New Shipping Regs Pave the Way for Low Sulphur Fuel Regulation in 2020

New rules could ultimately increase shipping raising costs for shippers. Credit: Jim Allen.

A number of new shipping regulations became effective at the start of the year that will consolidate the knowledge of regulators regarding the consumption of bunker fuel by ships of over 5,000 gross tons and ultimately increase costs for cargo owners.

Low Sulphur Fuel regulations are set to come into force on 1 January 2020 and will see the limits for the sulphur content of ships’ fuel, known as bunkers or bunker fuel, capped to 0.5 percent in areas outside the four emission control areas currently in operation, which limit sulphur levels to 0.1 percent in fuel.

In preparation for this new regulation, also known as the sulphur cap, amendments to the MARPOL (Marine Pollution) regulation will require all vessels to collect data on fuel oil consumption, including the sulphur content of all the bunker fuel being used and the amounts consumed. Furthermore, changes to the bunker delivery note mean that suppliers of fuel to ships must certify that the fuel is compliant with International Maritime Organization (IMO) regulations.

In addition, bunker suppliers will only be able to sell non-sulphur cap-compliant fuels to vessels fitted with scrubbers that clean their exhaust gases, collecting sulphur for disposal later in closed loop scrubbers or for disposal at sea for open loop scrubber operations. However, only an estimated 5 percent of around 80,000 ships will have fitted scrubbers by 2020, meaning that shipowners have chosen to opt for the more costly distillate fuels in order to meet the regulations.

Data collected by ships must cover all fuel types used aboard the vessel and the IMO said, “The aggregated data is reported to the flag state for each calendar year and the flag state, having determined that the data has been reported in accordance with the requirements, will issue a Statement of Compliance to the ship.  Flag states are required to subsequently transfer this data to an IMO Ship Fuel Oil Consumption Database. IMO is required to produce an annual report to the Marine Environmental Protection Committee {MEPC], summarizing the data collected.”

Cargo movements by ship could also increase in cost as a result of the nitrogen oxide (NOx) emission control areas being extended to the North Sea and Baltic Sea. The U.S. and Caribbean regions have had NOx emission controls since January 2016.

The latest extension includes NOx emission controls extended to northern Europe, requiring ship operators to reduce NOx emissions by around 70 percent in order to meet the IMO’s Tier III standard. Although the rule became effective this month, the emission control areas will not be enforced for another two years.

Tier III NOx regulations are by far the most stringent, with owners needing to fit expensive equipment such as selective catalytic reduction systems or exhaust gas recirculation units to clean the NOx emissions from a vessel’s exhaust gases.

NOx emissions are considered poisonous and are said to be responsible for thousands of deaths annually.