Shipping companies now know that within three years all vessels involved in international trade will be required to use fuel with a sulfur content of 0.5% or less—an aggressive standard, considering that in most of the world today, ships are currently allowed to use heavy fuel oil (HFO) bunker fuel with up to 3.5% sulfur. This is a big deal. Ships now consume about half of the world’s residual-based heavy fuel oil, but starting in January 2020 they can’t—at least in HFO’s current form. How will the global fuels market react to a change that would theoretically eliminate roughly half the demand for residual fuels? How will ship owners comply with the rule? What are their options? Today we discuss the much-lower cap on sulfur in bunker fuels approved by the International Marine Organization, and what it means for shippers and refineries.
The international shipping industry is a major energy consumer, and for that reason we’ve blogged about it often. In Against the Wind, we talked about how the International Maritime Organization (IMO) in recent years has been implementing rules that gradually reduce emissions of sulfur (sulphur for many of our non-American readers). In January 2012, the “global” cap on sulfur content in marine fuel was reduced to 3.5% (from the old 4.5%), and—as we said in All the Way From America—in January 2020 (per an IMO decision in October 2016) it will be reduced to a much stiffer 0.5% sulfur cap. There has been an even tougher standard (a 0.1% sulfur cap) in place in the IMO’s “Sulphur Emission Control Areas” (SECAs, or sometimes ECAs), which include Europe’s Baltic and North seas and (more recently) areas within 200 nautical miles of the U.S. and Canadian coasts (dark-shaded areas in Figure 1).
Join Backstage Pass to Read Full Article
About the song
“How Am I Supposed To Live Without You” was a #1 hit both for Laura Branigan in 1983 and for Michael Bolton in 1990; Bolton wrote the song with Doug James.
Comments
Nice article.
Stena Lines has now been operating their large methanol ferries in Europe for nearly two years. The conversion cost and downtime was roughly 1/10th the expected cost and time of an LNG conversion (i.e., ~$3 million instead of $30, 6 weeks instead of 12 months).
ECA also has a NOx emission restriction in addition to an SOx restriction. The NOx restriction is in some ways more troublesome than the SOx restriction because while lower sulfur distillates can meet the sulfur restriction, they will still require require undesirable exhaust gas recirculation or selective catalytic reduction to achieve NOx limits.
Both methanol and LNG can normally meet the NOx restriction without EGR or SCR.
Although long haul LNG or methanol ships are usually also dual (distillate) fueled, the fact that LNG conversion is so expensive, and time and space consuming, means that operators will be motivated to use LNG 100% of the time, whereas with an inexpensive conversion like methanol, fuel switching based on cost (once outside the ECA boundary) becomes more doable and palatable.
Here is a You Tube video describing the methanol conversion of the Stena Germanica.
Phil Lewis
what does this mean for light/heavy spreads do you think? does history provide any guidance on wha the removal of that much outlet for pitch will mean?