Starting Next Year, Domestic Vessels Including Fishing Boats Will Face Stricter Fuel Sulfur Content Limit of 0.5%

Strengthened Sulfur Content Standards Applied to Domestic Coastal Vessels Following Foreign Vessels
15% Reduction in Fuel Tax Imposed on Low-Sulfur Fuel to Alleviate Burden on Coastal Cargo Ships

(Photo) [Image source=Yonhap News]

[Sejong=Asia Economy Reporter Joo Sang-don] Starting next year, the sulfur content standard for fuel oil used by domestic coastal vessels will be strengthened to 0.5%.

The Ministry of Oceans and Fisheries announced on the 21st that according to the revised "Marine Environment Management Act Enforcement Decree," the sulfur content standard for fuel oil used by domestic coastal vessels will be strengthened as such from January 1, 2021.

To domestically adopt the related regulations of the International Maritime Organization (IMO), the government amended the "Marine Environment Management Act Enforcement Decree" on July 2, 2019, to strengthen the sulfur content standards for fuel oil. The strengthened standards were first applied to foreign vessels from January 1, 2020, and will be applied to domestic coastal vessels one year later, from January 1, 2021.

Accordingly, domestic coastal vessels, including fishing boats, will not be allowed to use or carry fuel oil exceeding 0.5% sulfur content from the date they receive the "Marine Pollution Prevention Equipment Inspection" after 2021. Vessels that do not undergo inspection next year must comply with the same standard from December 31, 2021.

Separately, under the "Special Act on Improvement of Air Quality in Port Areas," from September 1, 2020, in major ports such as Busan and Incheon where sulfur oxide (SOx) emission control zones are applied, fuel oil with a more stringent sulfur content of 0.1% must be used.

The Ministry of Oceans and Fisheries plans to implement support measures to alleviate the additional costs that the domestic coastal cargo industry must bear due to the sulfur content regulations and to actively encourage the switch to low-sulfur diesel fuel.

First, according to the Restriction of Special Taxation Act passed by the National Assembly this month, for two years starting next year, a 15% reduction (78.96 KRW per liter out of 528.75 KRW) in fuel tax will be applied to all low-sulfur diesel used by coastal cargo ships. Since 2001, the ministry has already been providing a fuel tax subsidy of 345.54 KRW per liter out of the 528.75 KRW diesel tax increase. When combined with the newly established tax reductions, operators (789 companies, 1,972 vessels) will receive support for up to 80% of the fuel tax.

Additionally, the ministry has increased the fuel tax subsidy from 25.2 billion KRW to 76.5 billion KRW to prepare for the expected rise in demand from domestic coastal vessels switching from heavy oil to diesel fuel.

Along with this, when selecting recipients for the "Coastal Vessel Modernization Interest Subsidy Project," which supports a 2.5% loan interest rate for funds borrowed for shipbuilding, additional points will be awarded to operators converting aged domestic coastal vessels into eco-friendly, high-efficiency vessels, thereby promoting a multifaceted transition to environmentally friendly domestic coastal shipping.

Park Jun-young, Vice Minister of Oceans and Fisheries, stated, "The government plans to actively respond to increasingly stringent international environmental regulations by promoting the switch to low-sulfur fuel and contribute to '2050 Carbon Neutrality.' However, we will carefully monitor to ensure that the strengthened regulations do not exacerbate the difficulties faced by the coastal industry, which is already struggling due to the COVID-19 pandemic."

This content was produced with the assistance of AI translation services.