International Maritime Organization (IMO)

2019: IMO 2020 is decrease in a limit on sulfur content in ship fuel from 3.5% to 0.5%

In September, 2019 the International Maritime Organization (IMO) lowered an admissible limit of content of sulfur in ship fuel from 3.5% to 0.5%. The new regulation which is referred to as IMO 2020 will become effective since January 1, 2020. According to Coface, it is the share of sea vessels from 5% to 10% of the total amount of anthropogenic emissions of sulfur. In spite of the fact that oxides of sulfur do not belong to greenhouse gases, they are harmful to the environment and human health. So, for example, dioxide of sulfur causes problems with a respiratory system and can lead to loss of the acid rainfall causing a strong loss to animals and plants on big squares.

According to the statement of IMO, the new measure "will allow to reduce considerably emissions of the oxides of sulfur which are formed at combustion of ship fuel that will reduce negative impact of the marine transport on the environment and human health, in particular inhabitants coastal and seaports". The convention MARPOL within which new regulation will be entered was ratified by 152 countries, including China, the USA, Canada and all states of the EU.

Experts of IHS Markit noted earlier that Russia can become main "victim" as a result of toughening of nature protection regulations. The problem is that the most part of the fuel oil manufactured in the Russian Federation which is exported to dozens of the countries of the world today does not conform to the IMO 2020 standards therefore demand for it will sharply fall after entry into force of new regulations. According to analysts of Wood & Co Financial Services, in 2020 the losses of the Russian oil suppliers connected with transition of sea carriers to the purified oil fuel can reach 3.5 billion dollars.

IMO 2020 – not the first attempt to limit emissions of the greenhouse and contaminating gases in the transport sector. In May of the 2018th the European Parliament voted for introduction of the regulations providing decrease in emissions of CO2 by trucks by 25% by 2025 and for 30% to the 2030th. The International Air Transport Association (IATA) also did not stand aside and set the object to twice reduce emissions of CO2 by 2050 in comparison with the 2005th.

Sea cargo carriers will have not much methods "fit in" in a new limit, and the first of them, – to pass the most obvious to oil fuel with the lowered sulfur content (up to 0.5% of weight).

The second – to continue to use the same fuel which is used now, but to install clearing filters which will allow to bring the mass of sulfur in emissions to level below 0.5%. Installation of filters, however, takes from 6 to 9 months, at the same time works on installation are performed not by each port. According to IMO, by the time of entry into force of new regulation filters will be installed only in 1,200 cargo courts (from more than 60,000).

At last, the third method – to switch to natural gas as a main type of fuel. In the short term mass transition to gas will hardly take place as gas-filling infrastructure is only in a small number of ports of the world today.

From among these options the first looks the most rational – and for installation of filters, and huge investments whereas fuel with the lowered content of sulfur though is more expensive, than normal will be necessary for transition to gas, but will not demand capital reconstruction of courts.

Growth of the costs connected with purchase of better fuel with the low content of sulfur for certain will develop into reduction of profitability of sea cargo transportation which because of oversaturation of the market is already low. At the same time the companies which will not be able to pass completely to "low-sulfur" fuel before the determined date can receive serious penalties. Each of the companies ratifying the agreement will independently set responsibility for violation of regulations on emissions and to monitor their observance.

Thus, regulation of IMO 2020 is unprofitable to sea cargo carriers and will even stronger complicate a situation in the sector suffering from "cooling" of world economy and aggravation of the trade conflicts.