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December 27, 2019
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IMO 2020: Marine Fuel Sulphur Cap

On 1 January 2020 the Regulations for the prevention of air pollution from ships under Annex XI of the MARPOL Convention will enter into force. The Regulations will implement a reduction in the sulphur content of marine fuels. EU Member States must ensure that ships in EU waters (except SOx Emission Control Areas) use fuels with a substantial cut in sulphur content to no more than 0.5% mass by mass (m/m) - from the current 3.5% cap.

As decided by the IMO, the UN specialised agency and governing body for the MARPOL Convention, the Regulations aims to substantially reduce the impact of ship emissions on human health. This sulphur cap will apply to all vessels of all flags, including vessels whose journey began outside the EU.

Therefore, ships will have 3 key options to comply with the Regulations, namely, low-sulphur marine fuel, scrubbers (otherwise known as "Exhaust Gas Cleaning Systems") or LNG. In fact producers state ship owners will have a number of choices of how to comply with the sulphur specifications. Needless to say each of such options consist of different challenges toward transition, including cost of installation and use, availability of new fuels and global infrastructure.

Scrubbers are accepted by flag States as an alternative means to meet the sulphur limit requirement because they remove sulphur oxides from the ship’s engine and boiler exhaust gases. However, public interest environmental groups are strongly opposing and ultimately demanding a ban on the use of scrubbers. Alternatively, refineries may blend fuel oil with a high sulphur content with fuel oil with a sulphur content lower than the required sulphur content to achieve a compliant fuel oil.

The 2019 Guidelines for Consistent Implementation of the 0.5% Sulphur Limit under MARPOL Annex VI (the “2019 Guidelines”) aim at ensuring a consistent implementation of IMO 2020 across port and flag states, and provide valuable guidance on interpreting and implementing IMO 2020. The comprehensive 2019 Guidelines include a template for a "Fuel Oil Non-Availability Report (FONAR)" set out in Appendix 1 and a "Technical review of identified possible potential safety implications associated with the use of 2020 compliant fuels" set out in Appendix 2.

Also the Guidance on ship implementation planning includes sections on:

  • risk assessment and mitigation plan (impact of new fuels);
  • fuel oil system modifications and tank cleaning (if needed);
  • fuel oil capacity and segregation capability;
  • procurement of compliant fuel;
  • fuel oil changeover plan (conventional residual fuel oils to 0.50% sulphur compliant fuel oil); and
    documentation and reporting.

Maritime shipping directly affects air quality in many European cities, including through sulphur oxide emissions resulting from the burning of fuel oil. However, ships also transport the majority of vital goods worldwide. Ships are also becoming more energy efficient, with IMO regulations on energy efficiency supporting greener and cleaner shipping.

Given that 2020 is around the corner, all stakeholders must collaborate and proceed on an urgent basis to prepare for implementation with IMO 2020.

Important developments constantly reshape the shipping industry, which ultimately adapts to the new requirements. Particularly given the uncertainty of the future, the relevant players need custom-made, long-term solutions for their commercial operations.

Our firm advises on the appropriate legal structure and financing vehicle for shipping activities, and all ancillary matters, as follows:

  • Ship Registration and Finance
  • Security Registration and Enforcement
  • Ship Sale and Purchase Agreements
  • Shipbuilding Contracts
  • Ship Management Contracts
  • International Law of the Sea
  • Marine Pollution and Security

Please do not hesitate to contact us if you require further information or support on such matters.

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