Diverging views on global cap compliance
Speakers at IBIA’s Annual Convention in Singapore in November have quite different views on the level of compliance with the 0.50% sulphur limit we can expect in 2020 and beyond, while most of the delegates voting in a poll on the subject thinks it will take a few years before compliance is above 80%.
Robin Meech, IBIA Chairman and Managing Director of Marine and Energy Consulting, shared his analysis on why the initial level of compliance with the global cap may be weak. One of the reasons is that for signatory states to enforce, they must have translated the regulation into their national laws. He said at present, it seems maybe less than 20% of MARPOL Annex VI signatory states have done that. Hence, although 90% of trade goes through ports in signatory states, and at least 96% of global tonnage is flagged in signatory states, the ability to enforce may be limited. If controls are weak, Meech suspects that non-compliance may be significant in 2020 but then improve gradually over the next decade. He estimated that around a quarter of global marine fuel consumption in 2020 would be high sulphur fuel oil (HSFO) used without abatement technology.
Meech asked the audience for their views. The poll question and outcome were as follows:
By which year do you think global compliance will be over 80%?
2020 – 15%
2023 – 38%
2025 – 34%
Never – 13%
Later in the day, Carlos Torres, Global Head, BP Marine fuels, shared BP’s much more optimistic outlook, which is that over 90% of the market is expected to comply with MARPOL Annex VI from the get-go.
The company said 97% of current bunker demand will be required to comply with MARPOL Annex VI and the options for non-compliance, outside the 3% that can legitimately ignore the regulation, are limited and carry high risk. They think only a very a small portion of ships may re-register to a non-signatory flag.
BP’s presentation at IBIA’s event showed that their expectation for non-compliance is split almost evenly between ships that are not obliged to comply because they are registered under a non-signatory flag, and vessels that are obliged to comply but don’t. Among the latter, some will be non-compliant due to a local non-availability situation in 2020, others either because they buy HSFO and hope to avoid detection, and others may unwittingly receive HSFO from a supplier. There may also be collusion between the ship and supplier to falsify samples and documents.
In reality, we may never know the true extent of compliance in 2020 as that would require reliable records from around the world both in terms of what has been supplied and checks on what ships are using. The signal from suppliers and buyers at IBIA’s Annual Convention was that they are all preparing to comply, but they don’t necessarily believe that everybody else will try as hard as they intend to.