MEPC 70 - 2020 A clear marker for the future

The date of 27 October 2016, for most, was a day pretty much like any other and in all likelihood could well fall down between the cracks of history. However, in the marine world the day marked one of the single most influential decisions regarding the progression of legislative change.

The shipping world held its collective breath while it waited for the outcome of MEPC 70, which would determine when the 0.50% global sulphur cap would be implemented.

Eventually news broke and it was finally revealed that the 0.50% global cap would be implemented on 1 January 2020.

The decision to implement the global cap on 1 January 2020 was met with a range of different emotions but for the most part the sense of relief was palpable. The fact that a decision had been made laid down a clear marker for the industry as to
what is to be expected in relation to compliance, but one question stands tall above all others – how will compliance be achieved?
Although we now have a clear target at which to aim, the relatively short time frame is not conducive for significant changes to be made industry wide, but it at least provides scope for a degree of progress. The idea of a “silver bullet” or a one-size-fits-all solution is an ideal that was dismissed long ago, so how will the industry adapt?

The short term answer to this question is likely to consist of a range of options including ultra-low sulphur fuel oils (ULSFO), distillate fuels, blended fuels, the continued use of heavy fuel oil (HFO) in conjunction with abatement technology and to a certain extent more innovative fuel options such as liquefied natural gas (LNG) and Methanol. The long term solution is even less certain.

In the immediate future however, questions will still need to be answered regarding availability of good quality compliant product, specifically in relation to the “blended fuels”. Past experience of such products – looking at the 1.00% sulphur fuels used in Emission Control Areas (ECAs) prior to 1 January 2015 – were not positive with many fuels showing exceptionally poor quality traits such as high levels of catalytic fines and poor stability.

The other big consideration is the scale of the legislative shift; not only is the drop from 3.50% to 0.50% the largest single step change to date but it also impacts just about every sea-going vessel on the planet whereas previous legislative change has only really been a serious consideration on something of a localised level. Although the changes seen within ECAs, the EU and other regions of localised legislation have had a significant impact on the fuel supply chain they will not come close to what will be seen in the build up to, and immediately following on from 1 January 2020.

One lesson that has been learned in recent years is that our perceived fears aren’t always realised. The anticipated problems of reduced quality and availability following on from the ECA shift from 1.00% to 0.10% sulphur fuels did not materialise and the emergence of new ULSFOs – or hybrid fuels as they are sometimes know – provided a ready alternative to distillate fuels.

To assume another ready-made solution will materialise between now and the end of 2019 is optimistic to say the least but as previously noted the industry does have three years to prepare. Just what the industry will do between now and the end of 2019 is certainly open to debate but one thing is certain – the 1 January 2020 will not see the industry complete its journey of legislative reform. On the contrary, it simply signals a new direction to be taken with an even longer, more uncertain road stretching off into the distance.