Are You Prepared For The 2020 Cap on Sulphur Emissions?

Sulphur emissions are one of the major components of air pollution.

They cause respiratory diseases, contribute to acid rain and form aerosol gases. Because of the high content of sulphur compounds in marine fuels, the maritime industry has always been a huge part of the problem.

The IMO has been working to reduce the environmental impact of shipping since as far back as the 1960s and their latest initiative is to introduce a cap on sulphur emissions that will come into force on 1st January 2020.

The New 2020 Regulation

Regulation 14.1.3 of MARPOL Annex will set a limit of 0.50% m/m on the sulphur content of fuel oil used by ships – a dramatic reduction from the current 3.50% limit.

The sulphur content of oil is lowered by refining, but the maritime industry has traditionally used mostly low-grade fuel oils like heavy oil and diesel oil, both of which have a high sulphur content. Therefore, the main aim of the new regulation is to ensure that marine engines use a low-sulphur oil or a better grade of fuel such as marine gas oil.

Enforcement

Ships must be issued with an International Air Pollution Prevention (IAPP) Certificate by their flag state which states that they use a fuel oil that’s compliant with the new regulation. When they take on fuel, they must also obtain a bunker delivery note that details the oil’s sulphur content. Samples may be taken to verify this, and port and coastal states can use surveillance, assess smoke plumes and apply many other techniques to catch out vessels that attempt to evade the 0.50% m/m limit.

Vessels that fail to comply can be fined and may even be declared unseaworthy, stopping them from sailing.

Impact on shipping

Approximately 90% of world trade is by sea and global shipping currently consumes around four million barrels of high sulphur fuel oil per day. It’s estimated that fuel accounts for about half of a ship’s daily operating cost so the new regulation will have a huge impact on the industry.

Based on average consumption of 20 to 80 tonnes of fuel a day, a vessel using cleaner fuel can expect to face extra daily expenses of about $6,000 to $20,000. Overall, global shipping costs are expected to rise by at least a quarter and analysts say that the maritime industry is not prepared for the change.

How to comply

There are three main ways of making sure your vessels meet the standards required by the new regulation. However, all of them come with added costs and challenges.

Use compliant fuels
This is the most straightforward solution – ships can simply switch to a low sulphur fuel without the need to fit expensive new equipment. These low sulphur fuels have an extended refining process which removes a much larger amount of the sulphur content. However, the process means that fuel can cost up to 50% more and there are concerns that refiners may struggle to meet demand when the new regulations take effect.

Install exhaust gas cleaning systems
Known as ‘scrubbers’, these clean the ship’s emissions before they’re released into the atmosphere, stripping out the sulphur content. They enable vessels to continue using lower grade fuel while still meeting the IMO’s new regulation.

Many vessels are already using scrubbers and, by 2020, around 20,000 ships are expected to be equipped. However, fitting them takes time and there are only a limited number of manufacturers and installers – only around 500 vessels per year can be equipped. With a global fleet of over 90,000 vessels, this means that fitting every ship with scrubbers would take over 100 years.

The installation of adequate scrubbing equipment is also expensive, costing between $1-$10million per vessel. Additionally, if the equipment should break down while the vessel is at sea, operators would be faced with even more costs as well as significant operational difficulties.

Use clean gas LNG as fuel
This is a considerably greener alternative to oil and is seen as much more viable in the long term because it reduces sulphur emissions by up to 95%. As with scrubbers, this option does involve a large investment when it comes to installation as converting existing ships to run on LNG requires them to be re-engined. The fuel store and insulation equipment also take up a large amount of valuable space on board and currently, few ports have the necessary infrastructure to supply vessels.

Despite this, an increasing number of ships are beginning to use LNG in preparation for the new IMO regulation. Methanol is also being used as a fuel source on some short sea services.

What steps are you taking to prepare for the cap on sulphur emissions?

This is a very difficult transitional period for the maritime industry – you need to make sure you’re ready for 1st January 2020.

Contact us to find out how we can help.