SOX – it’s not all about 1 January 2020

Countdown to 1 Jan 2020 | BDM Blog | BDM Law

It’s not easy being a ship owner these days. Whilst the big issue is the looming 1 January 2020 MARPOL deadline for ALL ships to switch to low sulphur fuels (or have approved scrubbers in place to burn high sulphur fuel), ship owners also have to watch out for other countries who are imposing their own unilateral restrictions on the use of high sulphur fuel.

Recently, Hong Kong, Mainland China and Taiwan (all critical trading countries) issues regulations requiring the use of low sulphur fuel as follows:

Hong Kong –  Prior to 1st January 2019 all vessels at berth in Hong Kong ports were required to burn fuel with a sulphur content not exceeding 0.5% under the Fuel at Berth Regulation.   From 1st January 2019 onwards this regulation was replaced by the Air Pollution Control (Fuel for Vessels) Regulation.  The new regulation requires all vessels operating in Hong Kong waters, whether at berth or not, to burn fuel with a sulphur content not exceeding 0.50% unless fitted with scrubbers.   It is important to note that any vessel intending to meet emission regulations through the use of scrubbers must apply to the Hong Kong Authorities for an exemption certificate at least 14 days prior to the vessel’s first visit to Hong Kong waters after 1st January 2019.  That exemption will be granted for a period of maximum 3 years.

Mainland China – Under the Ship and Port Pollution Prevention Special Action Plan (2015-2020) mainland China designated the Pearl River Delta, Yangtze River Delta and Bohai Bay areas as Emission Control Areas.  It was intended that vessels entering these areas or when at any berth or anchorage within those areas from 1st January 2019 were to use fuel with a sulphur content of no more than 0.5%.  However, in November 2018 China’s Ministry of Transport designated a new Coastal Emissions Control Area extending the 0.5% sulphur cap to all its territorial waters.  These regulations came into effect from 1st January 2019.   It is also important to note that from 1st January 2019 mainland China has also banned the discharge of waste water from scrubbers in the county’s inland emission control areas (ECAs), port water areas of coastal domestic ECAs and Bohai Bay waters.  It is intended that the ban will be extended to the entire coastal domestic ECA in due course. This ban effectively bans the use of open loop scrubbers meaning that vessels fitted with this type of scrubber will have to burn more expensive LSMGO when visiting China’s Emission Control Areas. This effective ban on the use of open loop scrubbers followed similar moves made by Belgium and Ireland and looks likely to be implemented in more countries prior to 1st January 2020.  This has caused widespread impact across the industry for those owners who had invested in open loop scrubbers as the way of dealing with the new MARPOL requirements.

Taiwan – Regulations are now in force in Taiwan requiring all vessels, not fitted with scrubbers, to burn fuel with a sulphur content not exceeding 0.50% when calling at any of its seven designated international commercial ports (Kaohsiung, Taichung, Keelung, Taipei, Hualien, Suao, and Anping) from 1st January 2019.  It is understood that the ports of Mailiao and Hoping are also enforcing the sulphur cap for vessels entering within the ports’ limits (12 nautical miles from the port’s breakwater).

The early adoption of strict emissions controls by these countries only highlights the necessity for ship owners and charterers to make proper preparations well in advance of the implementation of the global sulphur cap on 1st January 2020.  We are already advising numerous ship owners and operators on how best to handle the risks and plan accordingly.  We are advising clients on the potential compliance issues and assisting them with their charter clauses so as to best protect their interests.

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