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BIMCO Raises Red Flag to IMO Sulphur Cap Study Conclusions

The world’s largest international shipping association has flagged several critical areas in the official study that will inform the decision of the Intentional Maritime Organization (IMO) and its Marine Environment Protection Committee (MEPC) on the implementation date of the global cap for sulphur content in marine fuels.

The decision will be made at MEPC 70 in two weeks’ time whether the global sulphur, cap that dictates a 0.5% fuel sulphur content for the global shipping industry, should have an implementation date of 2020 or 2025.

Upon examining the official study, BIMCO identified the following study conclusions for which they harbour serious concern:

• On fuel oil quality. A significant amount of the fuel oil that the IMO study concludes will be available for marine use is unsafe to store and use onboard ships.
• On how an assessed shortage of sulphur removal capacity in refineries will be resolved so that capacity would be in place by 2020.
• The study fails to model the disruption that an overnight introduction of the global cap (from 31 December 2019) would cause.

As a result, BIMCO states it is not possible to determine that the global refining industry will have the capacity to produce enough marine fuel by 2020. BIMCO also raises concerns that the supply of fuel to other sectors of the global economy could face major disruption if the scenario is not addressed beforehand.

BIMCO, among others, have funded an independent supplementary study (carried out by EnSys and Navigistics) to assess the availability of marine fuel, which addresses all the above issues. This study concluded that it is unlikely that there will be sufficient low sulphur fuel available in 2020, while maintaining uninterrupted supply of fuel to all other sectors of the global economy.

Lars Robert Pedersen, Deputy Secretary General at BIMCO, said:
“It is clear that the IMO study is flawed, meaning it is not possible to determine from the study that there would be sufficient fuel available in 2020. On that basis, our opinion is that it would be irresponsible for IMO to make the decision to go for 2020 at MEPC 70 in October. There is clearly a need for additional analysis to ensure the supply chain for global trade is not seriously disrupted and developing nations are not hit hard by a lack of affordable energy”.

“This is not about the cost of low sulphur fuel for ships – that has long been known. We know that the shipping industry will buy the fuel they need. But if it is in short supply, the cost will rise not just for shipping but for all users of the fuel. This will price those in poorer economies out of the market”. “It’s a complex issue – but the difficulties in ensuring sufficient refinery capacity and the disruption caused by an overnight introduction have to be thoroughly taken into account”.

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