IMO 2020 fuel sulphur regulation

What you need to know about the IMO 2020 fuel sulphur regulation.

30 Jul 2018

The quality and availability landscape of marine fuel oils will continue to evolve until 2020 and beyond.

Muhammad Usman

Our voice on marine fuels

A landmark decision to implement the 0.50% sulphur limit for marine fuels in use on ships operating outside sulphur emissions control area (ECA-SOx) from 1 January 2020 has the industry scrambling for solutions. The decision has not been without scepticism and triggered an intense debate amongst stakeholders about implementation framework and 0.50% Very Low Sulphur Fuel Oils (VLSFO) availability and quality.Various market surveys indicate that most shipowners and operators intend to comply with the MARPOL Annex VI regulation 14.1.3 by burning 0.50% VLSFOs. As a member of various industry forums, LR’s FOBAS (Fuel Oil Bunker Analysis Service) team is actively participating in these discussions to help guide the industry by carefully considering operators requirements and concerns.

Refiners and suppliers

The refineries, storage depots and physical suppliers will have to contend with over 150 million tonnes of high sulphur residual fuel oil becoming surplus to demand from 1 January 2020, being replaced by the demand for maximum 0.50% VLSFO.

Refiners are faced with difficult decision to make multimillion pound long term investment for bottom upgrading, source sweet crude or look for other outlets of high sulphur residual fuels after January 2020 when this convenient marine bunker option is no longer available. Some refineries have made a decision to invest in coking plant however there are others who may be playing a waiting game how exhaust gas scrubber markets evolves. The IMO fuel availability study predicted that around 3,800 ships with Exhaust Gas Cleaning systems (EGCS) will be in use by the implementation date; however, the figure is looking more likely to be about 1000-1500 ships. The relatively small uptake of EGCS at this time will be unlikely to make a significant difference. However, with the potentially greater price differential between high sulphur fuel oil (HSFO) and 0.50% VLSFO by 2020 and short pay-back, shipowners and operators have shown increased interest in installing scrubbers on their vessels. However, there are number of relevant operational, logistical, technical, regulatory and commercial parameters which require careful consideration when making a decision to install an EGCS making it complex issue. LR has developed an options evaluator to help clients make an informed decision based on the specific operational profile of vessels.

To help the supply chain, we also emphasise the ship operators to open dialogue with their charterers and suppliers and place their interest in the type of fuel they will need based on ship operations and trading pattern so that suppliers also get themselves prepared to meet the demand ahead of 1January 2020 deadline.

An update from IMO

During PPR5 (Pollution Prevention and Response – an IMO sub-committee) held in March 2018 and inter-sessional (PPR5_ISWG) meeting this month (9-13 July), few key areas of implementation of the regulation 14.1.3 were discussed and some actions agreed for PPR6 (February 2019). It has been made clear that the implementation date is 1 January 2020 and there is no possibility of any delays. Secondly, PPR5 principally agreed the proposal of carriage ban of non-compliant fuels on-board after the implementation date which is expected to come into force from March 2020. It has been agreed to present and review draft text of the following key documents at PPR6 (Feb 2019) in order to progress and subsequently finalise;

Guidelines for consistent implementation of the 0.50% sulphur limit under MARPOL Annex VI
Amendments to the guidelines for on-board sampling for the verification of the sulphur content of the fuel used on board ships
Amendments to MARPOL on sampling points and fuel analysis methodologies
Amendments to (Resolution MEPC.181(59)) to the 2009 guidelines for Port State Control officers under revised MARPOL Annex VI

The consistent implementation guide intends to cover various implementation parameters such as enforcement, safety, quality of fuel, verification, port state control, FONAR (Fuel Oil Non-Availability Report) etc. During PPR5_ISWG, various 0.50% sulphur fuel quality parameters such as fuel stability, cold flow properties, acid number, flash point, etc. have been raised as safety concerns. Moreover, the prevalent notion that current ISO 8217:2017 standard does not cover the future 0.50% sulphur fuels is also raised as safety issue. In response, a statement was made during ISWG from ISO delegation to counter these arguments and dispel concerns with enhanced understanding. Nevertheless, in order to address aforementioned 0.50% sulphur marine fuel quality concerns, a number of industry bodies have combined forces to form an expert group which will look into the various available guidelines and standards and come up with industry wide document to submit to PPR6 in February 2019.

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