The sulphur 2020 cap will pose multiple challenges to ship operators

The sulphur 2020 cap will pose multiple challenges to ship operators

Help sought on sulphur cap issue

Shipping industry captains have called for greater coordination amidst concern that over 70,000 ships are likely to be affected by the IMO regulation which comes into force from January 2020. R Sushil Nair reports

01 December 2018

With the global 0.50 per cent sulphur cap decision looming large over the shipping industry, several big league players believe there is a need for greater solidarity between governments and global maritime organisations to achieve the desired goals.

The call for greater co-ordination came from the industry captains at the recent Seatrade Maritime Middle East (SMME) in Dubai amidst concern that over 70,000 ships are likely to be affected by the International Maritime Organization (IMO) regulation which comes into force from January 2020.

The IMO move for a seven-fold decrease in the amount of allowable sulphur in marine fuel has triggered significant action and investment from across the petroleum refining and maritime industries. 

Many of the industry bigwigs termed it as the most significant change in fuel specifications in decades. While some industry bodies lauded the strategy, others slammed it for not being direct enough in outlining decarbonisation measures.

Even as the maritime sector is spearheading this change, many experts believe the petroleum refiners too needed to address their capabilities to remain competitive in the post-2020 marketplace. 

With the 2020 sword dangling over their heads, the owners of larger ships are now racing against time to comply with the IMO regulations. They now have the following four options before them:

• Switching from high-sulphur fuel oil (HSFO) to marine gas oil (MGO) or distillates;

• Using very-low-sulphur fuel oil or compliant fuel blends (0.50 per cent sulphur);

• Retrofitting vessels to use alternative fuels such as LNG or other sulphur-free fuels; and

• Installing exhaust gas cleaning systems (scrubbers), which allows operation on regular high sulphur fuel oil (HSFO).

The sulphur 2020 cap will pose multiple challenges to ship operators, said Tim Wilson, the principal consultant on fuels at Lloyd’s Register.

“Firstly the choice of fuel supplier will not be as simple as it was before,” remarked Wilson, adding that one of the prime safety concerns surrounding low sulphur fuel was the risk posed by opportunistic blending.

He pointed out that future strategies for sourcing 0.5 per cent sulphur fuel should be based on a knowledge base of the supply chain. “Then there will be the problems of verifying and enforcing compliance,” he stated. 

“Sniffer technology already exists to detect ships burning higher-sulphur fuel than they are meant to,” he warned, adding that the limit will be 0.5 per cent on the dot without any leeway.

He said record-keeping and total transparency with port state inspectors were the best course of action.

Meanwhile, Wilson pointed out that port states were likely to develop ‘blacklists’ singling out ships suspected of breaching the rules, with such information exchanged between states. 

While the new IMO rule has triggered mixed reactions with majority of the shippers ‘grudgingly’ following it, there is one section which isn’t complaining – the scrubber manufacturers. Top players such as Norway’s Yara Marine, Finnish company Wärtsilä and Swedish group Alfa Laval have their hands full. 

Yara said it was even looking to double its workforce to cope up with the spurt in demand. The Norwegian group has landed 200 to 300 scrubber deliveries over the last 36 months. 

The popularity of scrubbers as a way to comply with the IMO’s 2020 sulphur cap has grown rapidly over the last six months with over 1,000 systems ordered in that period, according to classification society DNV GL.

As per its latest report, a total of 1,850 vessels had either been fitted with scrubbers or had installations confirmed, a sharp hike from the 1,320 being quoted just a month ago.

The Big 3 – Wartsila, Alfa Laval and Yara Marine – hold over a 50 per cent share of the market, but as the orderbook grows and lead times get longer some of the smaller manufacturers have started to receive major orders, said experts.

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