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Web Alert: IMO 2020 global sulphur cap
News & Insights 7 August 2018
With less than eighteen months to go until the 2020 global sulphur cap deadline, members are faced with a decision of how to comply.
With less than eighteen months to go until the 2020 global sulphur cap deadline (0.5% low sulphur fuel), several ship owners and operators are still maintaining wait and watch stance, with an expectation of possible extension from the IMO. However, based on the outcome from the recent meeting of the IMO’s Pollution Prevention and Response (PPR) sub-committee and Marine Environment Protection Committee (MEPC), the possibility of any delay is highly unlikely.
Members are faced with a choice of either switching their ships to low-sulphur compliant fuel oil, retrofitting ships to use alternative fuels such as LNG/LPG/methanol, or installing approved scrubber systems which will clean the emissions before they are released into the atmosphere.
The pros and cons of each of the above mentioned options were covered in an article published in the July edition of Standard Safety, available on the right. Choosing the best option to comply with the requirement will eventually be a speculation based on future fuel prices.
The issue of cost and availability of low sulphur fuel oil is widely publicised; and compliant hybrid fuels as blended products could be a possible option. However, there’s an uncertainty in regards to the quality of the blends which poses a significant risk in terms of machinery breakdown claims.
With a high CAPEX involved in retrofitting ships to use alternative fuels like gas or methanol, installing approved scrubber systems may seem to be the most viable option (as this will be relatively cheaper). However, perhaps the most critical decision to be made by members is on the type of scrubber system itself. With three different types of scrubbers available - open loop, closed loop and hybrid (capable of switching from open to closed mode) systems - each with their own inherent benefits and drawbacks, the selection of the most appropriate system is highly important.
Even though all three types of scrubber systems are compliant at the moment; and the open loop scrubbers are relatively cheaper/simpler than the closed loop or hybrid systems, there is uncertainty in the future as authorities may consider prohibiting the release of wash-water from open loop systems in their coastal waters. Discharging this to a shore reception facility will involve additional operational expense; or else, there will be potential risk of MARPOL fines.
Furthermore, due to the high number of ships which have ordered or are installing scrubbers, recent reports from industry sources are mentioning that most of the suppliers cannot now deliver until after 2020. This will leave a large segment exposed to possible non-compliance and a practical/pragmatic approach from the enforcement agencies (PSCs) would be the least expected once the mandatory regulations are in force.
The club continues to remind its members that cover for fines arising from breaches of low-sulphur fuel regulations and other MARPOL violations is strictly discretionary; and strongly recommends that the charter-party contains suitable clauses to protect the party in question (whether as owner or charterer), including indemnities covering losses that may arise from wrong supply, fines and delays.