Shipping industry sails into unknown with new pollution rules

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Since the start of this year, United Nations shipping agency the International Maritime Organization (IMO) has banned ships from using fuels with a sulphur content above 0.5%, compared with 3.5% previously, in the biggest shake up for the oil and shipping industries in decades.

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Harris from Marsh, a broker active in marine insurance including hull and machinery, said assessing cover was still guesswork: for instance, who should pay a fine for a ship using high-sulphur fuel because no alternative was available?

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Interviews with key players in the industry show varying levels of alarm at potential risks, which they say range from unexpected fires or collisions due to engine failure to liability for inadvertently flouting the rules.

The IMO said it does not have a remit to regulate the fuel industry but that international standards for the new fuel and information about compatibility between types had been issued as part of comprehensive preparations.

Nautilus International, a union which represents over 20,000 workers in shipping, said the use of new fuel types would place extra strain on crews, who have reported incidents including power loss when changing fuels, filter problems and leaks.

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But some ports have banned one type of scrubber, the open-loop version which empties washwater residues into the sea, which has added to unexpected costs for shipping companies that have bought the devices at a cost of over $1 million each.

Khalid Hashim, managing director of one of Thailand´s largest dry cargo ship owners, Precious Shipping, said it had not allowed co-mingling of marine fuel, also known as bunker fuel, for over five years and required all of it to be sample tested.

Malaysia, Singapore and Fujairah in the United Arab Emirates, all marine refueling hubs, have banned the use of open-loop scrubbers. China is also set to extend a ban on scrubber discharge to more coastal regions.

To reduce emissions of toxic sulphur that cause premature deaths, shipowners who have long relied on the dirtiest residues of oil extraction will have to either switch to low-sulphur fuel or install exhaust gas cleaning systems from Jan. 1.

Around 172 ships have avoided the problem because they are powered by sulphur-free liquefied natural gas (LNG), data from Norwegian risk management and certification company DNV GL showed, but this in an expensive option.

Neither option has been fully tested for long, and some problems have already been reported, both with the more expensive new fuels and with devices known as scrubbers which extract the sulphur on board.

“Of course this costs us annually around $100,000, but we prefer that cost than to use untested bunker oil based solely on the Bunker Delivery Receipt and find that we have a massive problem on our ship,” he said.

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