Environmental concerns will help define 2018 – BIMCO Reflections

Environmental regulations that have been on the horizon for years – if not decades – and are now beginning to kick in, says BIMCO in its latest “Reflections”.

In 2017 the Ballast Water Management Convention (BWMC) finally entered into force. It was also the year when 2020 was set for the implementation of the 0.50% sulphur cap on fuel oil to be used outside of emission control areas.

BIMCO noted that the work at IMO had now begun to decide how to effectively implement the new regulation and ensure a smooth transition. BIMCO said that it had major concerns when it came to the supply of compliant fuels, both on quality and quantity.

The IMO has also started working on a comprehensive greenhouse gas (GHG) strategy. BIMCO said that the industry should expect the global focus on the environmental impact of shipping and fossil fuels to continue unabated. “It is BIMCO‘s opinion that the industry should proactively set ambitious goals, and at the same time work closely with regulators to keep a level playing field across our industry.”

BIMCO noted that opinions were divided about the entry into force of the IMO Ballast Water Convention. “Some say better late than never, while others say it should be delayed.” However, BIMCO said that “the fact is that the rules have been set for equipping ships with systems over the next seven years.” There was no chance of getting any further postponement. It was crucial to know the different capabilities of treatment systems to ensure the right one was selected for each ship. That said, BIMCO observed that the convention text was already out of date and this needed to be rectified.

BIMCO warned that there could be a lack of compliant fuel. With the global sulphur cap looming on the horizon, shipowners had two basic choices: either burn compliant low sulphur fuels or scrub the sulphur out of the exhaust emissions. However, scrubbing required a hefty investment in equipment. BIMCO expected a lack of supply in compliant fuels to drive up prices, which would make for a quicker pay back if the scrubbing option was taken. However, BIMCO noted that only a few owners had decided to install scrubbers, “and as 2020 is approaching it becomes evident that only a limited number of ships will have scrubbers by that date”, said BIMCO.

As a result, only a limited amount of the fuel needed by ships after the 2020 cut-over will remain as high sulphur fuel oil. BIMCO said that, in reality, this meant that the refining industry controlled whether the shipping industry would be able to comply with the regulation.

The current desulphurisation capacity in the world’s refineries was believed not to have the capacity to remove the required amount of sulphur. BIMCO said that it saw little evidence that the refineries had the appetite for the investment required to produce the needed supply of low-sulphur fuel. Therefore, BIMCO expected a shortage of compliant fuel in some areas of the world.

https://www.bimco.org/products/publications/free/reflections

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