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Sulphur cap

Priority: to enforce a level playing field with stricter sulphur standards

Shipowners:

“From 1 January 2020 onwards, shipowners have had to use more expensive low-sulphur fuels or install expensive scrubber equipment. Keeping the playing field level is paramount – cheaters must not be allowed to make economic gains!”

ALP Striker towing Hilli FLNG from Singapore to North Sea
Nick Lurkin 150.JPG
Contact

 

Nick Lurkin
Climate and Environment

+31 10 2176 275
lurkin@kvnr.nl

Nathan Habers 150.JPG
Press inquiries

 

Nathan Habers
Public Relations


+31 10 2176 264
habers@kvnr.nl

Context

Since 1 January 2020 – applicable worldwide – the maximum permitted sulphur emissions have been reduced from 3.5% to 0.5%. This equates to a reduction of more than 80% in sulphur emissions! The International Maritime Organization (IMO) decided on this in the autumn of 2016.

In order to comply with this regulation, shipowners have had to use a more expensive low-sulphur fuel from the end of 2019. According to manufacturers, this fuel is expected to be 70% to 100% more expensive than the current high-sulphur fuel, but full transparency in the pricing of the new fuel is not (yet) available.

Installing an exhaust gas cleaning system such as a scrubber, or switching to cleaner alternative fuels (LNG, for example) is another way to comply with the new regulation. However, for many shipowners, these are not (yet) feasible options because they are not always technically possible or require significant investment.

In addition, there are numerous uncertainties regarding the enforcement of the stricter sulphur regulations. This is obviously of great importance, especially considering the potential market disruption that would occur if unscrupulous shipowners continue to use cheaper high-sulphur fuel. This would have a negative effect on the state of the environment as well as the level playing field between shipowners.

The challenge

As mentioned above, it is important that there is a level playing field for shipowners. Unscrupulous operators who (deliberately) do not comply with the sulphur regulations may not be allowed to make economic gains. This calls for robust enforcement with appropriate sanctions to prevent this from happening.

A good example of how to accomplish this was suggested by the shipping sector itself. The proposed solution prohibits having fuel with a sulphur percentage higher than 0.50% on board after 1 March 2020*. Exceptions to this rule would be if a vessel is equipped with a scrubber, or if it could be demonstrated that low-sulphur fuel was unavailable.

If no low-sulphur fuel is available at a particular port, a globally unified procedure must be implemented that shipowners can follow without being penalized.

Finally, many shipowners have concerns about the stability of the new ship fuels. The quality of these low-sulphur 0.50% fuels is expected to vary greatly in different parts of the world. Moreover, many ship fuels are incompatible with each other, which can lead to potential problems with tanks and engines. The fuel left over from one voyage cannot be mixed with a new load of fuel as easily as before. Therefore, crews and bunkering departments of shipowners and charterers must pay close attention to which fuel they have to order.

* The global 0.50% sulphur cap came into effect on 1 January 2020, but the ban on having high-sulphur fuel on board took effect on 1 March 2020. This is due to the legal procedures within the IMO.

State of play - 8 February 2021

The KVNR will continue to closely monitor developments regarding the enforcement and practical problems of the stricter global sulphur cap. This is also in combination with problems on the subject of fuel quality.