MPACT OF SULPHUR CAP 2020 REGULATION ON THE SHIPPING INDUSTRY

Abstract

The adverse health and environmental impacts caused by high emission of Sulphur Oxide (SOx) from shipboard machineries have been considered as one of the major issues in the maritime transport sector. MARPOL Annex VI espoused that the amount of SOx and particulate matter (PM) from shipboard emissions shall be limited to 0.5% of mass/mass (m/m) for vessels operating outside of the Emission Control Area (ECA). For vessels operating within ECA areas, the SOX and PM emissions are limited to 0.1% m/m). The enforcement of Sulphur Cap 2020 regulation has seen the reduction in the production volume and price for Heavy Sulphur Fuel Oil (HFSO) and a significant price increased and higher production for Very Low Sulphur Fuel Oil (VLSFO). This event will result in increasing operating cost for vessels that chose to comply with the Sulphur Cap regulation by changing the usage of fuel oil. This study examines the impact of IMO’s Sulphur Cap regulation to the shipping industry using the Economic, Technology, Environment, Legal and Operational (ETELO) approach.