The IMO’s new regulation on sulfur emission reduction for ships, imposed to maritime shipping companies, will enter into force on January 1, 2020. With just a few months left before the change, we have decided to publish a series of articles looking at the stakes and impacts of this regulation. For a proper start, let’s look at the facts to get a good grasp on the topic.
The countdown has started. Starting on January 1, 2020, ships will have to start using fuel containing less than 0.5%m/m sulfur, when today the limit is set at 3.5%.
This new regulation comes from the amendment of Annex VI in the Marpol convention. Let’s look at a few key dates related to maritime pollution control, which started in the 1970’s.
- In 1973, the IMO created the International Convention for the Prevention of Pollution from Ships, also called MARPOL (MARine POLlution). It creates a framework for marine pollution prevention, whether it comes from regular business operations or accidents.
- In the 1980’s, the IMO’s Marine Environment Protection Committee (MEPC) decides to start specifically analyzing air pollution. This work culminates in 1997 with the signature of a protocol adding the Annex VI, dedicated to this type of pollution, to the Marpol Convention. This text, which entered into force in May 2005, is known for outlining limits to sulfur oxide (SOx) and nitrogen oxide (NOx) emissions from ship exhaust gases.
- In 2008, the MEPC passes a revision to the Annex VI. It maps out a gradual decrease of SOx and NOx emission limits, along with the creation of Sulfur Emission Control Areas (ECA) where stricter limits apply. Additionally, since January 1, 2010, European Union rules have taken things a step further: it requires that all ships use 0.1% fuel when they dock in Europe, even outsides of SECAs.
- January 1, 2020: the global sulfur content limit is lowered to 0.5% (it is currently at 3.5%)
The new regulation will significantly impact operational costs for maritime companies. For the leaders in the industry, this means billions of dollars . Citing “external sources”, Maersk Line estimates that it will cost $15 billion for the industry as a whole to comply with the new rules.
To reflect the rise in costs, maritime shipping companies are currently implementing new methods to calculate additional fuel fees, the transparency of which tends to vary, according to the study published by the specialized firm Drewry in late 2018. In the following weeks, and until the end of the year, we’ll publish a series of articles to help you understand the stakes, analyze the strategies, and follow price fluctuations with the help of the Upply database