‘For shipowners, the journey toward compliance will not be straightforward and it certainly won’t come cheap,’ said Lord Mountevens, Vice Chairman of Maritime UK, in his keynote speech delivered at the opening of a high-level shipping and trade conference in Santiago.
The Maritime Symposium: Chile, organised by Petrospot, is being held this week in Santiago and Valparaiso as part of national celebrations of the Chilean Navy’s 200th anniversary and the 100th anniversary of Chilean-British naval cooperation.
The symposium features a one-day conference with a focus on the West Coast of South America and the impact and preparedness of Chile and other Latin American countries for the introduction of the 0.50% global sulphur cap in January 2020.
In his speech to conference delegates today, Lord Mountevens noted that the approaching 2020 deadline is ‘a call to action for not only shipping but its customers and fuel suppliers – as well as for governments, refiners and ports in IMO member states.’
He noted that shipping has two main IMO 2020 compliance options – the use of low sulphur marine fuel or the continued use of heavy fuel oil in conjunction with exhaust gas cleaning systems.
‘Neither option is perfect,’ he said.
‘It remains to be seen if refiners will be able to produce enough compliant marine fuel to meet demand by the 2020 deadline and, even if they can, it is likely to come at a cost premium over conventional heavy fuel oil. We also don’t yet know which regions could be worst affected by these potential shortages of compliant fuel.’
Lord Mountevans continued: ‘Scrubbers are expensive too, of course – with a price tag of at least $5 million per vessel. It’s a CAPEX investment that really only makes sense for bigger or newer vessels; it’s probably not worth the outlay for smaller or older vessels. Scrubbers are, however, a technology that has not yet been proven in the long term. It also remains uncertain whether vendors will be able to supply scrubbers to all the vessels that demand them before the 2020 deadline.’
Lord Mountevans reminded delegates that ‘there will be no “transition period” after 1 January 2020 to allow for the burning of any non-compliant fuel remaining on board ships.’
This, he emphasised, means that shipping companies, charterers and their crews need to fully prepare now in order to be compliant by midnight on 31 December 2019.
He also highlighted that ‘so many’ unanswered questions still remain in relation to IMO 2020. ‘We still need to gain a clearer picture of how regulatory enforcement will work and how non-compliance will be addressed by the authorities,’ he said.
Lord Mountevans also pointed to shipping’s key role in the context of growing global trade protectionism. He referenced research from the World Bank last year which found the world’s 60 top economies have adopted more than 7,000 protectionist trade measures since the financial crisis.
‘Capitalism, globalisation and international collaboration spread prosperity and growth - and shipping has a vital role to play in this process,’ he said. ‘It follows that the shipping industry should also play a vocal role in defending them and challenging the protectionist trend.
He continued: ‘Protectionism — whether in the UK, in the EU, the USA or anywhere else — will see trade fall and that extraordinary progress reversed. We must not allow this to happen.’
And he stressed that: ‘The world has never been more interconnected, never more reliant on each other and, by implication, never more reliant on shipping.
‘The future of trade is too important to be dismantled by protectionists who are interested only in their own short-term gains. Trade facilitates human progress. It is the rock upon which a strong global economy, international diplomacy and mutual respect is built. Let’s play our role in broadcasting and bolstering that fact.’
Following on from Lord Mountevans, John Derrick, Deputy Head of Mission at the British Embassy, spoke of the UK’s long commercial and cultural ties with Chile, and he also addressed the impact of Brexit on the ongoing relationship between the two countries.
‘Looking to the future, you will know that we have launched a public consultation on the potential for the UK to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTTP). If we get closer to making a formal application, look forward to working with Chile to make this a reality.
‘Chile is a country with which we can do business. But we can – and should - be doing more. As our relationship with Europe changes, we want to open our arms to the world.’
However, said Derrick, work remains to be done on the bilateral relationship between Chile and the UK.
He noted that: ‘The UK lags behind its European peers on trade with Chile. In 2016, UK-Chile trade was at a lower level than Chile’s trade with France and Italy, and significantly less than trade between Chile and Germany.