Low-sulphur future for bunker suppliers

Sulphur reduction was under discussion this week at the 57th session of the IMO's Marine Environment Protection Committee (MEPC 57) meeting in London. None of the proposals could fully satisfy the participants though they were especially interested in two options. According to one of the options the sulphur cap for fuel used in SECAs is to be 1.00% from early in 2010, dropping to 0.10% in 2015, and for the global sulphur cap to be reduced to 0.50% from 2018. The second proposal was that the global sulphur cap should be further lowered from 3.00% in 2012 to 1.50% in 2016. The final decision is to be taken by IMO this year.

The IMO's Bulk Liquids and Gases (BLG) sub-committee had put three options for sulphur reduction to the 57th session of the IMO's Marine Environment Protection Committee (MEPC 57) meeting in London this week. Option 1 Global:  A 1.00% sulphur fuel standard applied globally [possibly by 2012], falling to 0.50% sulphur  [possibly by 2015]
Option 2 Global/Regional:  Global cap remains unchanged at 4.5% sulphur, while Sulphur Emission Control Areas (SECAs) will require a 0.10% standard  [possibly by 2012]
Option 3 Global/Regional with Micro-Areas:  Global sulphur cap lowered to 3.00% [possibly by 2012]. SECA standard lowered to 1.00% sulphur  [possibly by 2010], then 0.50%  [possibly by 2015].  Micro-SECAs may be established within 24 nautical miles from the baseline with a 0.10% sulphur standard.

But during the MEPC 57 opening session on Monday, a number of delegations expressed support for a new joint proposal submitted to MEPC 57 by Finland, Germany and Norway - MEPC57/4/30. The joint proposal was presented as a "total package for new requirements on NOx, sulphur, fuel oil quality as well as a way forward on PM in the review of MARPOL Annex VI."  

It called for the sulphur cap for fuel used in SECAs to be 1.00% from early in 2010, dropping to 0.10% in 2015, and for the global sulphur cap to be reduced to 0.50% from 2018.  
It said exhaust gas cleaning systems could only be used in the short term to meet the 1.00% sulphur cap in SECAs during the 2010-2015 period, but not for the 0.10% SECA nor for the global 0.5% sulphur cap from 2018.  From 2018, it said fuel delivered to ships globally should comply with a distillate specification.

During a brief presentation outlining the joint proposal, the Norwegian delegation said it was important for a revised Annex VI to "stand the test of time" and that "IMO must delay no more" in delivering long-term regulations.
The proposal received immediate support from Ireland, which described it as offering a clear path for the shipping and refining industry to achieve short, medium and long-term environmental benefits.  
Delegations from Sweden, Belgium, Poland, Estonia, Latvia, Portugal, Croatia, Italy and Lithuania later told the plenary they were behind the proposal from Finland, Germany and Norway.

The United Kingdom, meanwhile, has submitted a proposal that is broadly speaking an amended version of Option 3. The key difference in the UK's proposal was that the global sulphur cap should be further lowered from 3.00% in 2012 to 1.50% in 2016.  It said there should be no Micro-SECAs, but suggested to reduce SECA sulphur limit to 0.10% from 2015.
The UK proposal said all sulphur limits could be met either through the use of lower sulphur fuel, including low sulphur fuel oil (LSFO) or distillates, or by using acceptable technological equivalents such as exhaust gas cleaning systems.

The UK delegation stressed that its proposal could prevent the proliferation of regional SECAs as the lower 1.50% global limit, in line with current SECAs, would offer "protection to coastal areas everywhere."  Outlining its position, the Russian delegation said it had been "most impressed" by the UK proposal for a global 1.50% sulphur limit, and that it was the closest to representing a "golden mean" among the options being discussed.  Delegations from Bahamas, Spain, Nigeria, Panama, Liberia, Bolivia and Malta expressed support for the UK's position during Monday's plenary session.
The US delegation said it was "critical" to reduce SECA sulphur limits to 1,000 ppm (0.10%) and that it found MEPC57/4/30 "interesting".

India was the only delegation to specify Option 2 as the appropriate measure. Other countries' delegations expressed no clear position, but the Chairman of the MEPC, Andreas Chrysostomou, noted that "nobody said we do not want to do anything" and that everybody wanted a "solid revision of Annex VI." He said the working group on Annex VI would not be given any specific measures, and that all options, or hybrid versions, were open for discussions. Concluding the debate,  Chrysostomou said:  "We have established that the whole committee wants to go forward, but we will leave the technicalities to the working group, which shall hopefully come back with one solution." The work group is to continue discussion of the three proposals to take the optimal decision. The IMO hopes a final and binding revised text for MARPOL Annex VI will be approved at the 58th session of the MEPC.