By Shell Catalysts & Technologies on May 3, 2019
The International Maritime Organization announced a new global cap on marine fuel sulphur, requiring ships to use fuel with no more than 0.5% Sulphur. This was back in 2016, and the effective date for the cap is January 1st, 2020. IMO 2020 means companies will be forced to revisit their shipping practices and fuel logistics focusing on reducing the sulphur content without sacrificing supply chain and cost efficiency. Shell Catalysts and Technologies is committed to providing a wide range of on-spec, compliant marine fuels and lubricants to partners for low sulphur marine transport.
IMO 2020 Regulations
The International Maritime Organization has been working to limit the negative impact shipping has on the environment since the 1960s. In 1997, IMO issued Annex VI to the International Convention for the Prevention of Pollution from Ships. This was done specifically to address air pollution resulting from the shipping industry. Sulphur oxides, nitrogen oxides, ozone-depleting substances, and more are contaminants which result from ship emissions. These have realized effects on air quality and human health. It’s estimated by IMO that ship emissions account for 2.2% of all global human-made emissions in 2012. The European Commission lists man-made greenhouse gases, like nitrous oxide from ships, as a main contributor to humanity’s negative impact on the climate.
Annex VI began being enforced in 2005, with a subsequent strengthening of regulations to follow in 2008. Further amendments introducing enhanced Emission Control Areas were made since 2010. Most recently, with IMO 2020 regulations being put in place, a new global sulphur cap is being placed on fuel used by ships. The implications of these regulations are far-reaching. Refiners will need to be proactive in order to maintain their competitive position and profitability.
High Sulphur Fuel Oil
Refineries and other industries whose supply chains depend on maritime shipping must adhere to a 3.5% m/m sulphur content limit until December 31st. That will rise to a .50% content limit starting January 1st, 2020. The only exemptions accounted for in the regulations relate to situations of safety or if a ship is malfunctioning. There is also an exemption made available for ships testing new technologies, engine efficiencies, and performance but requires a license.
The reality is that ships must use low-sulphur compliant oils or organizations will be subject to various penalties. These penalties are not determined by the International Maritime Organization, but by individual state parties and ports. Refineries, management, and technologists will need to collaborate across departments to devise new supply chain and shipping strategies that are less reliant on sulphur-heavy oils.
Impact on Supply Chain
S&P Global Platts presents the following conundrum for the shipping industry: equipping ships with exhaust gas cleaning systems, more colloquially referred to as scrubbers, can help maintain compliance under new legislation. However, this requires upwards of $6 million to implement. These kinds of costs will impact cost structures and the profitability of your supply chain and must be accounted for. Liquefied natural gas (LNG) is also referenced in the report as a greenfield option on the cusp of seeing more consistent adoption.
Long story short, there are many options made available to refineries by Shell Catalyst and Technologies to meet specifications set forth by IMO 2020 and maintain profitability. Shell as an organization has been preparing for these kinds of regulations for years, as evidenced by the creation of ultra-low .1% Sulphur fuel oil in 2015. Similar strategies and technologies were applied to the creation of Shell’s .5%S fuel which underwent trails in key ports around the world in 2017. Additionally, Shell actually played a significant role in pioneering LNG in 1964 being involved in the procedures of the first commercial LNG liquefaction plant in Algeria. Click the link to learn more about all the options made available to ship owners in light of IMO 2020.
Be Prepared for IMO 2020
For more advice on how to be prepared for IMO 2020, view our key steps for refiners page here. At Shell Catalyst and Technologies, we pride ourselves on innovating to stay on the cutting edge of clean refining and compliant shipping technology. We’re a fully integrated supplier with a global maritime network and we’re ready to assist you to transform your shipping supply chain for 2020.
Download the IMO 2020 Brochure