If you are a maritime professional, you must have heard
the term IMO 2020 lately/
IMO 2020 is a regulation that has shaken the maritime
industry and the fuel oil market.
So what is IMO 2020?
In the year 2016, during the 70th session of
the Marine Environment Protection Committee
or the MEPC meeting in London,
the International Maritime Organization (IMO)
took a landmark decision
which will enforce a new regulation
from 1 January 2020.
According to this latest regulation
the marine sector emissions in international waters
will be slashed even outside the emission control areas
such as the North American coast.
The ships now will have to reduce sulphur emissions
by over 80% by switching to lower sulphur fuels.
The current maximum fuel oil sulphur limit of 3.5 wt %
will fall to 0.5 wt%.
This regulation will see the largest reduction in the sulfur
content of a tra nsportation fuel undertaken at any time.
The next question is Why this reduction and Why now?
One of the pillars of IMO is MARPOL - i.e.
Prevention of Marine Pollution in international water.
The ships use the lowest grade of fossil fuel today
known as Heavy Fuel Oil
along with other refined products such as MGO
Diesel oil, Intermedia Fuel Oil etc.
Most of the marine fuels which are used onboard ships
use high sulphur up to 3.5%.
The burning of this fuel in ship’s main engine,
Boilers, or Generator engine produces exhaust
containing Sulphur Oxide (SO2),
which then reacts with water
oxygen and other chemicals to form sulfuric acid
and secondary inorganic aerosols.
Sulphur is also an Ozone Depleting substance,
which causes harmful rays reaching the earth surface.
This then mixes with water and other compounds
in the atmosphere and turns into acid rain,
which is harmful not only to the environment
but also to humans
causing diseases like Asthma,
lung cancer, stroke, pulmonary diseases etc.
Actually, This is not at all recent.
If we follow the previous IMO unfoldings,
the first reduction came into force in 2005
with 4.5% sulfur cap.
Later in the year 2012,
it was further reduced to 3.5 wt %.
The decision to make it 0.5% in 2020 was taken way
way back in 2008 and it got ratified in 2016
in the 70th session of MEPC meeting
So, this is not sudden and ship owners
got ample time to prepare for this regulation.
Following a typical business mind setup,
most of the companies did not expect
the regulation will come into force so early.
Even after the resolution was adopted on 28th Oct 2016
shipping company still believed that implementing
such a strict regulation will not be possible
at least till 2020
However, as the time approached everyone realised the
doom’s day is near.
Now, everyone is rushing to the shipyard
for fitting different equipment or retrofit the ships
to ensure they comply with IMO 2020
and not get fined or detained by the different
regulatory authorities.
Hence, we are looking at such a HYPE for IMO 2020.
One of the biggest impacts is the rise in the operating
and preparation cost of the ships.
To understand the impact on shipowners
let’s first understand how current ship owners can
comply with this regulation.
Reduction in the sulfur content can be done by-
Fitting an exhaust gas cleaning system
which will treat the exhaust and reduse the SOx
emission to the desirable limit value.
Shifting to a cleaner compliant fuel such as LSFO.
Shifting to Alternate fuel such as Liquified Natural Gas,
Methanol, Ethanol or Biofuel
Using Shore Power when in Port
While complying with the IMO 2020, the shipping
company have the following impact:
Huge cost in fitting an exhaust cleaning system
which can go from 6-12 million US Dollars per ship depending upon the size of the ship
per ship depending upon the size of the ship
Maintenance and operation cost
of the exhaust cleaning system
Higher fuel bill if switching to cleaner compliant fuel.
For a company having a fleet of 250 ships,
the cost can go upto
1-1.5 billion when compared to using LNG fuel
which is costly, the owner needs to modify the engine
and boiler for the consumption of LNG
which will incur an additional cost
This all can cost up to 20-30 million
US dollars per ship to the owner
Apart from the investment to procure technology
or the compliant fuel, the ship owner will need to
Invest in training of the seafarer
for the technology fitted onboard ship
such as exhaust scrubber etc.
Clean and dedicate a tank for low sulfur fuel
Make arrangement to store LNG onboard ship
Make arrangement to bunker LNG onboard ship
Fuel oil transfer line modification to avoid contamination
Compatible grade lube and cylinder oils
Modification in engine and boiler to burn LNG fuel
Comply with documentation and paperwork
of the compliant fuel
There is no doubt that this new regulation
will have a significant positive effect on the environment.
However, the increased cost of cleaner ocean freight
shipping would get passed along to the shipper.
and eventually, the consumer