New Rules on Hold

Malcolm Latarche
Malcolm Latarche

22 April 2016


A large amount of the regulation that has come from the IMO, US, EU and other authorities in recent years has been connected with protection of the environment. From a ship operator’s point of view any technology that reduces fuel consumption is something that can be embraced and the benefits to the environment that result by way of reduced emissions and pollutions are icing on the cake. But while some operators have enough of a conscience and pockets deep enough to go beyond what is required by regulations, there are many more who are struggling to survive and for whom the additional costs are possibly more than they can bear. Fortunately for shipowners – except those from the offshore sector – the falling price of bunkers has helped as has the seemingly endless delay in ratification of the ballast water convention which has allowed them to put off a major capital outlay for several years. From the beginning of 2015, operators had to cope with the new lower sulphur levels in ECAs and were helped enormously by falling fuel costs offsetting the premium on distillates. This year there are two new international deadlines to deal with but these will fall only on new vessels giving owners of existing ships a little breathing space. The rules which affect NOx levels in engine exhausts and sewage have been known about for some time but it now appears that while equipment makers have made efforts to meet the former there is some doubt as to whether they have been wholly successful and with regard to the latter it seems that port states have been tardy in providing suitable facilities. The first of the two new deadlines is the NOx Tier III requirement for new vessels operating in ECAs. Effectively this only applies in the North American and US Caribbean ECA regions because the two in Europe cover only SOx emissions. In time, European SECAs may indeed be amended to include NOx particularly as the HELCOM states have agreed plans to submit proposals to MEPC 70 this year. The requirement in the American ECAs affects ships with a keel laying date from 1 January 2016 and then only those individual engines on such ships with outputs of 130kW or greater. In 2013, Russia had sought to delay the imposition of the 2016 deadline for NOx Tier III at the MEPC arguing that the technology needed to comply with reducing NOx levels by 80% from Tier I was lacking. Initially the IMO looked as though it would support a five-year postponement, but in 2014 the idea was voted down. It was at that time that Denmark and other Scandinavian countries were proposing that the Baltic SECA should be amended to full ECA status. Under the current rules, if a new ECA is established anywhere in the world, the Tier III limits would apply for new vessels with a keel laying after the date it on which it becomes effective. However, Russia’s request for a delay may not have been without merit for at the beginning of this year when the Tier III rules came into effect, Canada, which is included in the North American ECA, announced a temporary moratorium for certain engine sizes. The decision to extend the requirement by a year applies only to engine with a power rating between 130 kW and 750kW and is because late in 2015, engine suppliers advised the Canadian government that US engine makers would not be able to produce Tier III compliant engines in the small model sizes. In the meantime all such engines must meet the Tier II requirements that all new engines must achieve. Since the rule only applies to ships with a keel-laying from 1 January 2016 or to new engines installed in existing ships, it will be some time yet in any case before any affected ship is in operation. Once ships are delivered, they will need to meet the rules whenever operating in the ECAs. Failure will result in a penalty determined by the appropriate littoral state; the USCG has indicated that the penalties for failing to comply with NOx Tier III will be $25,000 per violation. In order to meet Tier III requirements there are several options available but some are not suited to all vessels. The two most common for oil-fuelled ships are selective catalytic reduction (SCR), and exhaust gas recirculation (EGR). A third option is to use an alternative fuel such as LNG. Obviously the last choice would require either a pure gas burning engine or a dual fuel model. Oil fuelled engines may also be able to meet Tier III with changes to ignition timing or by using fuel water emulsions particularly if the engine also employs EGR. Despite being promoted as the answer to both the NOx and SOx emission problem, LNG is not however, guaranteed to meet the stringent requirements of Tier III. Some gas engines (particularly those operating on the Otto cycle and using spark ignition) can meet the Tier III emission limit however not all gas engines (particular those operating on the Diesel cycle with oil pilot fuel) offer Tier III compliance. The delay that Canada has allowed is limited and all of the main engine makers appear to have the problem well in hand for without that being the case, newbuilding would cease. However, it is widely believed that many owners, fearing a problem meeting Tier III rules, opted for ordering ships ensuring that keel-laying took place before the 1 January deadline and therefore meaning that ships would be subject to the more lenient Tier II levels. This would have reduced the capital expense since no SCR or EGR equipment would be needed and the lifetime operational cost due to there being no maintenance or consumable spending on the systems. The other regulation of note to come into effect this year is the entry into force of MARPOL Annex IV requirements prohibiting passenger vessels from discharging sewage within the IMO designated Special Areas. The original regulation text would have seen this applying from 1 January this year in the Baltic Sea Special Area alone as no other area has yet been designated a special area. However, a delay in arranging and/or confirming reception facilities in the nine Baltic Sea States means that the special area cannot take effect on this date. At MEPC 68 in May last year it was agreed in principal that the requirements would therefore come into effect from 1 June, 2019 for new vessels and from 1 June, 2021, for existing ships. Ships other than passenger vessels must still comply with the Resolution MEPC.227(64) performance test and standard requirements excluding the nitrogen and phosphorus removal standard on or after 1 January, 2016, though this is subject to final confirmation at MEPC 69. The decision to delay the introduction was widely reported but some believe that full information on the decision was lacking. Mark Beavis, MD of ACO Marine, which manufactures wastewater treatment systems, believes that any further delay from the IMO’s Marine Environment Protection Committee (MEPC) in formally announcing a new date will create further confusion. “A number of shipowners believe the deferred entry into force applies to MEPC.227(64) in its entirety, but this is not our understanding. The IMO at MEPC 68 postponed only the entry-into-force date of the ‘Special Area’ sewage discharge requirements. The rest of the regulation still remains very much in force”, he said. “I don’t believe that IMO has made any formal announcement about the June 2019 and June 2021 dates, so the industry is still in the dark on this,” said Beavis. “Nevertheless, passenger ship owners operating in ‘Special Areas’ should not use IMO’s postponement to defer the installation of MEPC.227(64) [including Section 4.2] compliant treatment plant.