DCN September Edition 2019

WORD FROM THE MINISTER
Australia well prepared for
Sulphur 2020
Deputy Prime Minister Michael McCormack says federal authorities
and industry are preparing for the advent of sulphur emissions restrictions
THE GLOBAL COUNTDOWN TO
Sulphur 2020 is on and I am pleased to
report Australia’s maritime industry is well
advanced in its preparation, due in part
to the extensive consultation campaign
undertaken by the Australian
Maritime Safety Authority and
Maritime Industry Australia
Limited.
Airborne sulphur
oxides are one of the
major contributors to
respiratory illnesses,
as well as acid rain
which has a significant
effect on crops,
livestock and buildings.
The cumulative impacts of
air pollution, even away from
the coastline and shipping routes,
add up in economic costs.
The International Maritime
Organization has been progressively
tightening sulphur oxide emission
standards for ships since 2005. From 1
January 2020, ships and vessels operating
anywhere in the world will be required to
use fuel containing a maximum of 0.50%
sulphur, down from 3.50%. This represents
a reduction of more than 85% in sulphur
emissions, which is a substantial change.
I know concerns have been raised
regarding flow-on effects such as an
owners to meet the new sulphur limit – for
example low sulphur fuel oil, exhaust gas
cleaning systems, or alternative fuels.
The short-term price impacts on diesel
are likely to be smaller than global crude
oil price fluctuations over recent years
given that bunker fuel demand
from the shipping industry
constitutes just over 4%
of global oil demand.
Regarding supply, an
IMO review completed
in 2016 concluded that
sufficient compliant
fuel oil would be
available globally for the
shipping industry to meet
the 2020 deadline. And
as more vessels are expected
to transition towards the use of a
compliant low sulphur fuel in the last
quarter of 2019, any indications of diesel
price impacts are likely to be observed
towards the end of the year.
In Australia, marine fuel oil demand
comprises less than 3% of total liquid fuel
demand and the majority of Australia’s
domestic fleet already use compliant
fuels. Australian refineries have indicated
there will be no shortages in the supply of
compliant fuels for ships across Australia’s
six major bunkering hubs. As Australia is a
relatively small bunkering market, the price
and solutions on implementation with
the maritime and fuel supply industries.
In the lead up to 1 January 2020, AMSA
has stressed that ships should report any
issues with compliance preparations to
their flag state, recognised survey and
certification organisations and the coastal/
port state. Also important after that date
is early notification of any issues with fuel
availability so AMSA can assist with a
timely and appropriate regulatory response.
In the coming months, the Liberal and
Nationals government will continue to
pursue measures which will put in place the
IMO ban on the carriage of high sulphur
fuel oil for ship propulsion from 1 March
2020. The carriage ban aims to support
compliance with the sulphur standard and
ensure a global level playing field for the
maritime industry.
I have every confidence that through
our work with the IMO, as well as AMSA
and MIAL’s thorough groundwork and the
willingness of our maritime industry to
meet these improved standards, we are well
on track to be Sulphur 2020 ready.
The cumulative impacts of air pollution,
even away from the coastline and shipping routes,
add up in economic costs
increase in fuel costs and changed supply
and demand in the diesel-reliant landbased
sectors. It is difficult to estimate the
extent and duration of diesel price rises
as they are dependent on refinery output
responses, changing demand from landbased
consumers and options taken by ship
of marine fuel oil and diesel is determined
by the international market. Indications
worldwide are that refineries have been
investing in plant upgrades to produce
sufficient volumes of low sulphur fuel.
Since 2017, AMSA and MIAL have
held roundtables to discuss problems
Michael McCormack, Deputy Prime Minister
and minister for infrastructure
Image supplied; Michele Ursi
8 September 2019
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