IMO MEPC 70 meeting agreed on a global fuel sulphur limit of 0.5% which will enter into force in 2020.According to IMO estimations up to 70,000 ships may be affected by the regulation. To have the best competitive edge on the market, strategies and plans on how to react to the IMO’s 0.5% sulphur cap needs to be addressed soon. DNV GL has issued a guidance paper to assist in navigating both the regulatory landscape and the alternatives for compliance and to provide an introduction to the choices and challenges ahead. DNV GL recommends starting planning and acting as soon as possible, to ensure compliance in the most cost-efficient way.
How the global suplhur cap affects shipping
As there are a variety of options to consider, shipowners and operators should start planning which fuel their vessels should use and being aware of fuel availability and price.
HFO (3.5% S) will be available, though compliance will require the installation of exhaust gas cleaning systems. Compliant fuels and distillates will be on the market, but will be more expensive and have different operational issues. Alternative fuels, such as LNG, are and will be available, but requires investments and the price fluctuations are different from conventional fuel. Other fuels such as methanol or ethanol may be an alternative where such fuels are available, and in the far future, a hydrogen fuel cell combined with battery technology could be viable for use in the marine industry.
There is, however, some uncertainty in the industry whether there will be a sufficient amount of compliant fuels available, how this will affect fuel oil prices and, not least, how the enforcement of the sulphur cap will be carried out.
The time to implementation is short, and operators who are investigating options other than a fuel shift to MGO need to have their strategies ready for actions to take and options to choose between. DNV GL notes that there is no one-size-fits-all solution, and the best option very much depends on vessel type, size of vessel, operational patterns and which fuels are available in the short and long term. For options requiring a retrofit, it is also important to consider the complexity of installation, possible off-hire and the remaining lifetime of the ship.
HFO with SOx scrubber : HFO will still be an option after 2020. This might be an alternative for owners who are concerned about price increase and availability of compliant fuels. However, to be in compliance, it will require the installation of exhaust gas cleaning technology commonly known as SOx scrubbers
Scrubber technologies: There are two technologies available today: dry and wet systems. The wet systems are by far the most predominant. Within the wet systems there are three alternatives: open loop, closed loop and a hybrid system that can operate either as a closed- or openloop system.
Distillates: Switching to distillate fuel will mean a significant increase in fuel cost and may also require upgrading to the fuel treatment plant due to the significantly lower viscosity of the fuel.
New low sulphur fuels: Low sulphur compliant hybrid fuels are expected to be available, as refineries gear up their plants. De-sulphurisation is costly and refineries may opt to refine higher grade fuels rather than invest in de-sulphursation systems. Some stakeholders in the industry are concerned if the supply of de-sulphurised fuels will cover the demand by 2020, leaving the world fleet to rely on MGO or distillate blends
LNG as fuel: With the IMO 0.5% sulphur cap, it is expected that LNG as fuel will gain a more favourable position as a marine fuel. LNG as fuel is now a technically proven solution, and LNG bunkering infrastructure is developing rapidly. While conventional oil-based fuels will remain the main fuel option for most existing vessels in the near future, the commercial opportunities of LNG are interesting mainly for newbuilds, but in some cases also for conversion projects.
Other alternative fuels: There are a variety of emerging fuels that could be considered. The most predominant are methanol, different types of biofuels and LPG. These are considered to have very little impact on the market as a whole, but are alternatives that can be considered where supply is readily available. Apart from some of the biofuels, changing to these types of fuel will need special adaptive engines and fuel treatment systems.
On this guidance paper, DNV GL experts provide you:
- A summary of the regulatory landscape
- Insights into the different compliance options
- An overview of future trends
- Cost comparisons for different scenarios
- An overview of its class and advisory services related to emission compliance
Source: DNV GL