It has been slightly more than a year since the IMO 2020 deadline has passed, where the International Maritime Organization (IMO) required sulfur content of marine fuel to be capped at 0.50 wt% globally since Jan. 1, 2020. Stratas Advisors was a key contributor to the CE Delft study that led to the decision by IMO.
Despite the ongoing COVID-19 pandemic, it appears that so far 68 countries and territories out of the 177 IMO member countries and associate member countries have set regulations in place to meet the IMO sulfur cap of 0.5 wt% (see first figure below), which was 36 more since our last report in December 2019 (see Insights, Dec. 18, 2019). However, countries and territories with top ports including China, Hong Kong, Singapore, South Korea and the U.A.E., alongside the EU and U.S., have regulations in place adopting the IMO 2020 cap (see second figure below). Other countries and territories with major ports including Brazil, Canada, India, Indonesia, Japan, Malaysia, Morocco, Oman, Panama, Philippines, Saudi Arabia, Sri Lanka, Taiwan and the U.K. also have regulations in place adopting IMO 2020. On the other hand, other countries and territories with major ports including Egypt and Thailand have yet to ratify MARPOL Annex VI by setting regulations or plans to draft regulations.
In addition, Stratas Advisors found that regulations adopting IMO 2020 have been enacted in countries with smaller top ports such as Argentina, Australia, Canada, Pakistan, South Africa and Turkey. On the other hand, it appears that others such Chile, Colombia, Ecuador, Iran, Jamaica, Mexico and Peru have yet to set national regulations, even though Chile, Iran, Jamaica and Peru have ratified MARPOL Annex VI while Ecuador has plans to do so.
It is also worthwhile to note that a total of 100 countries have ratified MARPOL Annex VI as of March 2021. In addition, Stratas Advisors observes that the nine countries of Argentina, Austria, Bahrain, Hungary, Oman, Pakistan, Qatar, Sri Lanka and Taiwan have yet to ratify MARPOL Annex VI, but they have set national regulations, follow EU directives, or put maritime circulars and notices in place to comply with IMO 2020.
Furthermore, regarding the use of scrubbers to discharge wash water from ships, currently the entire EU and 22 other countries including those with top ports such as Brazil, Canada, India, Malaysia, Oman, Panama, Saudi Arabia, Singapore, U.A.E., U.K. and the U.S., as well as certain regions of China and the Suez Canal of Egypt do not allow the use of open loop scrubbers at their ports. Regulations prohibiting the use of open loop scrubbers were already set and implemented prior to the IMO 2020 deadline for a few countries such as China. However, as previously discussed, IMO is not looking to put a global ban on open loop scrubbers, and the IMO’s EGCS Guidelines have established wash water discharge and monitoring criteria to safeguard against environmental damage.
In the full report, two case studies were discussed for Egypt and the U.K. including the continued non-adoption and non-compliance of IMO 2020 regulations in the Suez Canal of Egypt, and inspection waivers at the British ports as a result of the COVID-19 pandemic in 2020. In Egypt’s case, ambiguity is still present among shipowners despite SCA’s clarifications, where a number of industry players have interpreted that the SCA continues to allow ships to burn non-compliant fuel in the Suez without using scrubbers.
Countries with National or Port Regulations in Compliance with IMO 2020
Source: Stratas Advisors, April 2021
Top 10 Bunker Fuel Oil Markets (2017)
Source: Stratas Advisors
From 2020 onwards, compliance options for a ship operator are to:
- Switch to low-sulfur petroleum fuel (< 0.50 wt%, or < 0.10 wt% in ECAs).
- Install an approved exhaust gas cleaning system to achieve equivalent or lower SOx reductions than when using 0.50 wt% S fuel.
- Switch to alternative low-sulfur or sulfur free fuels such as Liquefied Natural Gas (LNG), methanol, biofuels, ammonia, hydrogen, etc.
The full report provides an update on whether the remaining key IMO member states with major ports have enacted the cap into their national or port legislations as well as marine fuel specifications since January 2020. The report also includes an appendix in Excel containing the regulations and specifications for marine fuels for more than 60 countries.