3.1 MARPOL Annex VI
The first global measures to limit the sulphur content in ships’ fuels were introduced in 1997 through regulation 14 in MARPOL Annex VI. Those rules, which entered into force in 2005, established a maximum sulphur content limit at global level of 4.5%, with more stringent requirement for special areas (including the Baltic Sea), for which a maximum ceiling of 1.5% was established.
In 2008 a significant strengthening of the Annex VI was made, which is illustrated in 1 below. The revised Annex, which entered into force in 2010, introduced a progressive reduction of emissions of SO x at global level and a further tightening of the standards within ‘sulphur emission control areas’ (SECAs), of which there are four: Baltic Sea, the North Sea, the North American and the United States Caribbean Sea SECAs. The worldwide sulphur cap was initially reduced to 3.5%, effective from 1 January 2012, then to 0.5%, effective from 1 January 2020.(1) Under MARPOL Annex VI regulation 14(8) and (10), the time for introducing the global sulphur cap of 0.5% could be extended to 2025, subject to a feasibility review to be completed no later than 2018. However, IMO's Marine Environment Protection Committee decided in October 2016 that the global cap will enter into force already on 1 January 2020. The EU Sulphur Directive never included a corresponding possibility to postpone implementation beyond 2020. The sulphur limits applicable in SECAs were reduced to 1.0%, beginning on 1 July 2010 and further to 0.1%, effective from 1 January 2015.
MARPOL Annex VI is widely ratified, including by all littoral states around the Northern European SECA. In January 2017, MARPOL Annex VI had 88 contracting parties, representing 96% of the World’s total shipping tonnage.(2) See www.imo.org Amendments to it, and to most other conventions adopted by the International Maritime Organization (IMO), are adopted through the ‘tacit acceptance’ procedure, which make them applicable to all parties without a need for formal acceptance of the amendment. (3) MARPOL article 16(2)(f) and (g).
In practice, the 0.1% limit amounts to a requirement to use either distillate fuel oils (Marine Diesel Oil or Marine Gas Oil) or other than petroleum-based fuels, such as LNG, in SECAs. Given that such fuels are significantly more expensive than heavy fuel oil (HFO, which may be low sulphur (0.5%-1.5%) or high sulphur (>1.5%) HFO), the new requirements will raise fuel costs for shipping within SECAs as from 1 January 2015.(4) IMO figures indicate that the yearly average sulphur content of the residual fuels tested on board ships in 2015 was 2.45%. The worldwide average sulphur content for distillate fuel in 2015 was 0.11%. See www.imo.org/en/MediaCentre/HotTopics/GHG/Documents/sulphur%20limits%20FAQ_20-09-2016.pdf. A number of studies have been performed to assess the economic impact of the SECA requirements. For an overview, see e.g. Finnish Government Bill HE 84/2014, pp. 13-14. The difference between compliant and non-compliant fuel varies depending on what fuel qualities are compared and varies from day to day depending on market prices, but the difference is commonly estimated to be in the order of +50-75%. Based on prices in late December 2016 the difference between high sulphur HFO (IFO 380) (around 310 USD per ton) and <0.1% Marine Gas Oil (around 470 USD per ton) was around 50%.
Under regulation 4 of MARPOL Annex VI, flag state administrations may approve alternative compliance methods, if such systems "are at least as effective in terms of emissions reductions as that required by this Annex, including any of the standards set forth in regulations 13 and 14". In accepting such equivalents, administrations should take into account any relevant IMO guidelines. Specific guidelines have been adopted for the approval exhaust gas cleaning systems.(5) IMO Resolution MEPC.259(68) Guidelines for Exhaust Gas Cleaning Systems. The discharge of washwaters from such cleaning systems is prohibited in certain areas within the SECA, but the matter is not harmonized and may often be regulated individually by each port. For an overview in the Baltic Sea, see Annex 6 of HELCOM Doc. MARITIME 15-2015, 4-2.