It was refreshing to hear Intertanko chairman Paolo d’Amico grudgingly admit at the Connecticut Maritime Association's conference last week that his association had actually lobbied hard for a 0.5% global sulphur cap a decade ago.
He then went on to reel off a list of concerns about the upcoming IMO 2020 regulation.
Back in 2008, the tanker owners’ association was always keen to talk about its influence in the IMO’s decision to go for a global sulphur cap.
But these days, as the pitfalls become clearer, Intertanko strangely hardly ever gives it a mention.
It certainly seemed to have slipped the mind of Andreas Hadjiyiannis, chief executive at long-standing Intertanko member Hellenic Tankers, when he recently told the Cyprus Shipping Forum: “The IMO has done a terrible job. It’s a disgrace.”
He added: “This has turned the shipping market, the transportation market, into a casino."
There would have been plenty of enthusiastic nods from the audience in agreement with Hadjiyiannis because he is right. As the clock ticks down on IMO 2020, there are fortunes to be made by some and potential financial disasters awaiting others — given the uncertainty around fuel prices.
Is that Intertanko’s fault?
In its defence, the regulation has not turned out as Intertanko envisaged when it laid out its proposal in its 2008 press release, “Why regulators should mandate the global use of marine diesel oil”.
The association believed that by enforcing an initial 1.0% sulphur cap and then phasing in a 0.5% cap depending on availability, it would switch over the shipping industry completely to distillates.
Intertanko said it did not want to see treated residual fuels — or scrubbers for that matter — become part of the solution. “The best solution is a global mandate for a specifically defined low-sulphur marine distillate fuel to achieve significant reductions in air emissions,” it added.
But when Intertanko tabled its ideas, there was a strong sense that its position amounted to pure commercial self-interest dressed up as environmental concern.
Many believed tanker owners would benefit from the increase in trade for refined products that would follow the enforced use of marine diesel oil.
The whiff of self-interest was so strong that Intertanko’s usual allies in the shipping industry — the likes of the International Chamber of Shipping, Bimco and Intercargo — actually distanced themselves from the proposal.
In the end, the IMO took Intertanko’s idea for a 0.5% global sulphur cap because it was radical, uncomplicated and could be applied globally. And it helped that the controversial idea was backed, in principle, by politically the strongest sector in shipping — tanker owners.
Scrubbers and treated residual fuels as a compliance method were allowed in order to cover the fuel availability uncertainties and speed up entry into force.
The end result was not exactly in line with what Intertanko was asking for — but why should the IMO tailor its regulation to suit the commercial interests of any sector in shipping?
Commercial interests
IMO 2020 is not the first example of a shipping regulation that has been influenced by commercial interests.
In the 2000s, the IMO was heading for a global system of ballast water exchange to help preserve the marine eco balance until machinery manufactures in Northern Europe said they could come up with equipment to purify ballast water.
So convinced were regulators by their lobbying that they passed the Ballast Water Convention in 2006 before the technology had been developed.
There is still some uncertainty over whether the equipment being installed today actually meets the standards of the regulation.
And industry interests are likely to continue to influence greenhouse-gas regulation in the future. The Japanese government is suggesting to the IMO that ships that do not meet certain efficiency standards should be punished by measures such as speed restrictions. The idea is to accelerate the replacement of old gas-guzzlers with super-fuel-efficient technologically advanced newbuildings. But is the move all about the environment?
It just so happens that Japan’s shipbuilding industry has the technology to build such low-emission ships and, because of the global downturn in newbuilding demand, has plenty of capacity available to handle the work.
