IMO Issues More Guidance on Sulfur Limit, Uncertainty on Scrubbers Persists

22 May 2019

The International Maritime Organization has issued additional guidance over the implementation of the lower 0.5% sulfur limit on bunker fuels that goes into effect from January 1, 2020, according to a statement Monday.

The guidance includes sections on the impact of fuel and machinery systems resulting from new fuel blends or fuel types, as well as clarifications on control mechanisms and a standard reporting format for non-availability of fuel oil.

Member states also approved the 2019 guidelines for on-board sampling for the verification of the sulphur content of the fuel oil used in ships.

The additional guidelines seek to lift some of the uncertainty surrounding the implementation of the lower sulfur caps in the year ahead.

However, on the topic of exhaust gas cleaning systems, also known as scrubbers, uncertainty remains.

The Marine Environment Protection Committee approved a new output on the “evaluation and harmonization of rules and guidance on the discharge of liquid effluents from exhaust gas cleaning systems into waters, including conditions and areas” in the 2020-21 biennial agenda of the Pollution Prevention and Response sub-committee.

There is significant variation on the guidelines surrounding the potential use of open-loop scrubbers among IMO member states, which the committee seeks to address, albeit in 2021 — one year after the lower sulfur cap goes into effect.

Open-loop scrubbers send water used to clean emissions back into the sea while closed-loop scrubbers retain the emissions for disposal at port.

However, countries remain divided over open-loop scrubbers due to environmental concerns over the discharge of polluted washwater into the sea.

As a result, some countries have started banning the use of open-loop scrubbers in their port waters, necessitating either the use of closed-loop scrubbers or lower sulfur marine fuels.

In January, the Port of Fujairah said it was banning the use of open-loop scrubbers in its port waterswhile Singapore is set to implement a ban from January 1, 2020 and China has already banned their use within its emission control areas covering inland waters and most of its coastline.

Other countries with bans or restrictions are India, Belgium, Germany, Lithuania, Latvia, Ireland, Norway and parts of the US.

According to the latest data from DNV GL, the Norwegian accredited registrar and classification society, the total number of ships in operation and on order with scrubbers fitted rose to 3,286 in May.

Of that total, 2,419 are retrofits and 867 newbuilds, according to DNV GL data.

Some 80% of scrubbers fitted or to be fitted to ships are open-loop scrubbers, while 16% are hybrid scrubbers enabling ships to operate in both open and closed loop.

Hence, the potential ban on the most widespread type of scrubber in some ports continues to cause significant uncertainty on the shipping markets.

The appeal of scrubbers is that they will allow shipowners to avoid paying higher prices for compliant fuel and continue to buy high sulfur fuel oil, which is expected to price considerably below very low sulfur fuel oil.

S&P Global Platts assessed FOB Rotterdam 0.5% marine fuel for Cal20 on the swaps forward curve at $528/mt Monday, compared with $329/mt for FOB Rotterdam for 3.5% fuel oil barges.

The MEPC also requested that an expert team be established to assess the available evidence relating to the environmental impact of discharges of exhaust gas cleaning system effluent, with a view to reporting its findings to the PPR.