2020 Sulfur Challenges : The Ship owners’ perspective
by Stavros Meidanis, DPA/CSO, S&Q Manager, Capital Ship Management Corp.
This paper addresses other options available such as retrofitting as well as alternative powering options. Sulfur cleaners (scrubbers) offer an effective solution for reducing sulfur emissions as they allow ships to meet IMO regulations while still consuming high sulfur fuels. Another solution is the use of liquefied natural gas (LNG) as fuel. LNG is an alternative and less expensive fuel with zero sulfur content and excellent combustion properties. At the same time within the global supply chain there are relatively few LNG terminals which provide the necessary storage and supply facilities with the result that ship owners have not gone down this route. Finally, fuel blending, compliant with the 0.5% sulfur cap may provide a less expensive solution, though this can lead to huge problems due to possible destabilization of the final combustion, mechanical problems and serious effects on
the safety of the ship.
Annex VI of the IMO MARPOL Convention (2008) specifies the sulfur content of marine fuel reducing from 3.5% to a maximum of 0.5% starting on 1st of January 2020 on a worldwide basis. The current transition period is intended to provide the shipping industry with time to implement solutions and be ready for the beginning of a new era. In view of the Global Sulfur Cap, ship owners, ship operators, bunker suppliers, oil refiners and all parties involved in shipping need to find effective solutions in order to address these fast and pressing challenges resulting in prohibition on carriage for noncompliant fuel.
The Maritime industry has demonstrated its adaptability to developments that follow rules and regulations that protect the environment. Although the reduction in the sulphur content of marine fuel from the current 3,5% has been known since October 2016, many players in shipping industry adopted a “wait and see” approach.
In order to ensure compliance, shipowners must decide between the three (3) main commonly accepted compliance options namely:
– Switching from High Fuel Oil
(HFO) to distillates,
– Using LNG as a marine fuel and
– Installing exhaust gas emissions cleaners – scrubbers.
As always, there are pros and cons to each for the above mentioned options, with the size and age of vessel impacting on suitability. Distillate (or distillate based low sulphur fuel), is expected to be the most acceptable option, although its future cost and availability is unknown. There are also quite of few concerns about the commingling characteristics if blended fuels and its impact on engines. We will expand to safety concerns in a while.
LNG as Marine Fuel
Using LNG a marine fuel still need significant investment and infrastructure and bunkering procedures and is primarily suited for new buildings. Retrofitting of existed vessels is a quite difficult, costly and complicated process. LNG installation also requires substantial capital investment which is unlikely to be a “first line” option for ship owners and operators.
Scrubbers could be an attractive option that affords the owners/ operators the opportunity to continue to burn lower cost HFO. As it is widely known, scrubbers are a costly capital expenditure, with installation cost ranging from 1,5m to 6 m per unit. However based on a fair cost/ effective analysis, the wide spread between the price of HFO and more expensive MGO means that the costs of installing scrubbers units could be recouped in just of few years.
It is essential for shipowners that they take the best option for their vessel and operations to ensure compliance with the forthcoming regulations. For those looking to scrubbers as a solution, they will need to fully understood not only the regulatory requirements but also the operational implications (i.e. “wet” scrubbers).
On the other hand, key industry players admits serious safety worries with regards to fuel switch and potential effect of lowsulphur fuels on ships’ machinery. Although arguments tabled was that safety was not such a big concern because owners and managers already had plenty of technical experience in low-sulphur and fuel switching from trading in sulphur emission control areas in northern Europe and the US, safety concerns remained without reply. It is unknown how machinery would react to operating with much lower viscosity fuels such as MGO (Marine Gas Oil). Fractures and gaps in pipes and piping system, could emerge that were not apparent, when using much thicker HFO (High Fuel Oil) and leakages could pose a threat of breakdown, blackout or even fire. Even IMO has identified potential danger areas, such as fuel pump puncture valve, auxiliary boilers, pump seals, circulations pumps and fuel oil filters.
As we can understand from the above analysis, while MGO is expected to be the initial option for most ship owners to comply with new regulation, blended fuel oils (approx. 80 % MGO content), it is expected to become widely used. And at this point, another problem arise. Not only with quality –as fuel tests unlikely to happen before the deadline- but also compatibility of these blended fuels.
As stated during the Internal Chamber of Shipping (ICS) Annual General Meeting there are fears for ‘chaos and confusion’ unless the International Maritime Organization (IMO) urgently resolves issues concerning the successful implementation of the 0.5 percent sulfur cap. As discussed, such chaos would have serious consequences for the movement of the world’s energy, raw materials and manufactured products, with about 90 percent of global trade being carried by sea.
It is well recognized however, that there are many thousands of ships that have not yet truly experienced operations on much else other than high sulfur residual fuel oils and the occasional switch to distillates. This would suggest that the lessons learnt by some from the switch in 2015 will have to be learnt by many more for 2020 and the same technical and operational warnings will need to be reiterated.
The implications of the IMO 2020 sulfur requirements on operations are now becoming clear. Ship owners and ship managers intend to comply through the use of compliant fuel oils, exhaust gas cleaning (scrubbers) or alternative fuels, need to take into consideration all the above parameters and factors which may lead to a success or to an alternative approach with catastrophic results.
For the shipping sector, it is important to look at the bigger picture and not forget about shipping’s long-term decarburization options. Overall, as the transition period comes to its end in 15 months, it seems that the involved parties are not well prepared to face the upcoming changes and strict regulations. New legislation, technical issues, fuel switchover problems, fuel availability and increased cost of bunkers are some of the main issues that ship operators and bunker suppliers will face in the near future.
It is an exciting but at the same time a critical time in the industry, as shipping’s response to the 2020 sulfur cap will not only define the sector’s ability to adapt and comply with future regulations, but also sends a message to the public about the industry’s attitudes towards sustainability and sustainable future for the planet
– International Maritime Organization (IMO), 2018, Low Sulphur concerns
– Bimco, 2018, Perspectives towards 2020 sulphur rule
– Drewry Maritime Research, 2018, LSFP and HFP prices expected after 2020
– International Chamber of Shipping (ICS), 2018, Annual General Meeting
– Bloomberg, Sept.2018, Shipping fears failures as Industry switches to Low Sulphur fuel