript has been edited to improve readability.
You can hear more from Dr Edmund Hughes at the Operating Under the Sulphur Cap seminar this September – part of London International Shipping Week. His presentation will focus on the IMO’s ongoing work to ensure consistent implementation of the 0.50% sulphur limit.