Sulphur cap chaos in 2020 warn shipowners

(Posted on 24/05/18)

The International Chamber of Shipping (ICS) fears ‘chaos and confusion’ unless the UN International Maritime Organization (IMO) urgently resolves some serious issues concerning the successful implementation of the 0.5 percent sulphur in marine fuel cap, which is scheduled to come into effect globally overnight on 1 January 2020.  

Such chaos would have serious consequences for the movement of the world’s energy, raw materials and manufactured products – about 90 percent of global trade being carried by sea. This was the principal conclusion of the Annual General Meeting of ICS’s member national shipowner associations which met in Hong Kong last week. 

Speaking from Hong Kong, ICS Chairman Esben Poulsson said: ‘The shipping industry fully supports the IMO global sulphur cap and the positive environmental benefits it will bring, and is ready to accept the significant increase in fuel costs that will result.  But unless a number of serious issues are satisfactorily addressed by governments within the next few months, the smooth flow of maritime trade could be dangerously impeded.  It is still far from certain that sufficient quantities of compliant fuels will be available in every port worldwide by 1 January 2020. And in the absence of global standards for many of the new blended fuels that oil refiners have promised, there are some potentially serious safety issues due to the use of incompatible bunkers.’

Poulsson added: ‘Governments, oil refiners and  charterers of ships responsible for meeting the cost of bunkers all need to understand that ships will need to start purchasing compliant fuels several months in advance of 1 January 2020.  But at the moment no one knows what types of fuel will be available or at what price, specification or in what quantity.  Unless everyone gets to grips with this quickly we could be faced with an unholy mess with ships and cargo being stuck in port.’ 

ICS emphasises that governments will need to make significant progress on these issues at a critical IMO meeting in July about the impending global sulphur cap, to which ICS – in cooperation with other international industry associations – will be making a number of detailed technical submissions to assist successful implementation of what ICS describes as a regulatory game changer. 

The ICS AGM in Hong Kong endorsed its support for the historic UN IMO agreement adopted in April 2018 on a comprehensive strategy to phase out international shipping’s CO2 emissions completely.  This includes targets to improve the sector’s CO2 efficiency by at least 40 percent by 2030 and 70 percent by 2050, and a very ambitious goal to cut the sector’s total GHG emissions by at least 50 percent by 2050 regardless of growth in demand for maritime transport. 

ICS member national associations agreed to contribute constructively to the immediate development of additional IMO regulations that will start to have a direct impact on further reducing international shipping’s CO2 emissions before 2023, in line with the new IMO strategy.  They agreed that ICS should come forward with detailed proposals before the next round of IMO discussions in October on reducing GHG emissions from shipping. 

However, ICS members expressed serious disappointment at the apparent intention of the European Union to press on with the implementation of a regional CO2 reporting system at variance to the global system already agreed by IMO, despite having given an undertaking to align the MRV regulation with the global regime. 

‘We are still waiting to see the final recommendations from the European Commission following a recent consultation’ said ICS Chairman Esben Poulsson.  ‘But the industry has made clear its total opposition to the publication of data about individual ships using abstract operational efficiency metrics that bear no relation to CO2 emissions in real life and which will be used to penalise shipowners unfairly.’

Mr Poulsson added: ‘Anything less than a full alignment with the IMO CO2 data collection system will be seen as a sign of bad faith by many non-EU nations who recently agreed to the IMO GHG reduction strategy, precisely to discourage such unilateral measures which risk seriously distorting maritime trade and global shipping markets.’

The ICS AGM, which was hosted by the Hong Kong Shipowners Association, re-elected Esben Poulsson (Singapore) as ICS Chairman for a further two year term. 

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