In a major development, IMO Secretary-General Kitack Lim delivered a strong reminder about the vital importance of balanced and sustainable development to delegates at the Ocean Leadership conference at the Nor-Shipping 2019 conference in Oslo on June 4, reports the Maritime Executive.
Sustainable Global Efforts
In a keynote address, Lim spoke of the Sustainable Development Goals as a unifying factor in global efforts to improve the lives of people everywhere. He confirmed IMO’s strong commitment to the 2030 Sustainability Agenda and reminded delegates that IMO’s environment regulations were driving many of the technology innovations being showcased at the Nor-Shipping exhibition.
IMO’s Sustainability Agendas
He highlighted moves to cut greenhouse gas emissions, reducing the sulfur content of ships’ fuel oil, requiring strict ballast water management and adopting the Polar Code as recent examples of IMO’s own sustainability agenda.
IMO also plays a leadership role in major environmental projects like GloMEEP, GloFouling, the MTCC network initiative, MEPSEAS, the newly announced GreenVoyage 2050 project and many more, all established to enhance the environmental soundness and efficiency of shipping and contributing to the reduction of greenhouse gas emissions from international shipping.
Looking Out for Mutual Compatibility
“Shipping must meet the increasing demands of its customers, and of society as a whole, with regard to environmental and social performance,” he said. “It must continually adjust to new expectations and developments. At the same time, there is an equally strong pressure to achieve economic sustainability.”
Are these two ideas mutually compatible? Higher standards of safety and environmental performance often come at an initial financial cost. But they also provide opportunities to find truly effective and financially sound solutions in the long-term.
Improved Technology for Sustainable Blue Economy
“New technological developments such as digitalization, artificial intelligence, robotics, increasing automation, including issues like cyber security as well as the availability of renewable and alternative energy sources, together with enhanced hull design and improved operational procedures to optimize performance can both improve environmental performance and safety of ships and cut operating costs at the same time.”
Addressing the idea of the blue economy, he said: “The blue economy must be sustainable. It must not come at the expense of the ocean and marine ecosystems. But, sadly, it has been widely documented that the global marine environment and its resources are being over-exploited at an ever-increasing rate and scale.. Growth in this sector – blue growth – must be balanced and sustainable.”
Cost Effective – Isn’t the only way
“Events such as this remind us that the world is no longer prepared to accept services or industries that are simply cost-effective. We now demand them to be green, clean and energy-efficient and safe. Through IMO, governments ensure that shipping is responding to that challenge.”
Commercial Disadvantages of Compliant Bunker Users
Earlier on Monday, at a DNV GL panel, experts from shipping, bunkering and insurance discussed the challenges for owners going into 2020. Early adopters of compliant bunkers face several risks. First and foremost, their competitors do not have to bear the increased cost of the new fuel over the same period of time, which puts the shipowners who start the process first at a commercial disadvantage. Second, they will be the first to climb the learning curve on how to use the new fuels.
Abdulaziz Sabri, president of Bahri Ship Management, says that after trialing one new fuel supply, six of his company’s vessels suffered heavy sludging in their tanks and piping.
Rolf Thore Roppestad, the CEO of leading marine insurer Gard, says that his company has already dealt with 100 claims related to new fuels, including mechanical damage and disputes between owners / charterers / bunkerers. (Thorough segregation of every different fuel mixture – in shoreside storage tanks, bunker barges and shipboard tanks and piping – is the recommended preventive measure.)
Price Hike Coming
When owners do decide to adopt the new low-sulfur fuel oil, shipowners will have to be prepared for a steep price hike. This will not be an insurmountable problem for blue chip companies with excellent credit, but it is likely to squeeze the independent family-owned operators, who may not be able to secure a higher credit limit from their bunker suppliers. It could end up driving further consolidation among the many small- and medium-sized shipowning companies – the average owners with five or seven vessels in their fleet.
Issues of FONAR Abuse
Third, there is the certainty that some operators will keep using cheaper HFO without a scrubber, regardless of legality, and will obtain a large price advantage. Goldman Sachs has estimated that the first-year noncompliance rate will be about 20 percent, diminishing over time.
Among other methods of evading enforcement, less scrupulous shipowners might attempt to abuse the Fuel Oil Non-Availability Report process, intentionally buying non-compliant bunkers with paperwork indicating that proper supplies were not available. While port state control can address this problem, the vigor of enforcement varies by locality, and some regions may be less compliant than others. If a shipowner already does not comply with the law, one more rule may not make much difference.
“There are a lot of ships operating in the Pacific today that will never be allowed in the [Atlantic trade lanes], no matter what bunkers they’re using,” said Tom Paterson, managing director and SVP at bulker operator Fednav.
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