Ships at all major commercial ports in emission control areas China set up last year are now required to burn low-sulfur fuel for the majority of time spent at berth.
The higher costs of low-sulfur fuel and the possibility of refineries being unable to meet demand, have raised concerns that such rules will increase the operating costs of container lines, and by extension, the rates that shippers pay. As shipping lines remain mired in overcapacity that generates enormous financial losses, the rules create an additional financial pressure point for liners.
Although requirements were already mandatory at some ports in 2016, enforcement was limited, though not unheard of, as authorities gave shipowners the chance to prepare for the changes under laws that were developed and announced with very little lead time.
Enforcement is widely expected to be stepped up this year, particularly in the wake of recent pollution levels that prompted red alerts and closed businesses and schools across the north of the country. The port city of Tianjin was one of the locations hit most severely by pollution, so much so that port operations were suspended due to safety concerns over poor visibility and excessive particles in the air.
Under the timetable issued by the ministry of transport since Jan. 1 ships at berth in the ports of Tianjin, Qinhuangdao, Tangshan, Huanghua, Shenzhen, Guangzhou, Zhuhai, Shanghai, Ningbo-Zhoushan, Suzhou, and Nantong are required by law to burn fuel with a sulfur content equal to or less than 0.5 percent for the berthing period, excluding one hour after berthing and one hour before departure.
The Yangtze River Delta ports of Shanghai, Ningbo-Zhoushan, Suzhou, and Nantong had already made it mandatory for ships to burn low-sulfur fuel from April 1 last year. They were joined on Oct. 1 by Shenzhen, where authorities issued a local directive covering the terminals of Yantian, Shekou, Mawan, and DaChan Bay.
The next key deadline under the national regulation is January 2018, when ships will be required to burn low-sulfur fuel at all ports in the three ECAs for the entire berthing period. In January 2019, all ships entering the ECAs, whether at berth or not, will be required to burn low-sulfur fuel.
The government may introduce stricter requirements at later date, according to Huatai Insurance Agency, a mainland-based company that specializes in helping the private sector navigate China’s maritime environment.
“The government will evaluate the effect of the requirements in order to determine whether to take the following steps in the future: (i) when entering the ECAs, ship shall be required to use fuel with the sulfur content of no more than 0.1 percent; (ii) enlarge the geographical scope of ECAs; (iii) other further measures.”
Ships in breach of the rules are liable for fines of between $1,500 and $15,000 under the Law of Prevention of Air Pollution of the People’s’ Republic of China. Ships are required to keep bunker delivery documents on board for three years and a sample of fuel for one year, under the Regulation of Prevention and Control of Marine Pollution Act. Fines up to $1,500 can be imposed on owners that fail to meet the fuel record-keeping requirements.
The China Maritime Safety Administration issued guidelines on the implementation and supervision of ECAs that state how compliance with emission control measures will be verified.
For ships using low-sulfur fuel, verification will be made by checking bunker delivery notes, fuel changeover procedures, engine room logbook records, and fuel oil quality and samples. For ships using alternative measures to reduce emissions, such as shore power, liquefied natural gas, or exhaust gas scrubbers, checks will center on the International Air Pollution Prevention Certificate/Record and engine room logbook records.
Analysts said the availability of low-sulfur fuel for vessels and support of the national oil companies that dominate oil and gas upstream and downstream sectors would be critical to ensure the success of the new regulations.
“Because of strong SOE ownership in energy supplies it is important to have them fully on board. If they aren’t, or if this regulation will reduce their margins, there is a greater risk that business continues as usual,” Richard Brubaker, adjunct professor of management, sustainability and responsible leadership at the China Europe International Business School told JoC.com.
Local authorities in Shenzhen said ships could apply for immunity and exemption from the regulation in certain cases, including supply of sufficient proof that they made every effort but did not succeed in obtaining low-sulfur fuel.
The Shenzhen order said shipowners could also take alternative measures to reduce pollutants while at berth, including use of LNG and other clean energy sources. Alternative measures need to be approved in advance by the Shenzhen Residential Environment Committee and the Shenzhen Maritime Safety Administration.
The Shanghai Maritime Safety Administration also launched an exemption scheme that allows shipping companies or agencies to apply for an exemption if using low-sulfur fuel oil is unsafe for vessels.
Did you subscribe for our daily newsletter?
It’s Free! Click here to Subscribe!
Source: JOC
