US to back IMO 2020 ‘experience-building’ rollout

The US push for consensus on a sulphur cap “pragmatic approach” begins at IMO headquarters next week. Credit: IMO
IMO headquarters. Credit: IMO

After initially taking a wait-and-see approach to a proposal by major shipowner groups and ship registries seeking “pragmatic enforcement” of the International Maritime Organization’s (IMO’s) 2020 sulphur cap regulation, the United States has said it is now fully committed to working with other countries in support of that approach heading into a critical 73rd meeting of the Marine Environment Protection Committee (MEPC 73) in London on 22 October.

The regulation, which drastically reduces global limits on the sulphur content of marine fuel from 3.5% to 0.5% or below, becomes enforceable on 1 January 2020.

However, “with any major regulation there is always the issue of non-compliance during the initial stages, so taking a pragmatic approach is always the best way to ensure a smooth rollout”, said a high-ranking official at a pre-MEPC meeting sponsored by the US State Department in Washington, DC, on 18 October.

Therefore, he said, “the United States is going over [to London] to work on putting in place an experience-building phase as part of the regulation. We see that as the way forward to implementation.”

A petition filed in late August by Liberia, the Marshall Islands, Panama, and the Bahamas, along with shipowner groups BIMCO, Intertanko, and Intercargo, calls for delegates to MEPC 73 to consider adding into the regulation an experience-building phase (EBP) similar to one under development within the Ballast Water Management (BWM) Convention.

“The goal is to gain experience in the use of [new compliant fuel blends] and to ensure that unsafe fuels do not enter the market in response to availability pressures,” the petition states.

“Otherwise, the shipping industry faces considerable risks and shipowners and operators hold a disproportionate responsibility in implementing plans, contingencies, and making required investments to meet the challenges associated with the transition” to the 0.50% global sulphur cap, the petitioners assert.

With billions of dollars in fuel costs and oil revenues on the line, shipowners, Big Oil, and investors are paying close attention to how IMO 2020 will be enforced, particularly in the early stages of the regulation, as the spread between non-compliant, high-sulphur residual and low-sulphur compliant fuel is predicted to be roughly USD280/tonne in 2020.

As with the BWM Convention, the IMO 2020 EBP is to have three stages: a data collection stage, a data analysis stage, and a review stage. According to the proposal, a specific timeline for the stages of the EBP will be included within a low-sulphur compliant fuels data-gathering and analysis plan. The three stages “must be dynamically pursued” so that the regulation can be quickly adjusted.

The petition co-sponsors emphasised they are “fully committed to the successful transition” to the new sulphur limit on the original 1 January 2020 enforcement date. A high-ranking US official familiar with the US position told IHS Markit on 20 October that press reports characterising the White House as seeking to delay implementation of the regulation were false.

“The aim [at MEPC 73] is to come up with more details on the type of data that will be collected during the EBP and how it is to be collected, which will be further discussed next week,” the official said. A review of the data-collection and analysis stages could lead to amending the regulation, which falls under Annex VI of the IMO’s MARPOL Convention.

The United States, considered to be a tough enforcer of international shipping rules, has taken the hard-line position that once IMO 2020 is firmly in place, marine fuel will only be deemed compliant if it tests at levels at least 10% below the 0.50% standard.

“We’ve been alone on that position,” a state department official acknowledged at the 18 October meeting. “However, at some future point, the [MEPC] committee will reach a decision on [compliance levels] and I’d imagine we would end up supporting whatever they agreed upon.”