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Law specialist: Pandemic masking true picture of sulfur cap compliance

Apr 14, 2020 02:48 PM

Hill Dickinson says enforcement 'will perhaps be less of a priority' during the COVID-19 outbreak

The following is text of a news release from maritime law specialist Hill Dickinson:

(LONDON) — It will be difficult to ascertain a full picture of how well the international shipping industry is complying with the new sulfur 2020 environmental legislation and judge the effectiveness of enforcement measures until sometime after the COVID-19 pandemic has receded. 

Introduced on Jan. 1 this year, Regulation 14.1.3 of Marpol Annex VI was a key issue for the shipping industry, particularly in respect to how the sulfur cap was being observed and enforced. The horizon issue was the carriage ban, effective on March 1, which prevented any vessel not fitted with an exhaust gas cleaning system from carrying marine fuel with a sulfur content in excess of 0.5 percent for use on board. 

“While a few issues arose concerning the quality of the low sulfur fuel, particularly some blended fuels having a propensity to sediment, and around marginal breaches of the cap, the implementation of the global sulfur cap was progressing smoothly with reports of high levels of compliance," said Beth Bradley, a partner with Hill Dickinson. “Three months on and the disruption to international shipping caused by COVID-19 has pushed sulfur cap issues well and truly from the headlines. Regulation 14.1.3 remains in force – however, where port authorities globally are prioritizing health and the movement of freight, enforcement action will perhaps be less of a priority.”

The impact of the pandemic has led to serious delays to existing orders for the retrofitting of exhaust gas cleaning systems, particularly for those vessels where the work was to take place in Chinese shipyards, or to cancellations as owners and operators seek to cut costs. 

In addition, the collapse in the oil price has eroded the price differential between high sulfur and low sulfur fuel oil, making the immediate prospect of a larger uptake of exhaust gas cleaning systems doubtful, particularly if prices remain low for a significant period of time.

The United Kingdom’s Maritime and Coastguard Agency (MCA) recently announced that it was suspending vessel checks for compliance with low sulfur fuel regulations in order to keep freight moving, although it made clear that it will still inspect vessels where information is received indicating that an inspection would be appropriate. This is unlikely to be the last such announcement, Bradley said.

“While the sulfur cap and the carriage ban remain in force such that owners risk enforcement action if they carry marine fuel with a sulfur content in excess of 0.5 percent m/m for use on board, the disruption caused by COVID-19 may reduce that risk where port state control is under pressure on other fronts," she said. "It also will make it difficult to ascertain a full picture relating to compliance and enforcement until sometime after the pandemic has receded.”

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