MEPC vote on fuel study leaves shipowners steamed

imo hq logoOCTOBER 3, 2012 — IMO's Marine Environment Protection Committee has rejected a call to make an earlier start on a study into the global availability of low sulfur fuel for ships.

The International Chamber of Shipping (ICS), whose member national shipowners' associations represent more than 80 percent of the world merchant fleet, expressed "disappointment and concern" at the decision.

Shipowners are worried about whether sufficient fuel will be available to allow ships to comply with coming regulations on sulfur emissions and what, as a result of insufficient supply, the costs of 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.

Fuel is by far the largest operational cost for shipowners and has already increased in price by about 400 percent since 2000. However, the current 50 percent price differential between low sulfur 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.

There is a provision Annex VI of the MARPOL convention for IMO to complete a review, by 2018, of progress made towards meeting the demand for 0.5 percent sulfur fuel that must be used globally outside of Emission Control Areas (ECAs) by 2020 or 2025. ICS had called for a preliminary IMO study of the availability of compliant fuel, taking into account the introduction of the 0.1 percent sulfur in fuel requirements to be used in the Baltic Sea, North Sea and the North American ECAs in 2015. Such a study would provide a projection of possible scenarios resulting from the introduction of the 2015 0.1 percent ECA standard, against the background of the world market. This could then be considered in comparison with the real situation encountered in 2015.

In a close vote, a small majority of IMO Member States, led by the United States, rejected an ICS submission calling for the earlier study.

Speaking after the vote at the IMO MEPC, ICS Secretary General, Peter Hinchliffe remarked:

"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."

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