New fuel, emission standards for shipping from January.

Byline: Syed Rashid Husain

Maritime transport is critical to the global economy as over 90pc of the world's trade is carried by sea.

ON Jan 1, 2020, the International Maritime Organisation (IMO) is set to impose new emission regulations designed to curb pollution produced by the world's ships.

The new IMO rule is poised to ban shipping vessels using fuel with a sulphur content higher than 0.5 per cent. At present, the upper limit on sulphur oxides is 3.5pc, unless the ships are equipped with exhaust-cleaning systems known as scrubbers, down from 3.5pc.

The change is drastic. This meant ships would require a fuel product to meet the more stringent rules. It also means; ships found in violation of the new law risk being impounded as ports are expected to police visiting vessels.

When the rule was announced, most in the industry felt, it could be disruptive to the global economy, and specially to the shipping industry. After all, maritime transport is critical to the global economy. As per the United Nations, more than 90pc of the world's trade is carried by sea.

By far, it is also the most cost-effective way to move goods and raw materials, across the globe.

The most dire consequences of the change in rules were predicted by Phillip K. Verleger, in his July 1, 2018 article '$200 Crude, the Economic Crisis of 2020, and Policies to Prevent Catastrophe,' underAAlining the global economy was faced with an economic crash of horrible proportions in 2020, for want of low-sulphur diesel fuel.

In order to examine the implications of the new rules, the US Senate held an Oversight Hearing on Dec 10. 'There is still some disagreement over what those exact impacts will be,' said Sen. Lisa Murkowski, the chairman of the US Senate Committee on Energy and Natural Resources.

'But I'm glad to see a consensus - or at least something resembling a consensus - among many analysts that the impacts of IMO 2020 will be less than what was projected just a year ago.

Derrick Morgan, senior vice president at American Fuel and Petrochemical Manufacturers testified, that 'it is becoming increasingly clear that refining and shipping industries are prepared for IMO 2020. Major bunker fuel refiners and suppliers have been testing fuels for much of the year, and very-low-sulfur fuel oil (VLSFO) is already being supplied at major ports around the world.'

He also said the InterAnational Energy Agency has reported that 'ports, shipowners and refiners have stepped up preparations...