New Sulphur Regulations come into force

On I January 2015, the new IMO regulations ensuring that ships are only entitled to burn bunkers with a maximum 0.1% sulphur content in designed Emission Control Areas (or ECAs), came into force.   These ECAs currently cover the North Sea, Baltic Sea, North America and the US Caribbean Sea.

Ship owners have a number of options in order to comply with these new regulations:  they can switch to burning low sulphur fuel oil,  or fit "scrubbers" to their ships' engines to reduce the emissions, or alternatively, look to burn LNG as a fuel.  In the short term it appears that owners are largely opting to burn low sulphur fuel oil (despite the increase in cost that this upturn in demand is likely to cause), rather than undertake the capital expenditure the other options require.

But the question currently being asked by the industry is how these new regulations are being enforced?  Certainly some states are diligently enforcing the new regulations through the detention of vessels and the imposition of fines.  However, others have been slower to adopt enforcement procedures - and even within the European Union the penalties are not uniform, with Member States having discretion as to the level of fines they will impose for an owner's breach.

Consequently, whilst the industry largely supports the move to reduce sulphur emissions, there is also concern that without a robust and consistent approach to the enforcement of these new regulations,  ship owners will not feel incentivised to comply with their obligations under them.  Interesting times appear to lie ahead!