China's IMO 2020 Implementation Plan Raises Issues for Vessels Using Open-Loop Scrubbers

As the maritime industry continues to adjust to the implementation of the International Maritime Organization's (IMO) 2020 global low-sulfur fuel regulations, key parts of the China Ministry of Transportation's (MOT) "2020 Global Fuel Oil Sulfur Limitation Order Implementation Plan" (the 2020 Plan) go into effect this month. The 2020 Plan creates potential new compliance issues for vessels using exhaust gas cleaning systems (EGCSs), also known as "scrubbers," operating in waters within 12 miles of the Chinese coast and discharging scrubber wash water.

In addition to prohibiting the use of fuel oil with a sulfur content exceeding 0.50 percent m/m (mass by mass) in waters subject to the jurisdiction of China (and fuel oil with a sulfur content exceeding 0.10 percent m/m in domestic rivers and the waters of Hainan), effective March 1, 2020, China's 2020 Plan also prohibits vessels entering its waters from carrying self-use fuel oil with a sulfur content exceeding 0.50 percent. As of March 1, vessels carrying non-compliant fuel (i.e., with a sulfur content exceeding 0.50 percent) entering China's waters must comply with the IMO's "Guide to Port State Supervision on Contingency Measures for Solving Non-Compliant Fuel" (MEPC.1/Circ. 881), and must either take measures to unload the non-compliant fuel or seek the permission of the applicable port state control agency to keep the non-compliant fuel on board while in Chinese waters.

The 2020 Plan provides an exception to the low-sulfur requirements for vessels equipped with scrubbers meeting the equivalency requirement described in Article 4 of the International Convention for the Prevention of Pollution from Vessels (MARPOL). The 2020 Plan, however, also prohibits the discharge of wash water from scrubbers into the waters of China, which effectively amounts to a prohibition of the use of scrubbers in Chinese waters unless the EGCS can retain wash water for discharge outside Chinese waters, or disposal by other means. This will primarily affect vessels with open-loop scrubber systems, which actively discharge wash water subject to MARPOL Annex VI limits on pH and certain compounds and turbidity, and may also affect closed-loop and hybrid EGCSs, which also produce certain discharges. The interplay of these various requirements create a number of issues for vessels using high-sulfur fuel with MARPOL-compliant scrubbers and planning to call at Chinese ports. 

Takeaways and Considerations

Although implementation experience and details in China yet to come will provide further guidance, the current expectation is that vessels utilizing MARPOL-compliant scrubbers can comply with the guidelines in Chinese waters by deactivating their scrubbers in Chinese coastal waters and switching from higher-sulfur fuel oil, which may be used while the scrubbers are operational (3.5 percent sulfur) to low-sulfur fuel oil (0.50 percent max.).

The 2020 Plan also raises questions about what vessels using open-loop scrubbers are required to do with respect to the non-compliant fuel oil carried on-board for use when the scrubbers are in operation outside Chinese coastal waters. It appears that, effective March 1, vessels using any type of scrubbers will at a minimum be required to submit to the appropriate port state control agency a letter committing not to use the 3.5 percent marine fuel onboard while in Chinese waters and seek that agency's permission to keep the non-compliant fuel on-board while in Chinese waters. The 2020 Plan, however, offers no specific guidance as to acceptable procedure on this point, and it remains unclear what measures a vessel operator using scrubbers should take if authorization to carry non-compliant fuel cannot be obtained on a timely basis from the appropriate authorities. It would cause a major disruption to the operations of vessels using scrubbers if they were required to off-load the higher-sulfur fuel they are permitted to use for their open-sea transit.

With March 1 already here, questions remain as to exactly how the 2020 Plan will be enforced. Vessels using scrubbers and planning to call on Chinese ports must be aware of the 2020 Plan and should seek guidance on how to comply with the new rules before entering Chinese waters.

This change also comes at a challenging time when maritime authorities throughout the world are struggling to develop and implement programs to address the coronavirus threat.

Holland & Knight's Maritime Team will continue to monitor the implementation and enforcement of the 2020 Plan, and our attorneys are prepared to assist our clients in all aspects concerning the enforcement and development of IMO 2020 around the globe.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.