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IMO moves one step closer to resolving bunker sulfur cap enforcement problem

http://www.chemnet.com   Feb 12,2018 platts
More than a year after announcing its global 0.5% sulfur cap on marine fuels to be introduced in 2020, the International Maritime Organization has taken a first step towards helping member states deliver it.

The sulfur cap is due to be cut from 3.5% to 0.5% at the start of 2020, forcing most shipowners either to switch from burning fuel oil to cleaner, more expensive alternatives, or to invest in emissions-cleaning scrubber equipment to be installed on each vessel.

The IMO announced the measure in October 2016, but has given little guidance since then on how it should be implemented. The IMO has no enforcement powers of its own, and in international waters it will be down to the flag states where vessels are registered to check whether the regulations are being adhered to.

This has led to the concern that non-compliance with the sulfur cap will be widespread in 2020 as less scrupulous shipowners ignore the new rules where possible as a means of cutting costs. Some in the bunker industry have forecast 0.5% sulfur bunker prices could be as much as $400/mt more expensive than conventional fuel oil in 2020, giving a strong financial incentive to break the rules.

In an S&P Global Platts survey during a London International Shipping Week event in September, 27% of respondents said they expected to see 40 million-60 million mt/year of non-compliant fuel oil demand remaining in 2020. Another 27% said they expected to see 20-40 million mt/year of non-compliant demand.

But that may be set to change after a meeting of the IMO's sub-committee on pollution prevention and response (PPR). At the end of a week-long meeting in London, PPR delegates on Friday recommended a plan to ban the carriage of non-compliant marine fuels in bunker tanks, with vessels fitted with scrubbers exempted from the rule.

The proposal will now be passed to the next meeting of the marine environment protection committee (MEPC) in April to be provisionally approved or rejected, before being passed to the subsequent MEPC meeting to be adopted. If successful, the measure would come into force in March 2020, only a few months after the new sulfur cap is imposed.

The proposal could remove much of the opportunity for non-compliance at a stroke by empowering port states to do more about enforcement. At present, a port state seeing a vessel leaving its waters with insufficient compliant bunker fuel for its journey in 2020 can do nothing apart from contacting the relevant flag state to notify them -- and few expect all flag states to be proactive about following up on these notifications.

But the PPR sub-committee's recommendation would allow the port state to search the vessel and prosecute its operators if any non-compliant fuel was found in the bunker tanks -- regardless of whether that vessel had been burning non-compliant fuel in its waters.

That would leave a vessel planning on ignoring the sulfur cap with two options: either to accept the threat of prosecution, or to avoid entirely any ports where vessel searches are likely to take place. Neither option will be possible for the majority of the global fleet.

The success of the measure will now be dependent on member states at the next two MEPC meetings allowing it to be adopted, which is still not certain. But, given that the MEPC previously accepted the imposition of the sulfur cap, it will be difficult for it now to reject a proposal to implement it effectively.
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