Australia approves IMO fuel legislation

The bill passed in the upper house of parliament the Senate yesterday, its last sitting day this year, and is expected to become law before the International Maritime Organisation (IMO) caps sulphur content in marine fuel at 0.5pc from 1 January 2020 from the current 3.5pc. The bill had already passed in the lower house of parliament the House of Representatives.

The law implements Australia's international obligations in relation to sulphur emissions from vessels under the International Convention for the Prevention of Pollution from Ships (Marpol), which is the main convention used by the IMO to reduce pollution.

The Australian Marine Safety Authority will oversee the enforcement of the new rules, which will apply to all vessels in Australian and international waters involving Australian shipping activity. Legislation had already been amended in 2013 to ensure the lower sulphur limits would apply in Australian territorial waters.

Shipowners have several options to comply with the new IMO sulphur regulations. These options include using low-sulphur marine fuel, diesel or alternative fuels with low to zero sulphur such as LNG, biofuels and hydrogen. Vessels can also continue to use high-sulphur fuel oil provided that they are fitted with an exhaust gas cleaning system, also known as a scrubber, to reduce sulphur in their emissions below the 0.5pc limit.

Australian exporters are significant consumers of bunker fuel given the country is the world's largest exporter of iron ore and hard coking coal, as well as the second-largest exporter of thermal coal and LNG.

Australian fuel oil sales averaged 18,000 b/d in the 2018-19 fiscal year to 30 June, up from an average of 17,000 b/d in 2017-18, according to Australian Petroleum Statistics data.

Australia is the fifth-largest user of shipping services in the world with 10pc of the world's sea trade passing through Australian ports, federal transport minister Mark McCormack said on 18 September when he introduced the bill into the lower house of parliament

New Zealand will also comply with the IMO 2020 rules by signing up to the Marpol update, but its signing will not come in time to abide by the new marine fuel rules and it will instead join in 2021.

Stricter limits on sulphur limits will apply to domestic ships from early 2022. "This gives our shipping and fishing industries sufficient time to prepare for the new regulations," New Zealand associate transport Julie Anne Genter said. Vessels operating only in domestic waters will have until early 2022 to comply, as the Marpol amendment comes into force for New Zealand three months after joining the international convention.

Argus launched 0.5pc sulphur marine fuel assessments in Sydney, Australia on 6 November. The latest assessment for 0.5pc sulphur fuel oil in Sydney was $667.50/t or a $95.27/t premium to low-sulphur fuel oil bunkers in Singapore, the largest international bunkering port.

By Kevin Morrison