The 2020 Sulphur Emissions
Regulation 14.1.3 of Annex VI of the International Convention for the Prevention of Pollution from Ships (MARPOL Regulation 14.1.3) will come into force on 1 January 2020 and its main objective is to reduce sulfur emissions from ships. This regulation was adopted by the IMO in 2016 in response to threats to the environment and the health of ship employees and humanity in general. The regulation provides that sulfur content to be used on vessels shall not exceed 0.50% mass by mass (m / m) from 1 January onwards.
The fact that around 90,000 vessels carry 90% of world trade and make use of fuel that produces Sulphur emissions contributing to global climate change and acidification of the atmosphere underlines the paramount environmental impact of this regulation.
What does the IMO decision mean?
As a specialized agency of the United Nations (UN), the International Maritime Organization (IMO) is a global authority that sets standards on safety, health, and the environment in relation to the maritime sector on an international scale. Its main goal is to create a regulatory framework that is fair and effective and universally adopted and implemented.
The ultimate objective of this regulation is that ship operators need to address environmental and consequently financial issues directly and not circumvent or avoid them. Such a regulation addresses safety, health and environmental issues related to maritime transportation which have been previously disregarded. The objectives of the regulation are also intended to encourage innovation and efficiency.
How will this affect vessel owners in Malta?
Malta is a member of the UN and is therefore expected to comply with any guidelines issued by this body. Vessel owners in Malta and around the world will be affected on several levels. One of the many fears that ship owners and refiners have is that they will face financial difficulties to adopt these measures. Such financial difficulties are an increase in bunker surcharges and in freight rates as well as higher priced refined fuel. Essentially, a balance must be struck, in terms of protecting the interests of the parties concerned.
Other problems that can affect ship owners are: the issue of fuel compatibility, distillates expenses such as Marine Diesel Oil (MDO) and Marine Gas Oil (MGO), the overnight switch from 1 January 2020, the considerations necessary to become 'charter party agreements’, as well as the scrubber system which is another huge and added cost to ship owners.
In order for this regulation to meets its objective realistically, there should also be measures to ensure compliance together with the necessary enforcement.
Will the work of Maltese lawyers in the maritime sector change?
It may be the case that if ships are not complying with this regulation, the necessary action must be taken. The transport authority of that particular country (in this case Malta) together with port state control, will be in charge and will oversee that this regulation is being complied with. Such authorities are present both in Maltese ports and in European countries.
If a ship is caught not complying with this regulation, the role of the Maltese lawyers (in this case) working in this sector will mainly be that of defending the non-compliant owners. The latter will be expected to argue the case for their inaction with respect to such regulation.
Are there still some things that are still unclear in relation to the changes mentioned above?
IMO has made it very clear and has said that the deadline for making this change in fuel cannot exceed 1 January 2020. Although there were multiple attempts to postpone the date, IMO has held firm and said that the date must be respected. If this is not respected there will be monetary repercussions amongst others.
The requirements set by IMO are very clear and the obvious financial challenges cannot serve as an excuse for the disregard of the regulation.
Despite this stand taken by the IMO, there still remain a number of questions that still have to be answered. There are a number of countries such as Argentina and Egypt that have not yet ratified Annex VI of MARPOL 73/78. Hence ships calling those jurisdictions may not face enforcement and inspections. Besides external enforcement, ship owners can have contractual reasons to which they must comply with if something goes wrong. For example, if there is an accident and an investigation is carried out and it results that the vessel in question was not compliant when it came to fuel usage or other matters, the vessel in question may be considered unsuitable for use at sea and the insurance policy would have to be invalidated.
Another question that is being put forward is on 'flag states' and their limited resources - including human resources. Will they be able to ensure efficient compliance when ships are sailing in international waters? This is a crucial point that needs to be urgently addressed if the IMO is to make sure that all member countries are complying with this law.
One has to bear in mind that for the IMO 2020 Sulphur reduction to be effective, the same level of enforcement standards have to be applicable and uniform on every level.
Naturally, there are still some questions which will remain even after 1 January 2020. Only time will tell whether the maritime industry is really prepared to welcome on board the challenges posed by these changes.
Dr. William Vella
Associate – Corporate Department
Kinanis Fiduciaries Limited
We are a Law Firm with offices in Cyprus and Malta and a representative office in Shanghai China comprising of more than 80 lawyers, accountants and other professionals who advise, international and local clients.
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companies are conducting business, each of which is a separate legal entity.