MEPC 70 – A turning point for the maritime industry?
10th October 2016 | Regulations
With the IMO’s MEPC committee about to convene in London for its 70th Session, there has been intense speculation in the media about whether or not the Global Sulphur Cap will be introduced as planned in 2020 or deferred until 2025
The maritime industry is still in crisis with operating margins historically low, therefore anything that increases costs without providing any revenue opportunity will not be welcome
The industry has concerns over the availability of compliant fuel. The IMO’s report seems to indicate that the regulation can enter into force in 2020 without significant risk to shipowners. However, there are contradictory reports which will be presented to the committee providing their viewpoint that the IMO’s report isn’t necessarily correct
Maritime technology suppliers are confident that abatement technology (scrubbers) can provide one of the solutions and allow continued use of residual fuel. However, owners have operational concerns about the full time use of scrubbers. There is also the technical consideration that many ships do not have the physical space or configuration to install scrubbers as a retrofit item, that combined with the large cost of capital purchase will inevitably lead some risk-averse shipowners to opt for the solution of procuring compliant fuel
The big question really is what are the wider implications of delaying implementation? One recent report (Source: Transport & Environment) suggests that 200,000 lives would be put at risk if the 5-year delay was approved. The environmental lobby suggests that the shipping industry has already had 12 years to prepare for this so it should be ready. The shipping industry doesn’t control the global supply of marine fuel so it sees any potential shortages as a significant risk to its operation. However, the maritime industry operates in a market based economy, therefore the law of supply and demand will inevitably prevail
One thing is for sure, MEPC 70 will certainly be a memorable meeting and the decision regarding the date of implementation of the global Sulphur cap by those of influence in our industry will have an effect on us all, one way or another
