Page 4 - The flag March 2016

REGULATORY CHALLENGES FACING THE TANKER INDUSTRYINTERTANKO members face 2017 with uncertainty about the all-important tanker market which is further compounded by the immediate concern of complying with international and national ballast water management regulatory requirements and the intermediate challenge of meeting the newly established global air emission regulations.WiththeentryintoforceoftheIMOBallast Water Management (BWM) Convention on 8 September 2017, INTERTANKO members are confronted with a possible “double jeopardy” of having to comply with the IMO convention requirements, as well as the US Coast Guard BWM regulations, which are not the same. The hope of all is that compliance with one will result in compliance with the other, but that is far from assured. In addition, there is the major concern that compliance with the IMO treaty could result in the installation of a BWM system that may have to be replaced with a different BWM system to meet the USCG BWM regulations.Under the agreement reached in IMO Assembly Resolution A.1088(28), shipowners will have to start installing a BWM system on their ships after 8 September 2017. The systems currently available are those that meet the testing and type approval in the Guidelines for approval of ballast water management systems (G8). There are more than 60 BWM systems that have IMO type approval under these G8 guidelines. However, the IMO Member States have agreed that there was a need to revise and improve the G8 guidelines to provide more robust and reliable equipment. These revised G8 guidelines were recently approved by IMO, but there is no way of knowing when BWM systems meeting the new G8 guidelines will be available. Therefore, it was agreed that BWM systems meeting these new guidelines would not have to be installed on ships until October 2020. This leaves more than a three year period when BWM systems installed will meet the existing G8 guidelines. Although some of these " rst generation" BWM systems may be t for purpose and can meet the required performance standard, the problem is that shipowners will have no way to determine which existing G8 approved systems will work and which ones will not. Installation of an existing G8 BWM system that does not work will not enable the ship to meet the environmental objectives of the BWM convention.Recognizing that there are some “shortfalls” in BWM systems approved to the existing G8 guidelines, IMO has also agreed to a roadmap for the implementation of the BWM convention. This roadmap is aimed at not penalizing shipowners that haveinstalled a BWM system that meets the existing G8 guidelines. The two main thrusts of this roadmap are that a BWM system that is installed, maintained and operated correctly does not need to be replaced due to “occasional lack of ef cacy” and the shipowner should not be penalized due to “an occasional exceedance of the [BWM convention discharge] standard”. However, this roadmap also includes a footnote which states that “non-penalization may be subject to review as additional information becomesavailable”. This puts the shipowner who installs a BWM system meeting the existing G8 guidelines in a very precarious position which is further compounded by the USCG BWM regulations.The US is not party to the IMO BWM convention and has separate national BWM regulations. Under these regulations, a shipowner must install a CG approved BWM system starting in December 2013. However, the CG recognized that there would be no CG approved BWM systems by that date and allowed shipowners to apply for an extension of the ship’s compliance date. In this respect, the CG has been very reasonable in granting more than 10,000 extensions to date. The result of these extensions is that in effect the overwhelming majority of ships calling at the US will not have to install a CG approved BWM system until starting in 2019. (It should be noted that in December 2016, the CG approved three BWM systems, so obtainingfuture extensions will become more challenging. It is not known when there will be additional CG approved BWM systems.)The result is that a shipowner that installs an existing G8 BWM system at a cost of millions of dollars to meet the IMO BWM convention implementation requirements, may not only be penalized if that system does not work, but worse, would most likely be required to replace that system at a signi cant additional cost of millions of dollars and install a CG approved BWM system when the ship reaches its compliance date under the extension granted.There is no “silver bullet” solution to this dilemma, but the best way forward is for the IMO Marine Environment Protection Committee (MEPC), when it meets in July, to agree to amend the IMO implementation schedule to provide more time for shipowners to install a BWM system on their ships. This would allow BWM system manufacturers more time to produce an ample supply of revised G8 and CG approved BWM systems. Ideally, the IMO implementation schedule should be amended to require ships to install BWM systems starting in 2019 which would be somewhat consistent with the CG implementation schedule. Doing so would not only help in alleviating the dilemma the shipowner faces through no fault of their own, but more importantly, would enable the shipping industry to meet the environmental objectives of the BWM convention and the CG BWM regulations.With regard to the air emission regulations, the good news is that IMO has made the decision that 1 January 2020 is the effective date for all ships to comply with the 0.50% global sulphur limit. This decision provides the much needed certainty to INTERTANKO members who now need to decide how they will comply with this regulatory requirement. INTERTANKO’s policy on air emissions is to “promote the global use of clean fuels to reduce air emissions from ships and assist members in making the right choices for their tankers to comply with these requirements”. A majority of INTERTANKO members share the view that it is better to solve this issue ashore, rather than on the ship, but each member will need to assess uu JOEANGELODEPUTY MANAGING DIRECTOR, INTERTANKO4WWW.BAHAMASMARITIME.COM