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It’s paramount that shippers, refiners, marketers and traders prepare effectively now so fines don’t mount and trade flows aren’t further disrupted.
On Jan. 1, 2020, the new International Maritime Organization’s regulation—dubbed “IMO 2020”— requiring sulfur reduction in fuels from 3.5% to 0.5% will go into effect. The regulation stipulates that oceangoing vessels must use either a cleaner bunker fuel, have on-board gas stack scrubbers to clean the higher sulfur fuel or use an alternative marine fuel such as LPG, LNG or methanol. With the regulation comes the need for inspections and enforcement to give the new rule “teeth” and force compliance.
In early 2018, the IMO was clearly thinking of non-compliance and offered additional mechanisms to tighten enforcement. Two mechanisms included providing the port states with additional authority to enforce IMO 2020 rules and a potential loss of insurance for those shippers/owners not in compliance with the lower sulfur fuel or on-board scrubbers.