IMO 2020 Sulphur Cap: Reducing Consumption When Prices Soar

Looking ahead to the IMO’s 2020 sulphur cap, we assess the challenges facing operators and discuss how Miros Speed Through Water can help cut the costs associated with running compliant, efficient operations in the future.

From January 2020, the International Maritime Organisation (IMO) will require all ships to use fuels with a sulphur content lower than 0.5%. With current thresholds set at 3.5%, the regulation is predicted to cause global shipping fuel costs to rise by a quarter (or $24 billion!) in 2020 alone. Needless to say, the implications of this ambitious shift are significant as, generally, lower sulphur content translates to a higher price. During a DNV GL webinar last week, Christos Chryssakis, Business Development Manager at DNV GL Maritime, confirmed everyone’s worst fears about the price of compliant fuel, stating, “we don’t know how high it’s going to go.”

The IMO’s 2020 sulphur cap is aimed at improving human health by reducing air pollution, with the organisation suggesting the change will, “significantly reduce the amount of sulphur dioxide emanating from ships and should have major health and environmental benefits for the world.”

Whilst these ends are certainly noble, the means to get to them involve a great deal of uncertainty. This is leading operators to explore a range of options moving forward, each with its respective benefits and drawbacks. Jason Breslaw, BP’s MARPOL Lead for low sulphur marine fuel development, explains that, “over 95% of the world’s bunker fuels are going to need to change.”

Though the use of so-called “scrubbers” could help to capture sulphur dioxide before it enters the air – allowing vessels to continue making use of fuels with higher sulphur content – according to Forbes, only 2000 scrubbers are currently installed or planned for installation by 2020. With a global shipping fleet of over 90,000 vessels, it seems that most operators are opting for a different approach. When it comes to compliant fuels, however, DNB explain that, “the fiscal challenges stem from the fact that shippers will have to bid for higher value products, competing against demand from other sectors.”

Beyond price point itself, there are additional concerns as to whether there will be enough compliant fuel available for everyone who needs it. Exxon Mobil point out that successful compliance with the IMO 2020 sulphur cap requires, “more than fuel selection,” adding that, “initially, some fuel types may be scarce, so vessel operators will need to plan their bunkering in advance as we move from the simpler age of fuel procurement to the age of fuel management in 2020 and beyond.”

One way to combat the challenge posed by soaring fuel prices is to simply use fuel more efficiently. With the advent of Miros Speed Through Water, operators could reduce daily fuel consumption by tons for a single ship. With low sulphur distillates already priced close to 300USD/mt higher than high sulphur bunker in 2020, and likely to rise further, such reductions in daily consumption could have major implications for the bottom-line of operators across the globe.

We invite you to attend one of the following events to learn more about how Miros Speed Through Water can contribute to reducing fuel consumption and aid operators in meeting the requirements of IMO’s 2020 sulphur cap. Miros CEO, Andreas Brekke, will be presenting this solution during a technical seminar at Nor-Shipping on June 6th. Meanwhile Miros CTO, Gunnar Prytz, will be leading a complementary talk at the concurrent VPO event, also on June 6th. Additionally, we will be showcasing this exciting development at Ocean Now from June 5-6th.

Download the Miros Speed Through Water whitepaper here.

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