{"id":40077163,"date":"2020-05-12T00:00:00","date_gmt":"2020-05-11T18:30:00","guid":{"rendered":"http:\/\/china-dialogue-ocean-staging.darkbluehq.com\/uncategorized\/13818-china-enters-a-new-low-sulphur-shipping-era\/"},"modified":"2022-02-10T23:01:44","modified_gmt":"2022-02-10T17:31:44","slug":"13818-china-enters-a-new-low-sulphur-shipping-era","status":"publish","type":"post","link":"https:\/\/dialogue.earth\/en\/ocean\/13818-china-enters-a-new-low-sulphur-shipping-era\/","title":{"rendered":"China enters a new low-sulphur shipping era"},"content":{"rendered":"

The global shipping industry is shifting to low-sulphur fuel in response to global calls for cleaner shipping . At the start of the year, the International Maritime Organisation (IMO) lowered the sulphur content<\/a> limit in ships\u2019 fuel oil from 3.5% to 0.5%. Since 1 March, the carrying of fuel oil not meeting the tougher standard has also been banned, all under the International Convention for the Prevention of Pollution from Ships (MARPOL). Ships fitted with a sulphur scrubber, or exhaust gas cleaning system, are still allowed to carry and use heavy fuel oil, since this apparatus can keep emissions to within the new limit. The changes are expected <\/a>to see sulphur oxides emissions from global shipping drop by 77%, thereby reducing health issues including asthma, stroke, lung cancer, cardiovascular and pulmonary diseases.<\/p>\n

China has been monitoring shipping within its waters for compliance with the new rules. The media has reported marine authorities in Qingdao penalising a Korean vessel on 3 January, and then a Panamanian one in Weifang on 19 January.<\/p>\n

The tougher limit will have a major impact. Cutting sulphur in fuel oil from 2.5% to 0.5%\u00a0 reduces emissions of sulphur oxides by 80% and of particulate matter by up to half, while a reduction to 0.1% reduces sulphur oxides by 95% or more, according to a 2017 report<\/a> jointly published by the Natural Resources Defence Council (an environmental advocacy group) and the Transport Planning and Research Institute of China\u2019s Ministry of Transport. Meanwhile, if very-high-sulphur heavy fuel oil<\/a> were to be replaced with 0.5% alternatives, particulate emissions could drop by up to half.<\/p>\n

According to a local official quoted<\/a> in the Economic Daily in 2018, data from Baoshan Monitoring Station, near Shanghai\u2019s Waigaoqiao port, showed a much larger drop in sulphur oxides than for the city as a whole.<\/p>\n

Stricter policies laying a foundation<\/h2>\n

China did have policies on shipping emissions before the IMO\u2019s restrictions came into force.<\/p>\n

In 2016, the Ministry of Transport starting imposing<\/a> emission control areas (ECAs) in the Pearl and Yangtze deltas and the Bohai Sea, with a staged reduction of fuel oil sulphur content to 0.5%. This started with some trial ports in 2016, was expanded to \u201ckey ports\u201d in 2017, to \u201call ports\u201d in 2018 and the \u201centire ECA\u201d in 2019. In July 2018, a State Council three-year action plan<\/a> for tackling air pollution said China would \u201cby the end of 2019, expand ECAs to cover [all] key coastal ports.\u201d Four months later the transport ministry announced<\/a> an ECA expansion \u2013 to 12 nautical miles outside its territorial baseline along the entire coast. ECAs also expanded to important shipping routes on the Yangtze and Xi rivers (a major tributary of the Pearl River).<\/p>\n

<\/p>\n

\"china<\/a>
DECA = Domestic Emissions Control Area | Data: International Council of Clean Transportation<\/a><\/figcaption><\/figure><\/p>\n

<\/div>\n

Those ECAs form the basis for implementing the sulphur restrictions. Freda Fung, consultant to the Natural Resources Defense Council\u2019s Green Ports and Shipping project, told China Dialogue the ECAs had given regulators necessary experience: in collecting samples, using high-speed testing equipment, and remote sensing. Monitoring fuel oil quality became a focus for the marine authorities once those policies were put in place. Now, remote monitoring of emissions allows the use of non-compliant fuel oil to be identified from afar.<\/p>\n

In November 2017, 13 ministries including the Ministry of Transport jointly issued guidance<\/a> on ensuring supply of low-sulphur fuel for shipping, along with introducing joint supervision. The document encouraged Chinese refineries to produce low-sulphur fuel oil, called for a faster update to fuel oil standards, and boosted oversight of the sector.<\/p>\n

\n

18.15 million tonnes<\/p>\n

\n
\nThe quantity of low-sulphur fuel oil China plans to produce in 2020
\n\n <\/div>\n <\/div>\n

Freda Fung explained oil firms have been planning production of low-sulphur fuel oil since last year. An IMO database<\/a> of shipping fuel oil consumption shows compliant fuel oil had been available in many countries before the tougher rules were realised.<\/p>\n

In January, OilChem China, a provider of energy industry statistics, calculated<\/a> that global demand for low-sulphur fuel oil for shipping would be 135 million tonnes in 2020 \u2013 leaving a 40% supply gap.<\/p>\n

Chinese refiners are boosting production. According<\/a> to OilChem China, the country produced 76,000 tonnes of low-sulphur fuel oil in 2019, while testing techniques. Planned output for 2020 is 18.15 million tonnes. For comparison, the EU and the US produce a combined 20 million tonnes a year.<\/p>\n

Cleaner fuel, or scrubbers?<\/h2>\n

The IMO allows for an alternative emissions-reduction method: continuing to use high-sulphur fuels but with a sulphur scrubber installed. However, the industry seems to prefer switching fuels. Only around 4,300 vessels \u2013 less than 5% of the total \u2013 worldwide have installed scrubbers according to data<\/a> from Norwegian shipping registrar DNV GL.<\/p>\n

Which is the better option? In 2019, Wu Huimin, a cruise liner captain with Royal Caribbean, said at a media event to discuss the restrictions, organised by green NGO Tianjin Binhai Environmental Protection Advisory Service Centre, that sulphur scrubbers are a more economical option: the switch to low-sulphur fuel will see a 100,000-tonne ship burn an extra $2,000 of fuel every hour; while a sulphur scrubber costs $1 million. So after 500 hours of sailing, the scrubber is the better deal.<\/p>\n

But at the same event Peng Chuangsheng, deputy chief engineer with the China Waterborne Transport Research Institute, said price changes and the lifespan of a sulphur scrubber need to be taken into account, adding that low-sulphur oil is the \u201cnatural choice\u201d for the shipping industry. He pointed out that sulphur scrubbers have an expected lifespan of five years, but due to a lack of testing, actual longevity is unknown. \u201cIf it doesn\u2019t last for five years, and the price of low-sulphur fuel comes down, it might not earn back its cost.\u201d<\/p>\n

<\/p>\n

\"ship<\/a>
Pollution from ships creates lines of clouds that can stretch hundreds of miles (Image: NASA Earth Observatory<\/a>)<\/figcaption><\/figure><\/p>\n

<\/div>\n

Freda Fung told China Dialogue that the Ministry of Transport\u2019s implementation<\/a> of the sulphur restrictions prevents ships from dumping wash water from sulphur scrubbers in an ECA. Scrubbers also take up space that could be used for cargo.<\/p>\n

Low-sulphur fuel \u2013 expensive, for now<\/h2>\n

Although low-sulphur fuel has become the shipping industry\u2019s main choice, it remains pricey \u2013 $200-250 more expensive per tonne than 3.5% sulphur fuel.<\/p>\n

Nature Fields, an NGO working on port air pollution, said<\/a> in an article on its WeChat account that research shows this increases the cost of each trip through an ECA by 100,000 euros (about 770,000 yuan). According to Nature Fields, this may make shipping firms more inclined to pay fines than use the pricier fuel.<\/p>\n

Commenting on this at the media event, Peng Chuangsheng said low-sulphur fuel will become cheaper as it is more widely used, while high-sulphur fuel will get more expensive as production and demand drops, shrinking the gap between the two. Freda Fung told China Dialogue that the shipping industry has always had a surcharge system, whereby shipping firms pass on increased fuel costs to cargo owners. The major firms raised those surcharges in anticipation of the new restrictions and are not themselves bearing all the extra cost, making the switch easier.<\/p>\n

Recent sharp drops in crude oil future prices have also affected low-sulphur fuel prices. According to the JOC Group, a shipping information and services provider, the cost of very low-sulphur fuel in Singapore has collapsed by 70%<\/a> since early January, from $740 a tonne on 8 January to $218 on 21 April. Rotterdam has seen a similar fall: 67% since early January.<\/p>\n

Freda Fung also said price isn\u2019t the only factor shipping firms consider when deciding to comply with an ECA. Breaches would mean reputational damage, fines and other economic losses. In China, ships found breaching ECA rules will be singled out by regulators for particular scrutiny and are more likely to be boarded for checks. This means more time at anchor and so delays to schedules and damaged reputations. Overseas, vessels may end up on blacklists, perhaps even publicly, again damaging reputations. Fung stressed: \u201cStrict enforcement, oversight and transparency are crucial to encouraging the use of compliant fuel oil.\u201d<\/p>\n

Monitoring still weak, fines should be higher<\/h2>\n

If the restrictions are to be effective, strict enforcement by the marine authorities is needed.<\/p>\n

Currently, officials in large ports around the world are boarding ships to check emissions. Data collected by the Tianjin Binhai Environmental Protection Advisory Service Centre shows that in 2018 over 20,000 routine checks were made at Tianjin\u2019s port \u2013 but in 80% of those checks no vessels were boarded. The huge number of vessels and complex itineraries is a major challenge for marine law enforcement officials.<\/p>\n

Freda Fung agreed. She said that monitoring and oversight capacity in the three areas<\/a> where ECA trials were run in 2016 \u2013 the Yangtze and Pearl deltas and the Bohai Sea \u2013 is in place, but in smaller port areas more staff are needed.<\/p>\n

Responding to this, Li Mingjun, senior engineer with the environmental resources bureau of the Ministry of Transport\u2019s Planning Research Institute, said at the media event that a big data analysis of records could find the companies and vessels with a history of breaches, and identify the routes and refuelling points more likely to see illegal behaviour. This would allow the authorities to make early decisions about which vessels should be checked.<\/p>\n

Technology has a greater deterrent effect<\/p><\/blockquote>\n

Ma Dong, project manager with the policy and research standards office at the Ministry of Ecology and Environment\u2019s Vehicular Emissions Control Centre, added that technology will be needed in the future \u2013 throwing staff at the problem is not enough. He pointed out that Hong Kong University of Science and Technology has a team researching automated monitoring, while remote sensing is being researched in Shanghai. \u201cTechnology has a greater deterrent effect,\u201d he said, \u201cand we should tell the industry that we can monitor them, and make sure they don\u2019t take chances.\u201d<\/p>\n

Ma also hopes to see joint enforcement across regions. Even within China, integration across regions would help sharing of information and methods. Internationally, more exchange and cooperation across the Belt and Road Initiative countries would help China share enforcement data, such as breaches, with international regulators, thereby reducing enforcement costs.<\/p>\n

Another issue is that low fines may be reducing the impact of law enforcement. Currently, fines in China are imposed according to Article 106 of the Air Pollution Law \u2013 which only allows for relatively small fines, of between 10,000 (US$1,400) and 100,000 yuan.<\/p>\n

In practice, fines have stayed at the lower end of that range. A study by Clean Air Asia and Nature Fields found that fines issued in China were far below the maximum allowed. Of 261 fines issued in 2016-2017, the average fine for using non-compliant fuel was only 15,000 yuan. Cheng HuiHui, senior researcher with Clean Air Asia pointed out there is no link between the size of the fine and the quality of the fuel: In Shenzhen, two vessels were given fines of 10,000 yuan \u2013 despite the fact that one was using fuel with 37 times the permitted quantities of sulphur, and the other only 2.4 times. This reduces the deterrent effect of the restrictions. They therefore called<\/a> for the upper limit on fines to be removed.<\/p>\n","protected":false},"excerpt":{"rendered":"

Establishing emission control areas has prepared China for global sulphur restrictions, but challenges remain<\/p>\n","protected":false},"author":0,"featured_media":40067591,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[50039901,760],"tags":[14274,591],"hashtags":[],"country":[20000110],"class_list":["post-40077163","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-ocean","category-pollution","tag-air-pollution","tag-shipping","country-china"],"acf":[],"yoast_head":"\nChina enters a new low-sulphur shipping era | Dialogue Earth<\/title>\n<meta name=\"description\" content=\"Establishing emission control areas has prepared China for global sulphur restrictions, but challenges remain.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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