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Nov 8, 2016 Blog

Ship Owners Face A Stiff Challenge

The most significant regulation for international shipping industry regarding air emissions is the recent IMO Global Sulphur Cap to reduce air pollution from ships. In October 2016 the International Maritime Organisation (IMO) agreed to January 01, 2020 as the effective date for implementation of the regulation by ships to comply with global 0.50% sulphur content of fuel oil.

IMO’s Marine Environment Protection Committee (MEPC) also adopted a resolution on the effective date for implementation of the fuel oil standard in regulation 14.1.3 of the International Convention for the Prevention of Pollution (MARPOL). The current standard is 3.5% mass by mass of high sulphur fuel oil. This standard has been in effect since 2012 and has now been lowered to a maximum of 0.5% sulphur. However, the new global limit will not change the limits in Emission Control Areas (ECAs) established by IMO, which has been 0.10% since early 2015.

While restrictions on sulphur emissions in shipping are not an entirely new concept, the transition to the IMO 2020 rule is daunting. The majority of bunker demand will have to switch from high-sulfur fuel oil (HSFO) to very low sulphur fuel oil (VLSFO, 0.5% sulfur) very quickly.

The use of low sulfur fuel will be globally mandatory in 2020 unless alternative technology such as an Exhaust Gas Cleaning System or scrubber is being used aboard the vessel. A scrubber is a system which removes sulfur dioxide from the exhaust gas of ship engines while utilizing seawater.

The global consumption of fuel oil for large ships is currently roughly 6.0 million barrels per day. As the demand for HSFO will decrease, there is a risk of overproduction of VLSFO which could lead to significant price swings. Fuels compliant with the 0.5% limit are being reported as more expensive than a traditional HSFO bunkers.

The cap “is going to represent a significant change for refiners in Europe, because the switch for fuel oil from 3.5% to 0.5% is not straightforward,” says Damien Valdenaire, Science Executive for the Refinery Technology at Concawe.

However, It is important to note that refineries are not the obligated party. “They don’t have to produce 0.5% bunker fuel. It’s a strategic decision whether to produce it in limited quantities, or at all,” says Valdenaire.

In conjunction with fuel switching over from HSFO to VLSFO, scrubbers will be an important solution for compliance with IMO 2020. The Exhaust Gas Cleaning Systems Association (EGCSA) believes that around 4,000 ships will be fitted with scrubbers globally by the beginning of the new regulation.

WP_Post Object ( [ID] => 220965 [post_author] => 1 [post_date] => 2020-01-07 19:19:39 [post_date_gmt] => 2020-01-07 19:19:39 [post_content] => The most significant regulation for international shipping industry regarding air emissions is the recent IMO Global Sulphur Cap to reduce air pollution from ships. In October 2016 the International Maritime Organisation (IMO) agreed to January 01, 2020 as the effective date for implementation of the regulation by ships to comply with global 0.50% sulphur content of fuel oil.

IMO’s Marine Environment Protection Committee (MEPC) also adopted a resolution on the effective date for implementation of the fuel oil standard in regulation 14.1.3 of the International Convention for the Prevention of Pollution (MARPOL). The current standard is 3.5% mass by mass of high sulphur fuel oil. This standard has been in effect since 2012 and has now been lowered to a maximum of 0.5% sulphur. However, the new global limit will not change the limits in Emission Control Areas (ECAs) established by IMO, which has been 0.10% since early 2015.

While restrictions on sulphur emissions in shipping are not an entirely new concept, the transition to the IMO 2020 rule is daunting. The majority of bunker demand will have to switch from high-sulfur fuel oil (HSFO) to very low sulphur fuel oil (VLSFO, 0.5% sulfur) very quickly.

The use of low sulfur fuel will be globally mandatory in 2020 unless alternative technology such as an Exhaust Gas Cleaning System or scrubber is being used aboard the vessel. A scrubber is a system which removes sulfur dioxide from the exhaust gas of ship engines while utilizing seawater.

The global consumption of fuel oil for large ships is currently roughly 6.0 million barrels per day. As the demand for HSFO will decrease, there is a risk of overproduction of VLSFO which could lead to significant price swings. Fuels compliant with the 0.5% limit are being reported as more expensive than a traditional HSFO bunkers.

The cap “is going to represent a significant change for refiners in Europe, because the switch for fuel oil from 3.5% to 0.5% is not straightforward,” says Damien Valdenaire, Science Executive for the Refinery Technology at Concawe.

However, It is important to note that refineries are not the obligated party. “They don’t have to produce 0.5% bunker fuel. It’s a strategic decision whether to produce it in limited quantities, or at all,” says Valdenaire.

In conjunction with fuel switching over from HSFO to VLSFO, scrubbers will be an important solution for compliance with IMO 2020. The Exhaust Gas Cleaning Systems Association (EGCSA) believes that around 4,000 ships will be fitted with scrubbers globally by the beginning of the new regulation.

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