“Although the forthcoming change in bunker fuel regulation is a key uncertainty, the requirement for cleaner distillate fuels will be supportive to refining earnings and distillate crack spreads for 2020,” said Alan Gelder, Vice President Research – EMEARC Refining and Chemicals, Wood Mackenzie.
Read more here: Bunkerspot
Global bunker fuel cost could rise by up to US$60 billion annually from 2020, when the International Maritime Organisation’s (IMO) 0.5 wt% sulphur cap regulation for bunker fuels kicks in.
Traditionally, fuel oil is used by the shipping industry as bunker fuel. In 2016, global demand for high sulphur fuel oil stood at almost 70% of overall bunker fuels.
With the implementation of the IMO regulation in 2020, the shipping industry will have to deliberate a switch to alternative fuels such as marine gas oil (MGO). This will enable the sector to meet the regulation’s sulphur specifications. Alternatively, shippers could install scrubbers, a system that removes sulphur from exhaust gas emitted by bunker fuel.
Analysis – IMO 2020 regulation could cost shippers billions | Wood Mackenzie