The International Chamber of Shipping (ICS) said the International Maritime Organization (IMO) rejected its call this week to accelerate a study into the global availability of low-sulfur fuel for ships.
"A small majority of IMO members states, led by the United States, rejected an ICS submission to the IMO Marine Environment Protection Committee (MEPC), which was debated this week in London. Nevertheless, the IMO vote was very close indeed," ICS said. It said it had support from some major shipping nations such as China, several open registers, and some EU member states.
ICS said it wanted IMO to start work without further delay on a comprehensive fuel availability study that could consider the impact of all the changes required by the new MARPOL Annex VI regime, to reduce atmospheric pollution, before it is too late for the oil refining industry to respond and invest.
ICS said "shipowners are worried about whether sufficient fuel will be available to allow ships to comply with the strict IMO regulations on sulfur emissions and whether, as a result of insufficient supply, the costs for those ships that are able to obtain the required fuels might be prohibitively expensive. In some trades this could lead to significant modal shift to shore-based transport, with negative consequences for congestion and the environment. These are issues that were not anticipated when the regulations were agreed."
ICS Secretary General Peter Hinchliffe said “some governments still appear to have their heads in the sand with respect to fuel availability. What will be the impact of ships switching to distillate on the availability of diesel for road transport or heating oil for homes? We still think it’s essential that a global fuel study is carried out sufficiently in advance of 2020 to give the refiners adequate time to invest and react. The major refinery upgrading required could take a minimum of four or five years, perhaps longer, and we believe that completing the study in 2018 would simply be too late.”
ICS argues the need to move forward the IMO study is more important than ever, especially as the European Union has already decided it will definitely implement the 0.5 percent sulfur requirements in 2020, even if the IMO study results suggest, as permitted by MARPOL, that full implementation should be postponed until 2025.
“ICS has not given up, and we will bring the issue back to IMO next year,” Hinchliffe said.
On Aug. 1, the U.S. Coast Guard began enforcing the North American Emission Control Area
(ECA), an area along the U.S. and Canadian coasts where carriers will be required to burn a fuel with 1 percent or less sulfur.
On Aug. 1, 2015, vessels operating within the ECA will be required to use an ultra-low 0.1 percent sulfur fuel.
Demand for low-sulfur fuel will intensify in 2020 because under IMO regulations the maximum sulfur content of marine fuel will be lowered worldwide — that is outside of ECA areas — from 3.5 percent to 0.5 percent.
ICS said fuel is by far the largest operations cost for shipowners and has already increased in price by about 400 percent since 2000. It said a current 50 percent price differential between low-sulphur distillate and the residual fuel oil that is currently in use is predicted to increase yet further if the new demand that will be created by the MARPOL requirements is not matched by increased supply.
ICS is the principal international trade association for shipowners, with member national associations from 36 countries representing all sectors and trades and over 80 percent of the world merchant fleet. - Chris Dupin