Time ticks on. By the sound of it the fuel of choice for the new era generated by the IMO come 2020 will be low sulphur fuel. But this depends on who you talk to ; there are those still investigating the use of scrubbers but the alternatives are switching to LSFO and the availability of fuel treatments, something that has not been widely spoken about here for a while.
Senior figures in the maritime and shipping world understand the issues and dilemmas thrown up by the cap: The global sulphur emission limits for marine fuels will be cut to 0.5% in 2020, from the current 3.5%. Ship operators will therefore have to switch to cleaner, more expensive fuel or to alternative fuels or invest in exhaust gas cleaning systems also known as scrubbers, to comply with the new limits. Let’s add they should also consider the benefits of fuel treatments – but we can leave that to another discussion.
Still the questions remain: The industry is banking on refineries to deliver compliant fuel and when is it going to be available and where in the world? The idea that shipping can cross the oceans seeking out LSFO in the first instance will negate a lot of the goodwill already generated (somewhat reluctantly) on the part of shipowners and managers.
But let us not get too carried away with the bigger picture when we are still grappling with the choice of scrubbers or compliant fuels. At the moment it appears the uptake of scrubbers has been very limited so far, in part due to the huge upfront capital expenditure and that is no surprise when figures hovering around the $3-6 million average are quoted. When the ball finally stops rolling the price will be the arbiter of such decisions. It won’t remove the compatibility issues in the early stages, including the risks of cat fines and the rush to have LSFO in tanks in the dying weeks of 2019.
Ship owners and operators have much to consider in the next 12 months and that will surely start mid-term when the practical issues such as tank cleaning, selecting the right bunkering operation and deciding when to make the switchover begin.
A piece from a feature in the respected The Loadstar magazine: “According to a blog published today by S&P Global Platts, it is estimated that if the global container fleet were to switch overnight from HFO to LSFO, the extra cost would be a staggering $34bn a year, based on today’s prices.”
There are alternatives to scrubbers and fuel treatment will be one of the most cost effective and efficient ways of working with the new fuel!
It depends on who you listen to: one analyst tells you low sulphur fuel will be readily available come the 1 January 2020 and then another pops up and suggests the reluctance of some ship owners to comply with the IMO’s requirement for 0.5% sulphur content fuel by fitting scrubbers, will result in a shift in demand to MGO and ultra-low sulphur fuel oil (ULSFO) causing the price spike in 2020. Now the question is obviously how many ship owners did that analyst talk to before making that statement?
It has taken years to define the regulations and yet there is no clear blue water ahead of us with little more than 18 months before they come into force. Some regions will have a good supply of new bunkered fuel from the outset – again according to industry experts – and the Caribbean has been mentioned because it is a key storage hub. The availability of fuel oil, diesel and ULSFO will be good we are told but this will not be the case for some global shipping bunkers and we wonder if the busy Pacific Northwest region will be fully up to speed from the outset of the IMO 2020 cap.
It was interesting to read that researchers from a Swedish university say they have developed a method for remotely monitoring emissions from marine vessels, which they have used to investigate the effects of the recent regulations. The work has been carried out through the Danish Environmental Protection Agency and the European Union (EU) projects Compmon and Envisum. One of the ways they carry out the surveys is low flying over a selected region and this has apparently highlighted that between 87%-98% of ships comply with the tougher ECA regulations for sulphur emissions introduced in northern Europe in 2015. It also flags up that the lowest levels of compliance were observed in the western part of the English Channel and in the middle of the Baltic Sea. An additional use of remote sensing is to advise port authorities as to which ships they should select for on-board fuel inspections and these inspections are a prerequisite for taking legal action against rule breakers. Bad news for those who think they might ‘get away’ with breaking the rules while on the high seas! Recently, the Norwegian Maritime Authority fined a ship NOK 600,000 (about EUR 63,000) for noncompliance. This was detected by the Great Belt measuring station and reported to the Norwegian Authorities.
But back to our original premise: when will the new fuel become readily available. Much of the initial preparation to take this fuel on board will necessitate in a comprehensive cleaning of fuel tanks beforehand. This rather ‘loose’ changeover period might cause initial concerns for ship owners and operators and yet much of the indecision can be removed once comprehensive announcements about fuel availability and location is made.
Every time we open an online page or magazine and read about IMO 2020 and the sulphur cap for maritime vessels we are faced with differing opinions. This is another perspective and looks at what ship owners make of this forthcoming regulatory change. In 2016 a total of 51,000 commercial ships were registered worldwide. The next statistic is more revealing with suggestions that only around 1% of the world’s fleet is operating within the future regulatory limits for sulphur emissions for ocean open areas – those outside of Emission control Areas.
Ship & Bunker magazine – a well respected publication – recently highlighted this whole area with this feature: well worth a read.
Reading online is like letting a tap continue to run: you get a constant stream of new material and yet the overall effect is simply the same thing coming over and over and over …. the same can be said of concerns about the 2020 sulphur cap. The questions keep coming back to quality of the new fuel and the availability of such.
Currently the choices come down to selecting a scrubber and continuing to use heavy fuel oil, or you can go with low sulphur fuels which is possibly what the majority will plump for. This is the time when the availability and quality of the new fuel will be of paramount importance. Maybe the real challenge will be low-sulphur fuel. The concerns about blending and stability, the effects on equipment will be the real concerns. One company involved in fluid handling has suggested that some vessels will use three or four different types of fuel in future operations – bit like a hybrid car by the sound of it. While it might make initial sense in terms of bunkering worries and fuel availability, will it be a financially and operationally perfect solution?