A new year is right around the corner, which means IMO 2020 is finally here. Effective January 1, 2020, Annex VI of MARPOL, which is the international treaty governing pollution on the high seas, will mandate a significant decrease in sulfur emissions from vessels—reducing the current permitted level of 35,000 ppm to 5,000 ppm. Compliance with this new standard will primarily be achieved through the burning of low-sulfur fuel, although compliance choices include other methods like the use of scrubbers and liquid natural gas (“LNG”) as fuel. Under this regime, the primary responsible party in the freight market will be the vessel owner or operator.
It is estimated that 10-20 percent of vessels after January 1, 2020, simply will not comply with the new IMO 2020 sulfur standard. Furthermore, because there is no industry standard specification for bunker fuel, there is an increased risk of fuel quality issues that lead to suboptimal performance and engine damage, which may give rise to inadvertent non-compliance. As a result, the industry should expect significant enforcement efforts of this new standard.
The IMO does not have a global enforcement body. Instead, IMO member states pass laws implementing the provisions of Annex VI, which are enforced by bodies analogous to the US Coast Guard and US Environmental Protection Agency (“EPA”). In particular, port states can enforce compliance within their coastal waters while flag states may enforce the standard on vessels flagged in their countries. Both port states and flag states have the authority to arrest vessels, and issue fines, penalties and prison sentences.