Potentially one of the most economically disruptive regulations the maritime sector has seen in recent years, IMO 2020 came into force from 1 January 2020. Whilst significantly reducing the amounts of sulphur oxides emitted from ships and bringing major environmental and health benefits, it has lead to ship owners facing difficult decisions, which have huge implications for their organisations. In this article we look at IMO2020 and the events leading up to it, the effects of sulphur oxides on humans and the environment, and the demand for low sulphur fuels together with the alternatives.
“IMO 2020: the global regulation effective 1 January 2020 from the International Maritime Organisation to cap the sulphur content in marine fuels at 0.50%, globally.”
What is IMO 2020?
The previous limit for sulphur content in marine fuel was 3.50% (when outside of Emission Control Areas – see below) and so 0.50% m/m (mass by mass, or weight by weight) represents a reduction of over 80% against current levels.
For many years the IMO has been attempting to reduce the harmful environmental effects of shipping. According to a Goldman-Sachs study, burning standard bunker fuel (Heavy Fuel Oil or HFO) accounts for almost 90% of sulphur oxide (SOx) emissions globally, with the largest 15 vessels producing more sulphur than the combined total of all the world’s automobiles.
The impact of this regulation will be significant, with the shipping sector consuming over 3.5m barrels of bunker-fuel oil per day in 2018. Because of that, the impact on the pricing and availability of compliant fuels, and hence the economics of the whole sector, has the potential to be cause considerable disruption.