A study on impact of the IMO year 2020 sulphur cap on shipping (0.5% VLSFO and distillates as a feasible solution)

• Main Author: Ng, Shi Yun
• Other Authors: Kenneth Tan Siah Ann
• Format: Final Year Project
• Language: English
• Published: 2018
• Subjects: DRNTU::Engineering
• Online Access: http://hdl.handle.net/10356/74942
• Institution: Nanyang Technological University

Over the years, air pollutants and greenhouse gases emitted from ships have been contributing significantly to the global air pollution and climate change. The severe human health and environmental impacts caused by the shipping sector from using burning bunker fuels has garnered attention by the International Maritime Organisation (IMO). Hence, IMO is moving with a reduction in the maximum sulphur content from 3.5% to 0.5% mass by mass (m/m) on January 1, 2020, known as IMO 2020. From 1st January 2020, the available compliant options will include 0.5% Very Low Sulphur Fuel Oil (VLSFO) and distillates, Liquefied Natural Gas (LNG) and 3.5% High Sulphur Fuel Oil (HSFO) with the installation of scrubbers. IMO 2020 is believed to be the game changer for the maritime cluster, in which the change in the fuel mix is expected. This report examined the impacts of 0.5% VLSFO and distillates as a feasible option for IMO 2020, through online research, surveys and interviews with industry stakeholders such as representatives from Total Marine, DNV GL and ship-owning entities. There are always trade-offs between the benefits of a cleaner and greener environment, and high compliance costs. Some of the factors impacting decision-making include capital and operational costs, age of vessels, trading routes, and availability of infrastructure and fuels. From the analysis, the availability of VLSFO remains the top concern, and its anticipated high prices (relative to HSFO) will be intensely felt by stakeholders in the marine fuel chain i.e. shipowners, ship operators and charterers. In the long run however, with a more stable supply of VLSFO (after implementation of IMO 2020 and VLSFO taking over as the main fuel for the ships), prices may stabilise, and shipowners and operators will enjoy a sustainable supply of VLSFO. The other challenges of 0.5% VLSFO include fuel instability and incompatibility issues. These technical issues can be overcome through appropriate fuel testing by bunker suppliers and refineries, good practice of fuel tanks cleaning by shipowners, and crew training on handling new grades of fuel. In the discussion section, comparison with other solutions in terms of economic, environmental, legal and regulatory, operational and technical implications were made followed by recommending the most appropriate solution across different time frames. Given IMO 2020 is approaching, 0.5% VLSFO is likely to be an immediate and effective solution, especially for shipowners who maintain the “wait-and-see” attitude and/or own smaller, short sea or older vessels.